Which metric includes money that leaves and enters the country in its calculation?

• A. Gross Domestic Product (GDP)
• B. Gross National Income (GNI)
• C. Net National Income
• D. Personal Income

Answer: (B)

The key idea is how each measure treats income that crosses borders. GDP counts all the value created by production inside a country’s borders, regardless of who owns the factors of production, and it ignores where the income from that production goes. GNI, by contrast, starts with GDP and then adds the income residents earn from abroad while subtracting the income foreigners earn within the country. In other words, it includes net factor income from abroad, which captures money entering the country from overseas and money leaving the country to foreign residents. So GNI directly reflects cross-border income flows, making it the metric that includes money that leaves and enters in its calculation.