Question
The difference between GDP and GNP is due
to:Solution
GDP counts total production within domestic territory, regardless of who produces it. GNP adjusts for Net Factor Income from Abroad (NFIA) —income earned by residents abroad minus income earned domestically by non-residents. Hence, GNP = GDP + NFIA. For India, NFIA is typically negative since more foreign capital earns income domestically than Indians earn abroad. Â
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