Why can the wages of a foreign citizen working in India be included in domestic income?
Answer and explanation
Correct answer: Because the income is generated within India’s domestic territory
Domestic income is determined by the place where production and factor services occur, not by the citizenship of the person receiving the income. If a foreign citizen works in India and provides labour within India’s domestic territory, the wages generated through that domestic production are part of domestic factor income. Citizenship and residence are relevant for national income adjustments, but they do not change the domestic location of the production. Hence, option A is correct.
Frequently asked questions
What is the correct answer to this question?
Because the income is generated within India’s domestic territory
Why is this the correct answer?
Domestic income is determined by the place where production and factor services occur, not by the citizenship of the person receiving the income. If a foreign citizen works in India and provides labour within India’s domestic territory, the wages generated through that domestic production are part of domestic factor income. Citizenship and residence are relevant for national income adjustments, but they do not change the domestic location of the production. Hence, option A is correct.
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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