If a Brazilian. company opens a new factory in Peru, it makes
A)foreign direct investment. The factory will make a bigger impact on Peru's GDP than on its GNP.
B)foreign direct investment. The factory will make a bigger impact on Peru's GNP than on its GDP.
C)foreign portfolio investment. The factory will make a bigger impact on Peru's GDP than on its GNP.
D)foreign portfolio investment. The factory will make a bigger impact on Peru's GNP than on its GDP.

Question

Quizplus · Accepted Answer

A Brazilian company opening a new factory in Peru qualifies as foreign direct investment, as it is a direct investment in a physical asset in a foreign country. The impact of the investment will be reflected in Peru's GDP, which measures the value of goods and services produced within a country's borders. The investment may also have an impact on Peru's GNP, which measures the total value of goods and services produced by a country's residents, regardless of where they are located.