Question

State whether the following is True or False. Give a reason.

In a closed economy, GDP is always equal to GNP.

Answer 1

This statement is true.

Explanation:

When an economy is closed, there are no exports, imports, or capital from other countries. There is no Net Factor Income from Abroad (NFIA), so Gross Domestic Product (GDP) and Gross National Product (GNP) are the same.