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 distinct yet linked economic indicators. Their sum is never zero. Primary Distinction: \[\text{GNP} = \text{GDP} + \text{Net Factor Income from Abroad (NFIA)}\]- A positive NFIA results in GNP exceeding GDP.- A negative NFIA leads to GNP being less than GDP.- Zero NFIA means GNP equals GDP.Therefore, option (D) is erroneous because the sum of GDP and GNP is contingent on NFIA, not necessarily zero.