An Example of How GNP Accounts for Services Provided by Foreign-Owned

question 23

Multiple Choice

An example of how GNP accounts for services provided by foreign-owned capital (and GDP does not) is

• A) earnings of a Spanish factory with British owners counts only in Spain's GDP.
• B) earnings of a Spanish factory with British owners counts only in Britain's GNP.
• C) earnings of a Spanish factory counts in Spain's GNP but are part of Britain's GDP.
• D) earnings of a Spanish factory counts in Spain's GDP but are part of Britain's GNP.
• E) earnings of a Spanish factory counts in Spain's GNP but not in Britain's GDP or GNP.

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Definitions:

Consumer Equilibrium

A state where a consumer has allocated their income in a way that maximizes their utility, given the prices of goods and services.

Total Utility

The complete satisfaction or happiness a consumer derives from consuming a particular quantity of goods or services.

Consumer Equilibrium

A state where a consumer has allocated their income in a way that maximizes their utility, given their budget constraints and the prices of goods and services.

Total Utility

The entire satisfaction or pleasure a consumer obtains from consuming a given quantity of goods or services.