ch13 (2) - Trade in factor services Trade in factor...

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Trade in factor services Trade in factor services occurs when one country is paid income by another, in compensation for labor, capital, and land. Example: If a foreign company builds an auto plant in the United States, then it will receive payments of profits each year. These are considered payments by the U.S. for imported capital services. A country exports factor services and receive factor income in return. Factor income includes payments for labor services (wages or salaries), payments on income from assets (dividends or interest). Some home GDP might be produced using “imported” foreign factors and some foreign GDP might be produced using “exported” home factors. International payments result (e.g., wages, rents). We must subtract factor service imports (IM FS ) and add factor service exports (EX FS ) to GDP to calculate the income received by the home nation. GNI = GDP + (EX
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ch13 (2) - Trade in factor services Trade in factor...

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