The value of production generated by a country's factors of production in foreign countries during a particular year was $51,000,and the value of production generated by foreign factors of production in the country during that year was worth $80,000.Which of the following is likely to be true in this case?
A) The GDP of the country is higher than its GNP.
B) The GDP of the country is lower than its GNP.
C) The GDP of the country equals its GNP.
D) The GDP of the country equals its trade balance.

Question

Quizplus · Accepted Answer

GDP includes the total value of all goods and services produced within a country's borders, including those produced by foreign entities. GNP, however, adds the value of goods and services produced by the country's nationals abroad and subtracts the value of goods and services produced by foreigners within the country. Since the value produced by foreigners in the country ($80,000) is higher than the value produced by the country's nationals abroad ($51,000), the GDP, which includes the higher foreign production value, is likely to be higher than the GNP, which subtracts this difference.

The Value of Production Generated by a Country's Factors of Production