Questions: A Japanese automaker produces 1 million worth of automobiles in its factory in the United States. How much of that is added to the GNP of the United States?
none
250,000
1 million
500,000
Transcript text: A Japanese automaker produces $\$ 1$ million worth of automobiles in its factory in the United States. How much of that is added to the GNP of the United States?
none
$\$ 250,000$
\$1 million
$\$ 500,000$
Solution
The answer is none: the original text in the question...
Explanation:
Gross National Product (GNP) measures the total economic output produced by the residents of a country, regardless of where that production takes place. It includes the value of goods and services produced by a country's residents and businesses, both domestically and abroad.
In this scenario, a Japanese automaker produces $1 million worth of automobiles in its factory located in the United States. Since the production is taking place within the United States, it contributes to the U.S. Gross Domestic Product (GDP), not the GNP. The GNP of the United States would only include this production if it were carried out by U.S. residents or businesses, regardless of the location.
Therefore, none of the $1 million is added to the GNP of the United States because the production is by a foreign company, not by U.S. residents or businesses.