GNI equals GDP plus what adjustment?

• A. GNI equals GDP plus government expenditure.
• B. GNI equals GDP plus income earned by residents from abroad minus income earned by non-residents domestically.
• C. GNI equals GDP minus depreciation.
• D. GNI equals GDP times exchange rate.

Answer: (B)

The key idea is that GNI measures the income earned by a country's residents, regardless of where that income is generated. GDP captures the value of all production that happens within the country’s borders. To get GNI, you start with GDP and adjust for cross-border income flows: add what residents earn from abroad and subtract what non-residents earn domestically.

So the correct statement is that GNI equals GDP plus income earned by residents from abroad minus income earned by non-residents domestically. For example, if residents earn 100 abroad and foreigners earn 40 domestically, the net adjustment is +60, and GNI = GDP + 60.

The other ideas don’t fit this definition: government expenditure is part of GDP, not a net cross-border income adjustment; depreciation is a capital cost used to derive net domestic product, not GNI; and multiplying by the exchange rate changes units, not the fundamental income flow that defines GNI.