The word “national” in GNP is related to which concept?
Answer and explanation
Correct answer: Normal residents
In GNP, the word national refers to the normal residents of a country, not merely to the geographical location of production. Therefore, factor income earned by the country’s residents abroad is included, while factor income earned domestically by foreign residents is deducted when calculating national product. Domestic territory is the key idea in GDP. Market sale and the government sector do not define the national boundary used in GNP accounting.
Frequently asked questions
What is the correct answer to this question?
Normal residents
Why is this the correct answer?
In GNP, the word national refers to the normal residents of a country, not merely to the geographical location of production. Therefore, factor income earned by the country’s residents abroad is included, while factor income earned domestically by foreign residents is deducted when calculating national product. Domestic territory is the key idea in GDP. Market sale and the government sector do not define the national boundary used in GNP accounting.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates.
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