How does factor income earned by a foreign resident inside the country affect the calculation of GNP?
Answer and explanation
Correct answer: It is included in GDP but subtracted through NFIA when calculating GNP
Income earned by a foreign resident within the country arises from domestic production, so it is included in GDP. However, GNP measures the income of the country’s normal residents. Therefore, this non-resident factor income is deducted through NFIA: GNP = GDP + resident income from abroad − non-resident income at home.
Frequently asked questions
What is the correct answer to this question?
It is included in GDP but subtracted through NFIA when calculating GNP
Why is this the correct answer?
Income earned by a foreign resident within the country arises from domestic production, so it is included in GDP. However, GNP measures the income of the country’s normal residents. Therefore, this non-resident factor income is deducted through NFIA: GNP = GDP + resident income from abroad − non-resident income at home.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
Student feedback
Was this question useful?
👍 0 Helpful 👎 0 Not helpful
Yes 0% No 0%
0 responsesStudent Reviews
No published reviews yet.
