Question

1. If no foreign companies produce in a country, but many of the country’s companies produce...

1. If no foreign companies produce in a country, but many of the country’s companies produce abroad, then it is probably true that

a. the country’s GNP exceeds its GDP.

b. the country’s GDP exceeds its GNP.

c. the country’s GNP and GDP are equal.

d. the country’s GDP equals its domestic income

2. Nominal GDP is calculated using a constant set of prices from a base year. __________ (True/False)

3. If a country is experiencing inflation, nominal GDP is always greater than real GDP. __________ (True/False)

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Answer #1

ANS 1

Option a. the country’s GNP exceeds its GDP. as if none of the companies from the abroad will produce in the country and many of the country's companies produce in the abroad then the national income will rise due to increase in the income of companies of country producing in abroad and as many of country's company produce in abroad so GNP will be greater than GDP .

ANS 2

False. As the nominal GDP is calculated using the prices of current year and real GDP is calculated using the prices of base year.

ANS 3

True, If a country is experiencing inflation, nominal GDP is always greater than real GDP as the nominal GDP will be affected by the increase in price due to inflation because of which it will be greater than real GDP.

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