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    Question

    Which of the following statements accurately differentiates between Gross Domestic Product (GDP) and Gross National Product (GNP)?

    A GDP measures the total value of goods and services produced within a country's borders, while GNP measures the total value of goods and services produced by a country's residents, regardless of location. Correct Answer Incorrect Answer
    B GDP includes net factor income from abroad (NFIA), while GNP excludes NFIA. Correct Answer Incorrect Answer
    C GDP is calculated at factor cost, while GNP is calculated at market prices. Correct Answer Incorrect Answer
    D GDP is a better measure of a country's economic well-being than GNP. Correct Answer Incorrect Answer
    E GNP is a more comprehensive measure of a country's economic activity than GDP. Correct Answer Incorrect Answer

    Solution

    GDP focuses on the geographical location of production, while GNP focuses on the ownership of production. GNP includes the income earned by a country's residents from their overseas investments and excludes the income earned by foreigners within the country's borders.

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