Question

question 8 (1 point)
in an open economy, gross national product (gnp) is typically:

1. equal to gdp.
2. greater than gdp if net income from row is positive.
3. less than gdp if net income from row is negative.
4. unrelated to gdp.

which of the following statements is correct about the relationship between gnp and gdp?
1 and 2 only
1 and 4 only
1,2,and 3
2 and 3 only

Explanation:

To solve this, we recall the formula: \( \text{GNP} = \text{GDP} + \text{Net Income from Rest of World (ROW)} \).

• Statement 1: If net income from ROW is 0, \( \text{GNP} = \text{GDP} \), so this can be true in some cases, but not always. However, we analyze other statements.
• Statement 2: If net income from ROW (\( \text{Net}_{ROW} \)) is positive, \( \text{GNP} = \text{GDP} + \text{positive} \), so \( \text{GNP} > \text{GDP} \). This is correct.
• Statement 3: If \( \text{Net}_{ROW} \) is negative, \( \text{GNP} = \text{GDP} + \text{negative} \), so \( \text{GNP} < \text{GDP} \). This is correct.
• Statement 4: GNP and GDP are related via net income from ROW, so this is false.

Now, check the options:

• "1 and 2 only": Statement 1 is not always true (depends on net income), so eliminate.
• "1 and 4 only": Both 1 (not always) and 4 (false) are wrong. Eliminate.
• "1, 2, and 3": Statement 1 is not universally true (e.g., if net income is non - zero, GNP ≠ GDP). But wait—wait, the question says "typically". Wait, maybe the initial analysis of statement 1: In an open economy, if net income from ROW is zero (a possible case), GNP = GDP. But the key is statements 2 and 3 are conditionally correct, and statement 1 is a possible case. Wait, no—let's re - evaluate. The formula is \( \text{GNP} = \text{GDP} + \text{Net}_{ROW} \).

• Statement 1: If \( \text{Net}_{ROW} = 0 \), GNP = GDP. This is a valid case (though not always, but the options include "1, 2, and 3"). Wait, no—let's check the options again. The option "1, 2, and 3" includes statement 1 (GNP can equal GDP when net income from ROW is 0), statement 2 (GNP > GDP when net income from ROW is positive), and statement 3 (GNP < GDP when net income from ROW is negative). Statement 4 is wrong (they are related). So the correct option is the one with 1, 2, and 3.

Answer:

B. 1, 2, and 3 (assuming the option label is B; in the image, the option is "1, 2, and 3" as one of the choices)