Question

4. For each of the following state whether this item would be included in the United States GDP in 2018, the United States GNP in 2018, both the US GDP and GNP, or neither. You may just circle or highlight the answer.

a. A BMW (a German company) produced in a plant in South Carolina. Only GDP Only GNP Both GDP and GNP Neither

b. Soybeans produced by American farmers in Iowa sent to consumers in China. Only GDP Only GNP Both GDP and GNP Neither

c. An air conditioner produced by Carrier (an American manufacturer) in a plant in Mexico and sold in Mexico. Only GDP Only GNP Both GDP and GNP Neither

d. A concert performed by Nickelback (a Canadian band) in Los Angeles. Only GDP Only GNP Both GDP and GNP Neither

e. High fructose corn syrup produced by an American producer sold to Coca-Cola (an American company) to be used in their products. Only GDP Only GNP Both GDP and GNP Neither

Answer 1

Q4. A. GDP

As the good is produced in USA hence it will be included in the calculation of USA GDP.

B. GDP

As soyabeans are [roduced in USA hence the item will be included in USA GDP

C. GNP

As Carrier is a USA based firm hence irrespective of where it produces, the value of its production will be included in USA GNP

D. Both GDP and GNP

As the services (Concert) of Nickelback are provided in USA only, hence it is a case of Closed economy. In a closed economy GDP = GNP