Suppose Canadian-based Nortel builds and operates a new factory in Mexico. What would the future production from such an investment do?
A)increase Mexico's GDP more than it would increase Mexico's GNP
B)increase Mexico's GNP more than it would increase Mexico's GDP
C)not affect Mexico's GNP, but it would increase Mexico's GDP
D)have no effect on either Mexico's GDP or its GNP

Question

Quizplus · Accepted Answer

GDP measures the value of goods and services produced within a country's borders, so the factory's production increases Mexico's GDP. GNP measures the value of goods and services produced by a country's nationals, so the production would not significantly affect Mexico's GNP as the factory is owned by a Canadian company.

Suppose Canadian-Based Nortel Builds and Operates a New Factory in Mexico