Answer to Question #123849 in Macroeconomics for Samuel

Question

What is the difference between gross domestic (GDP) and gross national product (GNP) and which is likely to be lower in developing countries? Why?

Answer 1

The gross domestic product (GDP) is the monetary value of all the final goods and services produced within the borders of a country.

The gross national product (GNP) is equal to the GDP plus the net income from foreign investments.

Thus, the difference between the GDP and the GNP is clear in that the GNP includes the foreign net income.

GDP is likely to be lower in developing countries since they have low foreign investment income.