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Detailed explanation-1: -Detailed Solution. The correct answer is Option 1, i.e 1 only. GNP = GDP + Net factor income from abroad. GNP is NOT always greater than GDP.

Detailed explanation-2: -Both measure the value of a country’s economic activity. The main difference is that GDP measures productivity within a country’s geographical boundaries and GNP records economic activity by that country’s citizens and businesses, regardless of location.

Detailed explanation-3: -If the income earned by domestic firms in overseas countries exceeds the income earned by foreign firms within the country, GNP is higher than the GDP. For example, the GNP of the United States is $250 billion higher than its GDP due to the high number of production activities by U.S. citizens in overseas countries.

Detailed explanation-4: -Gross domestic product (GDP) is a more useful measure of the economy than gross national product (GNP), which is mostly used to understand the total income of a country’s residents during a certain time period.

Detailed explanation-5: -GDP also fails to capture the distribution of income across society – something that is becoming more pertinent in today’s world with rising inequality levels in the developed and developing world alike. It cannot differentiate between an unequal and an egalitarian society if they have similar economic sizes.