If Germans invest in the UK economy by building a new Volkswagen factory, in the future UK GDP will rise by more than UK GNP.

Question

Quizplus · Accepted Answer

GDP includes all economic activity within a country, including that of foreign-owned companies, while GNP only includes economic activity of domestic-owned companies no matter where they operate. Therefore, if a German-owned company, such as Volkswagen, builds a new factory in the UK, the economic activity generated from that factory will contribute to UK GDP but not necessarily to UK GNP.

If Germans Invest in the UK Economy by Building a New