01-21-2008, 12:13 PM
For the moderator's info, there seems to be contradictory information in flashcard 50 of 60 for "Money and Macroeconomic Activity": (Money and Banking)
Should be GNP not GDP.
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Includes. GNP includes earnings of domestic residents overseas from domestic production; in other words, U.S. citizens working overseas would be included. On the other hand, GDP excludes earnings from domestic residents overseas but includes foreign residents' earnings from domestic production.
For instance, in GNP, a German factory in the U.S. would count towards German GNP. The income for the German workers in that factory would also count towards German GDP, but the American workers in that factory would be added to the U.S. GDP.
With GDP, income is counted according to where it is earned rather than who owns the factors of production. In the above example, all of the income from the car factory would be counted as U.S. GDP rather than German GDP--even though those German workers will be taking their money back to Germany.
From above: "The income for the German workers in that factory would also count towards German GDP, but the American workers in that factory would be added to the U.S. GDP." From my understanding, this should state,
"The income for the German workers in that factory would also count towards German GNP, but the American workers in that factory would be added to the U.S. GDP.
Please correct me if I am mistaken. Thanks.
Should be GNP not GDP.
==============================
Includes. GNP includes earnings of domestic residents overseas from domestic production; in other words, U.S. citizens working overseas would be included. On the other hand, GDP excludes earnings from domestic residents overseas but includes foreign residents' earnings from domestic production.
For instance, in GNP, a German factory in the U.S. would count towards German GNP. The income for the German workers in that factory would also count towards German GDP, but the American workers in that factory would be added to the U.S. GDP.
With GDP, income is counted according to where it is earned rather than who owns the factors of production. In the above example, all of the income from the car factory would be counted as U.S. GDP rather than German GDP--even though those German workers will be taking their money back to Germany.
From above: "The income for the German workers in that factory would also count towards German GDP, but the American workers in that factory would be added to the U.S. GDP." From my understanding, this should state,
"The income for the German workers in that factory would also count towards German GNP, but the American workers in that factory would be added to the U.S. GDP.
Please correct me if I am mistaken. Thanks.
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