With reference to the ldquo Gross National Product GNP rdquo consider the following statements 1 It ...........

Economic Affairs Development and Indicators

With reference to the “Gross National Product (GNP)”, consider the following statements:

1.It includes income earned within the domestic economy by foreign residents.

2.If a country has many multinationals that repatriate income from local production, then GNP will be lower than Gross Domestic Production.

Which of the statements given above is/are correct?

1 only

2 only

Both 1 and 2

Neither 1 nor 2

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Explanation:

2 only

The first statement is incorrect. Gross National Product (GNP) includes income earned by the country's residents regardless of whether it's earned domestically or abroad, and it excludes income earned within the domestic economy by foreign residents. It reflects the total economic output produced by a country's residents, regardless of where they are located.

The second statement is correct. If a country has many multinational corporations that repatriate income from local production (i.e., profits earned domestically but sent back to the multinational's home country), then GNP will indeed be lower than Gross Domestic Product (GDP). GNP takes into account the income earned by a country's residents, regardless of where it is earned, while GDP measures the total value of goods and services produced within the country's borders.

Therefore, only statement 2 is correct.