The present value of GDP:
A) equals GNE.
B) equals GNE only when the country begins with positive initial wealth.
C) equals GNE only when the country begins with negative initial wealth.
D) plus the present value of initial wealth must equal the present value of GNE.

Question

Quizplus · Accepted Answer

The present value of GDP plus the present value of initial wealth must equal the present value of GNE, according to the definition of GNE as the total value of goods and services produced by a country's residents, regardless of where the resources are located. This is because initial wealth (assets or liabilities) affects the ability of residents to consume or invest, which ultimately affects the level of GNE. Therefore, to accurately measure the present value of GNE, initial wealth must also be taken into account.

The Present Value of GDP