Why is Gross National Product (GNP) called a national aggregate?
Answer and explanation
Correct answer: Because it represents the value of final goods and services produced by normal residents, whether production occurs within the country or abroad
GNP is called a national aggregate because it follows the normal-resident concept. It measures the value of final goods and services produced by a country’s normal residents, wherever production takes place. Its relationship with GDP is GNP = GDP + NFIA. Option B describes GDP, which is based on domestic territory rather than residence.
Frequently asked questions
What is the correct answer to this question?
Because it represents the value of final goods and services produced by normal residents, whether production occurs within the country or abroad
Why is this the correct answer?
GNP is called a national aggregate because it follows the normal-resident concept. It measures the value of final goods and services produced by a country’s normal residents, wherever production takes place. Its relationship with GDP is GNP = GDP + NFIA. Option B describes GDP, which is based on domestic territory rather than residence.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - GNP.
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