For a given level of GDP, an increase in net factor earnings from abroad will:
A) increase gross national product.
B) reduce gross national product.
C) not affect disposable personal income.
D) increase a nation's trade surplus.

Question

Quizplus · Accepted Answer

Net factor earnings from abroad are a component of gross national product (GNP). An increase in net factor earnings from abroad means that a country is earning more income from its investments overseas or from foreign-owned assets in the country. This increase in income flows back to the country and increases its GNP, thus choice A is the correct answer. Choices B, C, and D are all incorrect, as they do not accurately reflect the impact of an increase in net factor earnings from abroad on a country's economy.

For a Given Level of GDP, an Increase in Net