GDP and GNP may differ
A) because some income generated by domestic production may be received as income by foreign residents.
B) because some intermediate good inputs are imported.
C) because some workers are illegal aliens.
D) whenever tariff rates become excessively high.
E) when business cycles are unpredictable and volatile.

Question

Quizplus · Accepted Answer

GDP measures the total value of goods and services produced within a country's borders, regardless of the ownership of the factors of production. GNP, on the other hand, measures the total value of goods and services produced by a country's residents, regardless of where they are located. Therefore, if income generated by domestic production is received by foreign residents, it will contribute to the country's GDP but not to its GNP.

GDP and GNP May Differ