HISET Social Studies Practice

Gross National Product (GNP) includes income from which of the following?

1. Only domestic production

2. Only foreign investments

3. Income received from abroad

4. Income from government services

The correct answer is: Income received from abroad

Gross National Product (GNP) measures the total economic output produced by a country's residents, regardless of where that production takes place. This includes not only the income generated from domestic production but also income that residents earn from investments and economic activities conducted abroad. Therefore, GNP encompasses income received from abroad, which is a key component in accounting for all economic contributions made by a nation's residents. In contrast, focusing solely on domestic production would not capture the wealth generated by citizens operating outside the country, which is why GNP goes beyond just domestic income. Similarly, only considering foreign investments would exclude the earnings that residents derive from their operations abroad. Although income from government services contributes to a country’s overall economy, it does not specifically pertain to the GNP calculation, which is more concerned with the broader financial activities of residents.