What does gross national product (GNP) include beyond GDP?

What does gross national product (GNP) include beyond GDP?

• A. The revenues from local businesses only
• B. Earnings of non-resident sources sent back to the country
• C. Only domestic income generated from tourism
• D. The costs associated with foreign investments

Answer: (B)

Gross National Product (GNP) extends beyond Gross Domestic Product (GDP) by accounting for the earnings of residents from investments and work abroad, as well as any monetary flow that comes back into the country from these foreign sources. Thus, GNP incorporates the net earnings of residents from non-resident sources, meaning any income earned by citizens or entities in foreign countries is included, minus the income earned by foreign entities in the domestic economy. This is why the correct response emphasizes the importance of these earnings being sent back home, reflecting the broader economic reach of the nation’s citizens and businesses. In contrast to the other options, which do not accurately represent what GNP encompasses: - Focusing solely on revenues from local businesses neglects the international dimension that GNP includes. - Mentioning tourism income only encompasses a specific sector and does not reflect the full range of income that can influence GNP. - Cost considerations of foreign investments aren't directly part of GNP calculations; rather, GNP is about measuring income received rather than the costs incurred. This comprehensive view of GNP highlights its role in understanding a country's economic performance in relation to both domestic and international activities.

Gross National Product (GNP) extends beyond Gross Domestic Product (GDP) by accounting for the earnings of residents from investments and work abroad, as well as any monetary flow that comes back into the country from these foreign sources. Thus, GNP incorporates the net earnings of residents from non-resident sources, meaning any income earned by citizens or entities in foreign countries is included, minus the income earned by foreign entities in the domestic economy. This is why the correct response emphasizes the importance of these earnings being sent back home, reflecting the broader economic reach of the nation’s citizens and businesses.

In contrast to the other options, which do not accurately represent what GNP encompasses:

• Focusing solely on revenues from local businesses neglects the international dimension that GNP includes.

• Mentioning tourism income only encompasses a specific sector and does not reflect the full range of income that can influence GNP.

• Cost considerations of foreign investments aren't directly part of GNP calculations; rather, GNP is about measuring income received rather than the costs incurred.

This comprehensive view of GNP highlights its role in understanding a country's economic performance in relation to both domestic and international activities.