Which statement correctly identifies Net National Product at factor cost (NNP₍FC₎)?
Answer and explanation
Correct answer: The net value of final goods and services produced by normal residents after depreciation, at factor cost
NNP₍FC₎ measures the net value of final goods and services produced by a country’s normal residents. ‘National’ refers to normal residents, ‘net’ means depreciation has been deducted, and ‘factor cost’ means valuation according to payments made to factors of production. Hence option D includes all three defining features. Option C is NNP at market prices, not factor cost.
Frequently asked questions
What is the correct answer to this question?
The net value of final goods and services produced by normal residents after depreciation, at factor cost
Why is this the correct answer?
NNP₍FC₎ measures the net value of final goods and services produced by a country’s normal residents. ‘National’ refers to normal residents, ‘net’ means depreciation has been deducted, and ‘factor cost’ means valuation according to payments made to factors of production. Hence option D includes all three defining features. Option C is NNP at market prices, not factor cost.
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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