If an Indian citizen earns a salary by working in Dubai, why is that salary not directly included in India’s GDP?
Answer and explanation
Correct answer: Because GDP is based on domestic territory
GDP is a territorial concept: it counts production taking place within the domestic territory of a country, regardless of the producer’s nationality. The salary earned by an Indian citizen for production in Dubai is connected with production outside India and is therefore not directly part of India’s GDP. It may, however, affect India’s national income through net factor income from abroad.
Frequently asked questions
What is the correct answer to this question?
Because GDP is based on domestic territory
Why is this the correct answer?
GDP is a territorial concept: it counts production taking place within the domestic territory of a country, regardless of the producer’s nationality. The salary earned by an Indian citizen for production in Dubai is connected with production outside India and is therefore not directly part of India’s GDP. It may, however, affect India’s national income through net factor income from abroad.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
