Suppose Japanese-based Sony Corporation builds and operates a new chip factory in Canada.What would the future production from such an investment do?
A) increase Canadian GNP more than it would increase Canadian GDP
B) increase Canadian GDP more than it would increase Canadian GNP
C) not affect Canadian GNP,but it would increase Canadian GDP
D) not affect Canadian GDP,but it would increase Canadian GNP

Question

Quizplus · Accepted Answer

The investment by Sony Corporation in a new chip factory in Canada would increase Canadian GDP more than it would increase Canadian GNP. This is because GDP measures the value of goods and services produced within a country's borders, regardless of whether the producer is a domestic or foreign entity. On the other hand, GNP measures the value of goods and services produced by the domestic residents of a country, whether they are located within the country or abroad. Since Sony Corporation is a foreign entity, its production in Canada would not directly contribute to Canadian GNP but would increase the value of Canadian GDP.

Suppose Japanese-Based Sony Corporation Builds and Operates a New Chip