What is the basis for distinguishing factor income received from abroad from export receipts in GNP analysis?
Answer and explanation
Correct answer: Whether the receipt is a reward for factor services or payment for selling goods and services
Factor income is a payment to a factor of production for providing services, such as wages for labour, rent for land, interest for capital, or profit for enterprise. An export receipt is revenue from selling a good or service to a foreign buyer. The nature of the underlying transaction, not its size, currency, or payment method, makes the distinction.
Frequently asked questions
What is the correct answer to this question?
Whether the receipt is a reward for factor services or payment for selling goods and services
Why is this the correct answer?
Factor income is a payment to a factor of production for providing services, such as wages for labour, rent for land, interest for capital, or profit for enterprise. An export receipt is revenue from selling a good or service to a foreign buyer. The nature of the underlying transaction, not its size, currency, or payment method, makes the distinction.
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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