A:

Economists use gross national product (GNP) mainly to learn about the total income of a country's residents within a given period and how the residents use their income. GNP measures the total income accruing to the residents of a country over a specified amount of time. Unlike gross domestic product (GDP), it does not take into account income accruing to non-residents within that country’s territory; like GDP, it is only a measure of productivity, and it is not intended to be used as a measure of the welfare or happiness of a country.

The Bureau of Economic Analysis (BEA) used GNP as the primary indicator of U.S. economic health until 1991. In 1991, the BEA began using GDP, which was already being used by the majority of other countries; the BEA cited easier comparison of the United States with other economies as a primary reason for the change. Although the BEA no longer relies on GNP to monitor the performance of the U.S. economy, it still provides GNP figures, which it finds useful for analyzing the income of U.S. residents.

There is little difference between GDP and GNP for the U.S., but the two measures can differ significantly for some economies. For example, an economy that contained a high proportion of foreign-owned factories would have a higher GDP than GNP. The income of the factories would be included in GDP, as it is produced within domestic borders, but not in GNP, since it accrues to non-residents. Comparing GDP and GNP is a useful way of comparing income produced in the country and income flowing to its residents.

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