The Value of GDP Differs from the Value of GNP

question 89

Multiple Choice

The value of GDP differs from the value of GNP because:

• A) net exports are excluded from GDP but included in GNP.
• B) production in a country usually employs factors of production owned by residents of other countries.
• C) production in a country employs only factors of production owned by its residents.
• D) government purchases are excluded from GDP but included in GNP.

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Definitions:

Risk-free Rate of Return

The theoretical return on an investment with zero risk, typically based on government bonds.

Time Value

The idea that having money presently is more valuable than possessing an identical sum later on because of its capacity to generate earnings.

Systematic Risk

The risk inherent to the entire market or market segment, also known as market risk, which cannot be mitigated through diversification.

Diversification

The process of allocating investments among various financial assets to reduce risk and improve potential returns.