# Difference between GDP and GNI in this exercise

Based on domestic production we observe the following income flows in a period:

1. labor income of domestic residents: 150\$2. capital income received by foreign residents with a foreign citizenship: 5\$

3. capital income of domestic residents with a foreign citizenship: 15\$4. capital income received by foreign residents with a domestic citizenship: 25\$

5. capital income earned by domestic citizens with a domestic residence: 20\\$

Calculate the Gross Domestic Product (GDP) and the Gross National Income (GNI) of the economy:

Not sure how to solve this problem. As I understand GDP = 1+3+5, GNI = 1+4+5

I don't think that I understand how to treat foreign residents with foreign citizenship.

## 1 Answer

GDP refers to income associated to particular geography (or residence).

GNI refers to income associated to a particular set of individuals (citizens), regardless of where they earn their income.

Since geography and citizenship do not fully overlap, they might be different:

I think this is enough to help you answering the question.

(code for reproducing the figure here)