A wind farm in Manitoba buys a large turbine generator from a Swedish-owned factory located in Ontario and using local workers.What happens as a result?
A) Canadian investment,GDP,and GNP all increase by the same amount.
B) Canadian investment increases,but GDP and GNP are unaffected by the purchase.
C) Canadian investment and GDP increase by the same amount,but Canadian GNP increases by a smaller amount.
D) Canadian investment and GNP increase by the same amount,but Canadian GDP increases by a smaller amount.

Question

Quizplus · Accepted Answer

The purchase of the turbine generator increases Canadian investment and GDP because it is produced in Canada. However, since the factory is Swedish-owned, the profits from the sale contribute to Sweden's GNP, not Canada's, so Canadian GNP increases by a smaller amount.

A Wind Farm in Manitoba Buys a Large Turbine Generator