Explain the difference between GNP and GDP.

Question

Quizplus · Accepted Answer

The Answer is GNP (Gross National Product) and GDP (Gross Domestic Product) are both measures of a country's economic performance, but they differ in their scope and focus.

GDP measures the total economic output within a country's borders, regardless of whether the production is done by domestic or foreign entities. It includes the value of goods and services produced within the country, but excludes income earned by foreign residents and businesses operating within the country.

On the other hand, GNP measures the total economic output produced by the residents and businesses of a country, regardless of whether the production takes place within the country's borders or abroad. It includes the income earned by residents and businesses from foreign investments and excludes the income earned by foreign residents and businesses within the country.

In summary, GDP focuses on the economic activity that occurs within a country's borders, while GNP focuses on the economic activity generated by a country's residents and businesses, regardless of where it occurs. Both measures are important for understanding a country's economic performance and its impact on its residents.

Explain the Difference Between GNP and GDP