Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
Gross National Income (GNI)
B
Net Domestic Product (NDP)
C
Gross National Product (GNP)
D
Per Capita Income (PCI)
Understanding the Answer
Let's break down why this is correct
Answer
Countries are classified into income categories based on their economic productivity by looking at their Gross Domestic Product (GDP) and Gross National Income (GNI). GDP measures the total value of goods and services produced within a country, while GNI includes the income earned by residents from abroad, such as investments or wages. This means that GNI gives a fuller picture of the economic well-being of a country's citizens. For example, if a country has a high GDP but many of its citizens work overseas and send money back home, its GNI will show a different and often higher income level than GDP alone suggests. By using both metrics, we can better understand the true economic situation and living standards of people in different countries.
Detailed Explanation
GNI measures the total income of a country's residents, including money earned from abroad. Other options are incorrect because NDP focuses only on the value of goods produced in a country after subtracting depreciation; GNP measures the total value of goods and services produced by residents, but it is an older term and not as commonly used as GNI today.
Key Concepts
Economic productivity classification
Gross Domestic Product (GDP)
Gross National Income (GNI)
Topic
Economic Productivity Classification
Difficulty
hard level question
Cognitive Level
understand
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