HISET Social Studies Practice

Which economic measurement includes both domestic and foreign production by residents?

1. Gross Domestic Product

2. Gross National Product

3. Net National Product

4. National Income

The correct answer is: Gross National Product

The correct choice is Gross National Product (GNP), which measures the total economic output produced by residents of a country, regardless of whether the production takes place domestically or abroad. This means it accounts for the value of goods and services produced by a nation's residents, including those generated outside the national borders. GNP is particularly significant because it helps to capture the economic activity that is attributable to the country's citizens and businesses, providing a broader perspective of a nation's economic performance. By including foreign production, it reflects the contributions of national residents to the global economy and acknowledges the interconnectedness of economies. In contrast, Gross Domestic Product (GDP) focuses solely on the production of goods and services within a country’s borders, irrespective of who produces them, thus excluding foreign contributions by resident citizens. Net National Product (NNP) builds on GNP by subtracting depreciation from the overall GNP, and National Income refers specifically to the total income earned by a nation's residents and businesses, which may not account for all production activities as GNP does.