Question

Identify which of the following statements is incorrect with reference to an economy.

• A. Excess of Gross National Product (GNP) over Gross Domestic Product (GDP) is possible.
• B. Excess of Gross Domestic Product (GDP) over Gross National Product (GNP) is possible.
• C. Equality between Gross National Product (GNP) and Gross Domestic Product (GDP) is possible.
• D. Sum of Gross National Product (GNP) and Gross Domestic Product (GDP) is always equal to zero (0).

Hint:

GDP measures income generated within a country, while GNP includes net income from abroad.

Answer 1

The Correct Option is D

Gross National Product (GNP) and Gross Domestic Product (GDP) are related, but their sum cannot be zero. Key Difference: \[ \text{GNP} = \text{GDP} + \text{Net Factor Income from Abroad (NFIA)} \] - If NFIA is positive, GNP will be greater than GDP. - If NFIA is negative, GNP will be less than GDP. - If NFIA is zero, GNP will be equal to GDP. Thus, option (D) is incorrect, as the sum of GDP and GNP is not necessarily zero but depends on NFIA.