EC208_HW1PartB.docx - B1 The difference between GDP and GNP...

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B1) The difference between GDP and GNP is that GDP measures the output procued within the country without considering the owner’s nation, GNP measures the output produced by a country’s citizens without considering where it is produced. In a closed economy GDP and GNP theoritecially will be the same. However, this scenario is not realistic. Inflows and outflows make a country’s GDP and GNP different. If inflows > outflows, GNP will be higher than GDP. It outflows > inflows, GDP will be higher than GNP. The difference between current account balance and trade balance is that trade of balance measures the difference between imports and exports of merchandise goods while current account balance also takes the difference between imports and exports of services into account. Trade balance is usually the largest portion of current account balance. B2) a) Curent account, financial account, and cappital accound don’t add up to zero. To maket his

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