Aggregates related to national income - GNP

Correct answer: A. Do not count final output and factor income twice

Explanation: The product or output approach measures the value of final goods and services, while the income approach measures the factor incomes generated by producing them. These are two views of the same economic activity. Adding the full output value and the resulting factor incomes together would count the same production twice. Therefore, avoiding double counting is the essential precaution, making option A correct.

Correct answer: B. In factor income paid abroad

Explanation: GDP measures production within the domestic territory, so the factor income earned domestically by a non-resident can be included in GDP. GNP uses the normal-resident basis. Therefore, income paid to non-residents is treated as factor income paid abroad and is deducted through NFIA when moving from GDP to GNP. Hence, option B is correct.

Correct answer: A. Check gross, national, final output and (NFIA) adjustment together

Explanation: GNP is Gross National Product. “Gross” means depreciation has not yet been deducted, “national” means production attributable to normal residents, and “product” means the value of current final goods and services. GDP is converted to GNP by adding NFIA. Therefore, option A combines the essential identification rules.

Correct answer: A. −₹60 crore

Explanation: NFIA means Net Factor Income from Abroad and measures the difference between factor income received from abroad and factor income paid to foreign factors within the domestic economy. The relationship is GNP at market price = GDP at market price + NFIA. Therefore, NFIA = GNPMP − GDPMP = ₹1,640 crore − ₹1,700 crore = −₹60 crore. The negative value means that payments made to foreign factors exceed factor income received from abroad by ₹60 crore.

Correct answer: A. NFIA is positive

Explanation: At the same factor-cost valuation, GNPFC − GDPFC equals net factor income from abroad, or NFIA. A positive difference means residents receive more factor income from the rest of the world than non-residents receive from domestic production. Thus NFIA is positive. For NNP, this national-product measure is then adjusted by subtracting depreciation.

Correct answer: A. Net factor income from abroad

Explanation: GDP measures final production within a country’s domestic territory, whereas GNP measures the production or income attributable to the country’s normal residents. The relationship is GNP = GDP + Net Factor Income from Abroad (NFIA). Depreciation distinguishes gross from net measures, while indirect taxes and fixed-capital consumption are not the defining difference between GDP and GNP.

Correct answer: C. ₹5300 crore

Explanation: Gross National Product at market price is calculated by adding Net Factor Income from Abroad to Gross Domestic Product at market price. Therefore, GNPMP = GDPMP + NFIA = ₹5000 crore + ₹300 crore = ₹5300 crore. The positive NFIA means residents receive more factor income from abroad than foreigners receive from domestic production.

Correct answer: C. ₹6400 crore

Explanation: The relationship is GNPMP = GDPMP + NFIA. Rearranging gives GDPMP = GNPMP − NFIA. Substituting the values, GDPMP = ₹6200 crore − (−₹200 crore) = ₹6400 crore. Because NFIA is negative, subtracting it increases GDP relative to GNP. Therefore, option C is correct.

Correct answer: A. 9,050 crore

Explanation: GNP at market price is calculated as GDP at market price plus NFIA. Thus, GNP = 9,400 + (-350) = 9,050 crore. A negative NFIA means that factor payments made to the rest of the world exceed factor income received from abroad, so the national aggregate is lower than the domestic aggregate. Therefore, option A is correct.

Correct answer: B. ₹4000 crore

Explanation: Gross National Product is obtained by adding Net Factor Income from Abroad to Gross Domestic Product: GNP = GDP + NFIA. Here, GNP = ₹4200 crore + (−₹200 crore) = ₹4000 crore. Negative NFIA means factor payments to foreigners exceed factor income received from abroad. Hence option B is the only correct answer.

Correct answer: C. ₹15,000 crore

Explanation: GNP measures the value of production attributable to the normal residents of a country, whereas GDP measures production within the domestic territory. The relationship at the same valuation is GNPFC = GDPFC + NFIA. Therefore, GNPFC = ₹14,400 crore + ₹600 crore = ₹15,000 crore. Since NFIA is positive, GNP is greater than GDP, so option C is correct.

Correct answer: C. ₹10,200 crore

Explanation: The relationship between the two aggregates is GNPFC = GDPFC + NFIA. Rearranging it gives GDPFC = GNPFC – NFIA. Substituting the values, GDPFC = 9,800 – (–400) = 9,800 + 400 = ₹10,200 crore. A negative NFIA means that factor income paid abroad exceeds factor income received from abroad, so GDP is higher than GNP. Hence, option C is correct.

Correct answer: A. GNP will be less than GDP

Explanation: The relationship is GNP = GDP + net factor income from abroad (NFIA). NFIA is the difference between factor income received by residents from abroad and factor income paid to foreign factors working in the domestic economy. When NFIA is negative, residents receive less factor income from abroad than foreigners receive domestically. Adding a negative amount to GDP reduces the result, so GNP is lower than GDP.

Correct answer: C. 1120

Explanation: GNP at market price is obtained by adding net factor income from abroad to GDP at market price: GNPMP = GDPMP + NFIA. Substituting the given values gives 1200 + (-80) = 1120. The negative NFIA means that factor income paid to foreign countries is greater than factor income received from abroad. Therefore, option C is correct.

Correct answer: A. ₹1,210 crore

Explanation: The relationship between the two aggregates is GNP at market price = GDP at market price + net factor income from abroad. Therefore, when GDP is required, net factor income from abroad must be subtracted from GNP: GDPMP = ₹1,300 crore − ₹90 crore = ₹1,210 crore. Adding ₹90 crore would incorrectly move from GDP to GNP rather than from GNP to GDP.

Correct answer: A. Net factor income from abroad

Explanation: GDP measures production occurring within a country’s domestic territory, regardless of whether the producers are residents or foreigners. GNP measures the income or production attributable to the country’s normal residents, wherever it occurs. The bridge is net factor income from abroad (NFIA): GNP = GDP + factor income received from abroad − factor income paid abroad. Therefore, option A is correct.

Correct answer: A. 3850

Explanation: GNP at market price is calculated by adding net factor income from abroad to GDP at market price: GNP_MP = GDP_MP + NFIA. Therefore, GNP_MP = 4100 + (-250) = 3850. The negative NFIA reduces GNP because residents’ factor payments to foreigners exceed factor income received from abroad. Hence, option A, 3850, is correct.

Correct answer: B. ₹1,940 crore

Explanation: For any aggregate, the conversion is Aggregate at Factor Cost = Aggregate at Market Price − Net Indirect Taxes. Thus, GNP at factor cost = ₹2,100 crore − ₹160 crore = ₹1,940 crore. Option B is correct. Option C leaves the tax unadjusted, while option D adds it in the wrong direction; option A subtracts ₹320 crore instead of the stated ₹160 crore.

Correct answer: B. ₹2,790 crore

Explanation: For any aggregate, including GNP, the governing conversion is GNP at Factor Cost = GNP at Market Price − Net Indirect Taxes. Substitution gives ₹3,000 crore − ₹210 crore = ₹2,790 crore. Hence option B is correct. ₹3,000 crore is the original market-price value, while ₹3,210 crore would result from adding taxes and moving in the opposite direction; ₹2,580 crore uses an excessive deduction.