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If a country's GDP is greater than it's GNP , it implies that the country has a trade deficit?
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If a country's GDP is greater than it's GNP , it implies that the coun...
Explanation:
In order to understand why a country having a GDP greater than its GNP implies a trade deficit, we need to break down the concepts of GDP and GNP.
GDP (Gross Domestic Product):
- GDP measures the total value of all goods and services produced within a country's borders in a specific period of time.
- It includes both domestic and foreign production within the country.
GNP (Gross National Product):
- GNP measures the total value of all goods and services produced by a country's residents, regardless of where they are located.
- It includes the income earned by a country's residents from foreign sources, as well as the income earned by foreigners within the country.
Implication of GDP greater than GNP:
- When a country's GDP is greater than its GNP, it means that the country is earning more income from production within its borders than from production by its residents abroad.
- This could indicate that the country is importing more goods and services than it is exporting, leading to a trade deficit.
- A trade deficit occurs when a country's imports exceed its exports, resulting in a negative balance of trade.
In conclusion, if a country's GDP is greater than its GNP, it implies that the country may have a trade deficit due to importing more than it is exporting.
In order to understand why a country having a GDP greater than its GNP implies a trade deficit, we need to break down the concepts of GDP and GNP.
GDP (Gross Domestic Product):
- GDP measures the total value of all goods and services produced within a country's borders in a specific period of time.
- It includes both domestic and foreign production within the country.
GNP (Gross National Product):
- GNP measures the total value of all goods and services produced by a country's residents, regardless of where they are located.
- It includes the income earned by a country's residents from foreign sources, as well as the income earned by foreigners within the country.
Implication of GDP greater than GNP:
- When a country's GDP is greater than its GNP, it means that the country is earning more income from production within its borders than from production by its residents abroad.
- This could indicate that the country is importing more goods and services than it is exporting, leading to a trade deficit.
- A trade deficit occurs when a country's imports exceed its exports, resulting in a negative balance of trade.
In conclusion, if a country's GDP is greater than its GNP, it implies that the country may have a trade deficit due to importing more than it is exporting.
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If a country's GDP is greater than it's GNP , it implies that the country has a trade deficit?
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If a country's GDP is greater than it's GNP , it implies that the country has a trade deficit? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about If a country's GDP is greater than it's GNP , it implies that the country has a trade deficit? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If a country's GDP is greater than it's GNP , it implies that the country has a trade deficit?.
If a country's GDP is greater than it's GNP , it implies that the country has a trade deficit? for UPSC 2024 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about If a country's GDP is greater than it's GNP , it implies that the country has a trade deficit? covers all topics & solutions for UPSC 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for If a country's GDP is greater than it's GNP , it implies that the country has a trade deficit?.
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