Question

If a Japanese citizen owns an apartment in India, then the rental income that she earns from that apartment is part of

• A. India’s GDP but not part of India’s GNP
• B. both India’s GDP and GNP
• C. India’s GNP but not part of India’s GDP
• D. neither GNP nor GDP of India

Hint:

Remember: GDP includes income generated within the country’s borders, while GNP includes income generated by the country’s residents, regardless of location.

Answer 1

The Correct Option is A

Step 1: Understand the difference between GDP and GNP.
Gross Domestic Product (GDP) measures the value of goods and services produced within a country’s borders, regardless of who owns the productive assets. On the other hand, Gross National Product (GNP) accounts for the value produced by the residents of a country, including their income from assets abroad.
Step 2: Identify the impact of foreign ownership.
The rental income earned by a foreign citizen (in this case, a Japanese citizen) from property located in India is considered part of India’s GDP because it is income generated within the country’s borders, even though the owner is not a resident. However, this income is not part of India’s GNP because GNP includes income earned by Indian residents abroad, not foreign residents within India.
Thus, the rental income is part of India’s GDP but not part of India’s GNP.
Final Answer: \[ \boxed{\text{India’s GDP but not part of India’s GNP}} \]