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

---

Definitions:

After-Tax Income

The amount of income left to an individual or business after all federal, state, and local taxes have been applied.

Consumption

The process by which goods and services are used up or utilized by individuals or entities.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage.

Investment

The allocation of resources, typically money, into assets with the expectation of generating income or profit in the future.