Suppose Japanese-based Toshiba Corporation builds and operates a new computer factory in the United States. Future production from such an investment would
A)increase U.S. GNP more than it would increase U.S. GDP.
B)increase U.S. GDP more than it would increase U.S. GNP.
C)not affect U.S. GNP, but would increase U.S. GDP.
D)have no affect on U.S. GNP or GDP.

Question

Quizplus · Accepted Answer

GDP measures the total output within a country's borders, while GNP measures the total output of a country's residents, regardless of their location. Since Toshiba is a Japanese-based company, its investment in the U.S. would not be included in U.S. GNP. However, the production from the factory would increase U.S. GDP. Therefore, the correct answer is B.

Suppose Japanese-Based Toshiba Corporation Builds and Operates a New Computer