Multiple Choice
GDP per capita means that GDP is calculated per:
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10. Measuring National Output and Income
Other Measures of Total Production and Total Income
Multiple Choice
In national income accounting, how is gross national product (GNP) different from gross domestic product (GDP)?
A
GNP includes only goods production while GDP includes both goods and services production.
B
GNP measures production by a country’s residents (nationals) regardless of where it occurs, while GDP measures production within a country’s borders regardless of who produces it.
C
GNP measures production within a country’s borders, while GDP measures production by a country’s residents regardless of where it occurs.
D
GNP excludes depreciation (capital consumption allowance) while GDP includes depreciation.
Verified step by step guidance1
Step 1: Understand the definitions of GDP and GNP. Gross Domestic Product (GDP) measures the total value of all goods and services produced within a country's borders during a specific time period.
Step 2: Recognize that Gross National Product (GNP) measures the total value of all goods and services produced by the residents (nationals) of a country, regardless of where they are located in the world.
Step 3: Identify the key difference: GDP focuses on location of production (within the country), while GNP focuses on ownership or nationality of the producers (residents of the country).
Step 4: Note that both GDP and GNP include goods and services production, so the distinction is not about goods versus services.
Step 5: Understand that depreciation (capital consumption allowance) is not the distinguishing factor between GDP and GNP; both can be measured gross or net of depreciation.
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