Question

ArmiLiza, a popular United States-based brand of handbags, has built a second factory in Mexico. The majority of the new factory's employees are Mexican citizens or Honduran immigrants. On which country's gross domestic product will the second factory's goods be counted?

Answer 1

Answer:

The correct answer is: The goods produced at the second factory will be counted on Mexican GDP.

Explanation:

Gross Domestic Product is the most common measure of production of a country; it calculates the total output or goods produced within a certain country. This means that, even though a firm is located in one country (country A), the goods that are produced in another country (country B) will be counted as part of the foreign's country GDP (country B).

In this case, even though ArmiLiza is based on the US, the goods produced in Mexico are counted on mexican GDP.