Economics • Economic BasicsEasy
In macroeconomic accounting, what does 'Gross National Product (GNP)' include that 'Gross Domestic Product (GDP)' excludes?
A. Depreciation of capital assets within domestic borders.
B. Net factor income from abroad earned by residents.✓ Correct Answer
C. Indirect taxes minus subsidies on production.
D. Government transfer payments to households.
💡 Solution & Explanation
Gross National Product includes net factor income from abroad earned by a country's residents, which is explicitly excluded in Gross Domestic Product calculations that strictly measure domestic territory production. Other choices regarding capital depreciation or indirect taxes apply equally or differently depending on whether the aggregate is measured at market prices or factor cost. This metric helps economists analyze the global earnings of a nation's populace.
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