The difference between Gross National Income and Gross Domestic Product is known as

Analyze the question You are asked for the name of the gap between Gross National Income (GNI), also called Gross National Product (GNP), and Gross Domestic Product (GDP).

Explain the concept

• GDP measures the value of all final goods and services produced within a country's borders, whether the producers are citizens or foreigners.
• GNI/GNP measures the income earned by a country's citizens and firms, wherever in the world they earn it.

The link between them is:

GNI = GDP + Net Income from Abroad (NIA)

where Net Income from Abroad = income earned by a country's residents abroad (profits, dividends, wages sent home) − income earned by foreigners within the country and sent out.

Solution Rearranging the formula:

GNI − GDP = Net Income from Abroad

Checking the other options:

• A. Capital consumption (depreciation) is the difference between gross and net measures, such as GDP and NDP. It is not the difference between national and domestic.
• B. Debt repayments are not part of the national income calculation.
• C. Investment abroad is a use of funds, not the GNI–GDP gap.
• E. Net saving is not a national income adjustment either.

Answer: D. net income from abroad

Tip: Remember "National = Nationals everywhere, Domestic = Docated within the borders." To move from Domestic to National, add Net Income from Abroad. In Nigeria, for example, profits sent home by foreign oil companies are subtracted, while remittances from Nigerians abroad are added.