If NNP₍FC₎ is to be derived from GDP₍FC₎, which formula is correct?
Answer and explanation
Correct answer: NNP₍FC₎ = GDP₍FC₎ + NFIA − depreciation
Option A is correct. GDP₍FC₎ is a gross domestic aggregate at factor cost. To convert domestic to national, add NFIA; to convert gross to net, subtract depreciation. Because both aggregates are already at factor cost, no NIT adjustment is needed. Therefore, NNP₍FC₎ = GDP₍FC₎ + NFIA − depreciation.
Frequently asked questions
What is the correct answer to this question?
NNP₍FC₎ = GDP₍FC₎ + NFIA − depreciation
Why is this the correct answer?
Option A is correct. GDP₍FC₎ is a gross domestic aggregate at factor cost. To convert domestic to national, add NFIA; to convert gross to net, subtract depreciation. Because both aggregates are already at factor cost, no NIT adjustment is needed. Therefore, NNP₍FC₎ = GDP₍FC₎ + NFIA − depreciation.
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.
