Read the two statements and choose the correct option.
I. In a closed economy, GDP equals GNP.
II. When NFIA is zero, domestic income equals national income.

Only ICorrect answerYour answerOnly IICorrect answerYour answerBoth I and IICorrect answerYour answerNeither I nor IICorrect answerYour answer

Show the answer and explanation

CorrectNot quiteAnswer C

Correct answer: C

A closed economy has no factor incomes crossing its borders, so NFIA = 0 and GDP = GNP. I is true.
NNP at FC = NDP at FC + NFIA, so with NFIA = 0 they are equal. II is true.

Ten questions from National Income Aggregates & GDP, at your own pace.

Ten questions from National Income Aggregates & GDP, at your own pace.

Read the two statements and choose the correct option.I. In a closed economy, GDP equals GNP.II. When NFIA is zero, domestic income equals national income.