When is NFIA used in GDP numericals?
Answer and explanation
Correct answer: When GDP is to be converted into a national aggregate
GDP is a domestic concept because it measures production within a country's economic territory. To convert a domestic aggregate into a national aggregate, add Net Factor Income from Abroad (NFIA): national aggregate = domestic aggregate + NFIA. NFIA is not used for the market-price to factor-cost adjustment, which uses net indirect taxes, or for gross-to-net conversion, which uses depreciation.
Frequently asked questions
What is the correct answer to this question?
When GDP is to be converted into a national aggregate
Why is this the correct answer?
GDP is a domestic concept because it measures production within a country's economic territory. To convert a domestic aggregate into a national aggregate, add Net Factor Income from Abroad (NFIA): national aggregate = domestic aggregate + NFIA. NFIA is not used for the market-price to factor-cost adjustment, which uses net indirect taxes, or for gross-to-net conversion, which uses depreciation.
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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