Real-Time Data Analysis Exercise The following table contains Gross Domestic Product (GDP) and Gross National Product (GNP) from FRED for the first quarter of 2024. link [table]
Title | Value Gross Domestic Product | $28,624.069 billion Gross National Product | $28,706.261 billion
[/table] Since GNP exceeds GDP, it can be concluded that foreign production by U.S. firms Blank 1 Question 28[select: , is exceeded by, exceeds] U.S. production by foreign firms. For countries having a significant fraction of domestic production occurring in foreign-owned facilities, the GDP will likely Blank 2 Question 28[select: , be exceeded by, exceed] GNP.

Question

BlackTom AI · Accepted Answer

The prompt presents a two-blank, real-time data analysis question based on GDP and GNP figures. It asks us to choose the appropriate verb phrases to complete each sentence.

Blank 1: 'Since GNP exceeds GDP, it can be concluded that foreign production by U.S. firms ____ U.S. production by foreign firms.' The correct term here is 'exceeds.' The logic is that GNP includes the output produced by a country's residents anywhere in the world, whereas GDP includes output produced within the country’s borders regardless of ownership. If GNP is larger, it means U.S. residents are, on balance, producing more abroad than foreigners are producing domestically by U.S. firms. Therefore, foreign production by U.S. firms exceeds or surpasses U.S. production by foreign firms? Wait, the comparison is between 'foreign production by U.S. firms' and 'U.S. production by foreign firms.' A larger GNP implies the production by U.S. residents abroad (foreign production by U.S. firms) is greater than the production by foreign firms domestically, so the correct relational verb is 'exceeds' to indicate that foreign production by U.S. firms exceeds (is greater than) U.S. production by foreign firms. This matches the supplied answer choice 'exceeds.'

Blank 2: 'For countries having a significant fraction of domestic production occurring in foreign-owned facilities, the GDP will likely ____ GNP.' Here, GDP measures domestic production within the country’s borders, while GNP includes the output of the country’s residents regardless of where it’s produced. If a large portion of domestic production happens in foreign-owned facilities, that output still counts toward GDP (since it occurs domestically) but may be attributed to foreign ownership in GNP terms, reducing the residents’ income captured abroad. In this case, GDP tends to be higher than GNP, which means GDP will likely 'exceed' GNP. Thus the appropriate choice is 'exceed.' The other option 'be exceeded by' would imply GDP is smaller than GNP, which is not the typical implication when significant domestic production is foreign-owned.

To summarize the reasoning steps:
- Recognize that GNP > GDP implies more production by nationals abroad than by foreigners domestically; hence 'exceeds' is the correct relation for Blank 1.
- Recognize that substantial domestic production in foreign-owned facilities makes GDP larger than GNP, so GDP will likely 'exceed' GNP for Blank 2.

These interpretations align with standard national income accounting definitions of GDP and GNP and their relationship when ownership and location of production differ.

_ECON1220_2024 HW1 (due 10 pm on Wed Feb 19)

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