Question

1. Purchasing power parity is a neoclassical economic theory that states that the exchange rate between two countries is equal to the ratio of the currencies' respective purchasing power.
2. The OECD defines GNP as "an aggregate measure of production equal to the sum of the gross values added of all resident and institutional units engaged in production (plus any taxes, and minus any subsidies, on products not included in the value of their outputs).”
3. The gross national income (GNI) is the total domestic and foreign output claimed by residents of a country, consisting of gross domestic product (GDP), plus factor incomes earned by foreign residents, minus income earned in the domestic economy by nonresidents.    
4. Unlike GDP, which defines production based on the geographical location of production, GNP indicates allocated production based on location of ownership. In fact it calculates income by the location of ownership and residence, and so its name is also the less ambiguous gross national income.
5. HDI is a composite statistic (composite index) of life expectancy, education, and per capita income indicators, which are used to rank countries into four tiers of human development. A country scores higher HDI when the lifespan is higher, the education level is higher, and the GDP per capita is higher.

TRUE OR FALSE?

Answer 1

1). As we know that, The purchasing power parity theory was developed by Professor Gustav Cassel.PPP states that, rate of exchange between two countries depends upon the relative purchasing power of their respective currencies.

So the correct option is (true).

2). The correct option is (False).

It is the definition of GDP and not of GNP. In GDP we didn't include the net factor income from abroad.

3). The correct option is (True).

We know that Gross National Income (GNI) is GDP plus income paid into the country by other countries for such things as interest and dividends (less similar payments paid out to other countries).

4). The correct option is (True).

Another name of GNP is GNI also.Gross National Product (GNP) is the total market value of all goods and services produced by domestic residents no matter wherever they earn.

5). The correct option is (True).

The concept of HDI is given by Pakistani economist Dr.Mahbub ul Haq in 1990. It is a composite index of life expectancy, education and per capita income rates.

There are four Tiers of HDI as:

Very high human development,

High human development,

Medium human development and

Low human development.

Hope you got the answer.

Kindly comment for further explanation.

Thanks ?