A wind farm in Manitoba buys a large turbine generator from a Swedish-owned factory located in Ontario that uses local workers. What happens as a result?

Question

Quizplus · Accepted Answer

The purchase of the turbine generator by the wind farm represents Canadian investment. This increases GDP, since the purchase of a final good is counted as part of GDP. However, since the factory is owned by a foreign company, some of the profits may leave the country and not contribute to Canadian GNP (i.e. the generator is part of Canadian GDP, but not all of it was produced by Canadians). Therefore, Canadian GNP would increase by a smaller amount than Canadian GDP.

A Wind Farm in Manitoba Buys a Large Turbine Generator