When Toyota constructs a manufacturing facility in northern England ?
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Answer: D. once the plant starts producing cars UK GDP will rise more than UK GNP
Explanation
Production inside the UK by a foreign firm contributes directly to UK Gross Domestic Product statistics. However, a portion of the profits earned by Toyota flows back to Japanese investors as foreign income. Because GNP subtracts net factor payments abroad, GDP rises by more than GNP in this scenario. Gross Domestic Product measures total economic output produced within a country's physical borders. Gross National Product measures income earned by a nation's permanent residents regardless of location. Foreign-owned factories boost domestic production metrics while sending dividend payments overseas.
Developing nations often experience significant divergence between GDP and GNP due to foreign investment. Economists analyze both metrics to understand domestic job creation versus retained national income. Automotive manufacturing plants generate substantial local employment and tax revenue within host regions. None of these answers is incorrect because a valid economic outcome is provided in the choices. Foreign portfolio investment involves buying stocks and bonds rather than constructing physical manufacturing plants. GNP rising more than GDP would occur if domestic citizens earned more abroad than foreigners earned locally.
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Answer: D. Selling another unit will increase average revenue
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