Economists use gross national product (GNP) to measure
A economic output within a nation, regardless of ownership
B the output of foreign-owned businesses within a nation.
C the output of a nation’s citizens, regardless of where they are
D any business activity taking place outside a country
The correct answer and explanation is :
The correct answer is C: the output of a nation’s citizens, regardless of where they are.
Explanation:
Gross National Product (GNP) is a measure used by economists to evaluate the economic output of a nation’s citizens, regardless of where they are located in the world. GNP includes the total market value of all goods and services produced by the residents of a country in a given period, typically one year. This means that it takes into account the production of goods and services both within the country and abroad, but only if the production is by a nation’s residents or businesses.
GNP differs from Gross Domestic Product (GDP), which measures the total market value of all goods and services produced within a country, regardless of who owns the means of production. For example, if a foreign-owned company operates in the U.S., its output contributes to the U.S.’s GDP but not to its GNP. However, if an American company operates overseas, the output contributes to the GNP of the United States because it is produced by American citizens or companies.
To further clarify, GNP accounts for the income earned by citizens from overseas investments and businesses. This means that if a U.S. company earns profits in another country, those profits are added to the U.S. GNP, even though they were not generated within the U.S. Conversely, if foreign citizens or businesses earn income within the U.S., that income is excluded from the U.S. GNP but is included in the U.S. GDP.
In summary, GNP is an important indicator for understanding the economic activities and the global reach of a country’s citizens and companies. It provides insight into the total economic contributions made by a nation’s residents, irrespective of geographical location, which is essential for assessing national economic health and determining policy needs.