Econoland and Macroland are neighboring countries. Which of these would be included in the GNP of Econoland but NOT in Econoland's GDP?
A) the value of the output of a factory in Econoland that is owned by a company whose headquarters are located in Macroland
B) the value of the output of a factory in Macroland that is owned by a company whose headquarters are located in Econoland
C) the value of output sold in Macroland that was produced by a farmer who owns land in Econoland
D) the value of output produced in Econoland that remained unsold the year it was produced

Question

Quizplus · Accepted Answer

Gross National Product (GNP) includes the total value of all goods and services produced by the residents of a country, regardless of where the production takes place. Therefore, the value of the output of a factory in Macroland owned by a company based in Econoland would be included in Econoland's GNP because it is produced by Econoland residents, but not in its GDP, which only includes goods and services produced within Econoland's borders.

Econoland and Macroland Are Neighboring Countries