Suppose a U.S.automaker builds and operates a new factory in Italy.Future production from such an investment will
A)increase Italian GDP more than it increases Italian GNP.
B)increase Italian GNP more than it increases Italian GDP.
C)have no affect on Italian GNP,but will increase Italian GDP.
D)have no affect on either Italian GDP or GNP.

Question

Quizplus · Accepted Answer

The production from the U.S. automaker's factory in Italy will contribute to Italian GDP because it is produced within Italy's borders. However, it will not contribute to Italian GNP, as GNP accounts for the value of goods and services produced by a country's nationals, regardless of where they are located.