If GDP is ₹10,000 crore, factor income from abroad is ₹600 crore, and factor income paid abroad is ₹750 crore, what will be GNP?
Answer and explanation
Correct answer: ₹9,850 crore
First calculate net factor income from abroad: NFIA = factor income from abroad − factor income paid abroad = ₹600 crore − ₹750 crore = −₹150 crore. Then apply GNP = GDP + NFIA. Thus, GNP = ₹10,000 crore − ₹150 crore = ₹9,850 crore. The negative NFIA occurs because payments to foreign factors exceed receipts from Indian factors abroad.
Frequently asked questions
What is the correct answer to this question?
₹9,850 crore
Why is this the correct answer?
First calculate net factor income from abroad: NFIA = factor income from abroad − factor income paid abroad = ₹600 crore − ₹750 crore = −₹150 crore. Then apply GNP = GDP + NFIA. Thus, GNP = ₹10,000 crore − ₹150 crore = ₹9,850 crore. The negative NFIA occurs because payments to foreign factors exceed receipts from Indian factors abroad.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
