A country that makes large net income payments to investors in another country is likely to:
Correct answer: A. Have a large GDP than GNP
- A. Have a large GDP than GNP
- B. Grow slower economically than the other country
- C. Grow faster economically than the other country
- D. Have smaller GDP than GNP
Explanation
Net income payments to foreign investors are factor-income outflows, so domestic production measured by GDP exceeds the income accruing to the country’s residents measured by GNP. Therefore, GDP is larger than GNP.
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