Test 3 - Medeiros 1 Test 3 Sofia Medeiros Dr. Mbah BUS 370...

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Medeiros 1 Test 3 Sofia Medeiros Dr. Mbah BUS 370 4 th April, 2009
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Medeiros 2 1- Discuss the benefits and implications of using GNI, GDP per capita as a measure of a nation’s economic growth and development? The Gross National Income (GNI) comprises the total value produced within a country (i.e. its Gross Domestic Product ), together with its income received from other countries similar payments made to other countries. The GNI consists of: the personal consumption expenditures, the gross private investment, the government consumption expenditures, the net income from assets abroad, and the gross exports of goods and services, after deducting two components: the gross imports of goods and services, and the indirect business taxes . The GNI is similar to the Gross National Product (GNP), except that in measuring the GNP one does not deduct the indirect business taxes. The gross domestic product (GDP) is one of the measures of national income and output for a given country 's economy . It is the total value of all final goods and services produced in a particular economy; the dollar value of all goods and services produced within a country’s borders in a given year. Both GDP and GNI can measure a nation’s economic growth and development, but we must be careful when reading these indicators, as in some cases reading these tables can be muddle. Take Luxembourg’s GDP per head as an example. It has been at the top of the OECD (Organization for Economic Co-operation and Development) rankings for several years now, well ahead of other countries, including the US. To explain the large lead, statisticians point to the 90,000-strong labor force commuting across the border everyday from Germany, France, Belgium and the Netherlands, often to work in lucrative financial services. These workers are not counted as part of Luxembourg’s population of 450,000. If they were added to this number, then overall GDP per head would be smaller. (http://www.oecdobserver.org)
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Medeiros 3 Ireland is another country where GDP has to be read with care. Ireland's position has risen up the GDP per head rankings since 1999, and is now in the top five countries in the OECD (http://www.oecdobserver.org). This remarkable transformation has been put down to a mix of factors, of which inward investment in high value-added businesses is one. But does GDP per head accurately reflects Ireland’s actual wealth, since all that inward investment (and foreign labor) generates profits and other revenues, some of which inevitably flows back to the countries of origin? As we can see, there are several different situations of countries where you have to consider some other aspects before examine the benefits of GDP’s analysis. At the same time, the Gross National Income, accounts for these flows in and out of the country. For many countries, the flows tend to balance out, leaving little difference between GDP and GNI. But not so for Ireland, as outflows of profits and income, largely from global business giants located
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Test 3 - Medeiros 1 Test 3 Sofia Medeiros Dr. Mbah BUS 370...

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