When Would an Economist Focus on GNP Rather Than GDP

question 19

Multiple Choice

When would an economist focus on GNP rather than GDP?

• A) When the economist wants a more accurate measure of production, since GNP data are typically much more precise than GDP data
• B) When the economist wants to study consumption, since consumption expenditures are weighted more heavily in GNP than in GDP
• C) When the economist wants to measure total income earned or total amount of factors of production supplied by the residents of a country
• D) When the economist wants a measure of output that includes depreciation, because GDP omits depreciation in its calculations

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Definitions:

Economic Events

Transactions and occurrences that affect the financial position of a business entity.

Basic Accounting Equation

Represents the foundation of double-entry bookkeeping, stating that assets equal liabilities plus equity.

Assets

Resources owned by a business that are expected to provide future economic benefits.

Liabilities

Financial obligations or debts that a company owes to others, which must be settled over time through the transfer of economic benefits including money, goods, or services.