If the value of the output generated by a country's factors of production within the borders of foreign countries is higher than the value of the output generated by foreign factors of production within its borders,________.
A) the GDP of the country is higher than its GNP
B) the GDP of the country is lower than its GNP
C) the GDP of the country equals its GNP
D) the GDP of the country equals its trade balance

Question

Quizplus · Accepted Answer

This situation describes a trade deficit, where the value of imports (output generated by foreign factors of production within its borders) exceeds the value of exports (output generated by the country's factors of production within the borders of foreign countries). This means that the GDP of the country is lower than its GNP, as the GNP includes income generated by its factors of production regardless of their location.

If the Value of the Output Generated by a Country's