If a Japanese company opens a new factory in South Korea,it makes
A)foreign direct investment.The factory will make a bigger impact on South Korea's GDP than on its GNP.
B)foreign direct investment.The factory will make a bigger impact on South Korea's GNP than on its GDP.
C)foreign portfolio investment.The factory will make a bigger impact on South Korea's GDP than on its GNP.
D)foreign portfolio investment.The factory will make a bigger impact on South Korea's GNP than on its GDP.

Question

Quizplus · Accepted Answer

When a Japanese company opens a new factory in South Korea, it is making foreign direct investment. This investment will have a bigger impact on South Korea's GDP (gross domestic product) than on its GNP (gross national product), as the factory's production and economic activities will be included in South Korea's GDP but not in its GNP. GNP includes income earned by South Korean citizens and companies located outside the country.

If a Japanese Company Opens a New Factory in South