Measuring Economic Activity and Illustrating Its Variations · Paper 2 — Free Economics HL Practice Questions

Country X and Country Y are two neighbouring economies. In 2022, Country X reported a Gross Domestic Product (GDP) of USD 500 billion and a Gross National Product (GNP) of USD 480 billion. Country Y reported a GDP of USD 300 billion and a GNP of USD 320 billion. Both countries have significant foreign direct investment (FDI) flows and migrant worker remittances. Economists are also debating whether Net National Product (NNP) is a more useful welfare measure than GDP, given that Country X has a high rate of capital depreciation due to its manufacturing-intensive economy. $$\text{GNP} = \text{GDP} + \text{net property income from abroad}$$ $$\text{NNP} = \text{GNP} - \text{depreciation}$$

Vietnam reported a Gross Domestic Product (GDP) of approximately USD 430 billion in 2023. A significant portion of Vietnam's national output is generated by foreign-owned factories (e.g., Samsung and LG electronics assembly plants) that repatriate profits to their home countries. Meanwhile, many Vietnamese citizens work abroad (e.g., in South Korea and Japan) and send remittances home. Vietnam's Gross National Product (GNP) was estimated at USD 400 billion in the same year. The depreciation of Vietnam's capital stock (machinery and infrastructure) was valued at USD 30 billion.