The difference between the gross domestic product (GDP) and gross national product (GNP) is?

A. depreciation
B. transfer payment
C. net income from abroad
D. direct taxes

Correct Answer: Option C

C. net income from abroad

Explanation

The most important distinguishing point between these two is that while we calculate GDP, we take into consideration whatever is produced within the local borders of the country and so it includes the goods and services produced by the foreign nationals also but if we talk about GNP, only the production done by the country’s citizens is considered whether they are inside or outside the country and the contribution of foreign citizens are completely excluded.

Net income from abroad is income earned by ANY person {including Artificial} i.e citizen of that country, earned even outside political boundaries i.e land + 20 nautical miles of water. This is GNP. Income earned by anyone {including foreign citizen} within the country is GDP.