Answer to Question #133822 in Macroeconomics for Syed Hasnat Ali

Question

Q4: State why each of the following statements is true or false:
1. If the value of output by citizens outside the country is greater than the value of output by foreigners inside the country GNP will be less than GDP.
2. GNP may equal GDP.
3. GDP is the best measure of economic welfare.

Answer 1

1.If the value of output by citizens outside the country is greater than the value of output by foreigners inside the country GNP will be less than GDP.False

GNP= GDP $+$ National product outside the country $-$ Foreign product inside the country .

2.GNP may equal GDP True

This may happen in case the citizens of a country were limited to domestic sources of income

3.GDP is the best measure of economic welfare.False

Some items that contribute to a good life are left out when calculating GDP i.e Leisure.