Why does GDP, taken on its own, fail to capture the total income generated for a country's own citizens when a significant share of domestic production is carried out by foreign-owned firms that repatriate their profits abroad?
A.
Because GDP automatically excludes all foreign-owned firms from its calculation
B.
Because GDP is calculated only once every ten years
C.
Because GDP only measures the income of government employees
D.
Because GDP only measures output produced within domestic territory, without distinguishing how much of the resulting income is retained by domestic residents versus sent abroad to foreign owners
D. Because GDP only measures output produced within domestic territory, without distinguishing how much of the resulting income is retained by domestic residents versus sent abroad to foreign owners
A. GNP = GDP + Net Factor Income from Abroad (NFIA)
15.
Net Factor Income from Abroad (NFIA) is best defined as:
A.
The total value of a country's exports minus its imports
B.
The total foreign direct investment received by a country in a year
C.
The total foreign exchange reserves held by a country's central bank
D.
Income earned by a country's residents from abroad (wages, rent, interest, profit) minus income earned by foreigners within that country and sent back to their home countries
D. Income earned by a country's residents from abroad (wages, rent, interest, profit) minus income earned by foreigners within that country and sent back to their home countries
16.
If a country's residents earn more in factor income from abroad than foreigners earn within that country and repatriate, then its Net Factor Income from Abroad (NFIA) is:
A.
Positive, meaning that country's GNP will be greater than its GDP
B.
Equal to that country's total population
C.
Negative, meaning that country's GNP will be smaller than its GDP
D.
Always exactly zero, regardless of the actual income flows
A. Positive, meaning that country's GNP will be greater than its GDP
17.
If foreign residents operating within a country earn and repatriate more income than that country's own residents earn from abroad, then its Net Factor Income from Abroad (NFIA) is:
A.
Positive, meaning that country's GNP will be greater than its GDP
B.
Equal to that country's total exports
C.
Negative, meaning that country's GNP will be smaller than its GDP
D.
Always exactly zero, regardless of the actual income flows
C. Negative, meaning that country's GNP will be smaller than its GDP
18.
Net Factor Income from Abroad (NFIA), used to convert GDP into GNP, is generally understood to comprise which three main components?
A.
Net government expenditure, net private investment, and net household savings
B.
Net indirect taxes, net subsidies, and net depreciation
C.
Net compensation of employees from abroad, net income from property and entrepreneurship (rent, interest, profit) from abroad, and net retained earnings of resident companies operating abroad
D.
Net exports, net imports, and net foreign exchange reserves
C. Net compensation of employees from abroad, net income from property and entrepreneurship (rent, interest, profit) from abroad, and net retained earnings of resident companies operating abroad
