Why would the opening of a new Canadian-owned factory in Egypt tend to increase Egypt's GDP more than it increases Egypt's GNP?
A) Some of the income from the factory accrues to people who live in Egypt.
B) GDP is income earned by residents only, whereas GNP is income earned by residents and non-residents.
C) All of the income from the factory is included in Egypt's GDP, but not all is included in GNP.
D) Foreign direct investment is part of GDP, but it is not part of GNP.

Question

Quizplus · Accepted Answer

GDP measures the total value of all goods and services produced within a country's borders, including the output of foreign-owned businesses, whereas GNP measures the total income earned by a country's residents and businesses, regardless of where it is produced. Since the factory is in Egypt, all its production contributes to Egypt's GDP. However, because the factory is Canadian-owned, a portion of the income (like profits repatriated to Canada) would not be included in Egypt's GNP.

Why Would the Opening of a New Canadian-Owned Factory in Egypt