GDP and GNP Concepts Explained

This video lecture explains the difference between GDP and GNP. GDP measures economic activity within a country's borders, while GNP includes economic activities of a country's companies abroad. An example using McDonald's in China illustrates how GDP and GNP are accounted for differently. The video also introduces GNI, which is GDP plus net property income from abroad. Key takeaways include understanding the physical location focus of GDP and the nationality focus of GNP.

What does GDP stand for?

• Global Domestic Product

• General Domestic Product

• Gross Domestic Product

• Gross Development Product

Which of the following best describes GNP?

• Economic activity within a country's borders

• Economic activity of a country's companies abroad

• Total income of a country's residents

• Net exports of a country

If an American company operates in China, where is its economic activity counted for GDP?

• In the United States' GDP

• In China's GDP

• In both the United States' and China's GDP

• In neither country's GDP

How does McDonald's profit in China affect the United States' GNP?

• It does not affect the United States' GNP

• It increases the United States' GNP

• It is counted as part of China's GNP

• It decreases the United States' GNP

What is the primary factor for GDP calculation?

• The nationality of the company

• The number of employees

• The physical location of economic activity

• The type of goods produced

What does GNP focus on in terms of company operations?

• The physical location of the company

• The nationality of the company

• The industry of the company

• The size of the company

Which of the following best summarizes the difference between GDP and GNP?

• GDP is a measure of income, while GNP is a measure of production

• GDP and GNP are identical measures of economic activity

• GDP is based on physical location, while GNP is based on the nationality of companies

• GDP includes all global economic activities, while GNP is limited to domestic activities

What additional component does GNI include that GDP does not?

• Government spending

• Domestic consumption

• Net property income from abroad

• Net exports

Which of the following is true about GNI?

• It is equal to GDP minus net property income from abroad

• It is equal to GDP plus net property income from abroad

• It excludes any foreign income

• It only includes domestic economic activities

What is the relationship between GDP and GNI?

• GNI is always greater than GDP

• GNI is unrelated to GDP

• GNI is always less than GDP

• GNI can be greater or less than GDP depending on net property income from abroad