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Unformatted text preview: of pens is $4 each,
the price of shirts is $30
each, and the price of
radios is $35 each. What
is GDP for the economy?
3. Why are only final goods
and services computed
in GDP? 292 Chapter 11 Measuring Economic Performance national income, or GNI, instead of gross
national product, GNP.)
What is the difference between GDP and
GNP? GNP measures the total market value
of final goods and services produced by U.S.
citizens, no matter where in the world they
reside. GDP, in contrast, is the total market
value of final goods and services produced
within the borders of the United States, no
matter who produces them.
Suppose a U.S. citizen owns a business in
Japan. The value of the output she is producing in Japan is counted in GNP because
she is a U.S. citizen, but it is not counted in
GDP because it was not produced within
the borders of the United States. Now suppose a Canadian citizen is producing goods
in the United States. The value of his output
is not counted in GNP because he is not a
U.S. citizen, bu...
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- Winter '14