Suppose Japanese-based Toshiba Corporation builds and operates a new computer factory in the United States. Future production from such an investment will
A)increase U.S.GNP more than it increases U.S.GDP.
B)increase U.S.GDP more than it increases U.S.GNP.
C)have no affect on U.S.GNP, but will increase U.S.GDP.
D)have no affect on U.S.GNP or GDP.

Question

Quizplus · Accepted Answer

Gross Domestic Product (GDP) measures the value of goods and services produced within a country's borders, while Gross National Product (GNP) measures the value of goods and services produced by the residents of a country, regardless of where they produce them. Since Toshiba is a Japanese company, the production from its factory in the U.S. will increase U.S. GDP because the production occurs within the U.S. However, it will not increase U.S. GNP as much because the profits from the factory are likely to be repatriated to Japan, benefiting Japanese nationals more than U.S. nationals.

Suppose Japanese-Based Toshiba Corporation Builds and Operates a New Computer