Aggregates related to national income - NNP

Correct answer: A. ₹270 crore

Explanation: NFIA is calculated as factor income received from abroad minus factor income paid to foreign factors. Therefore, NFIA = ₹1,250 crore − ₹980 crore = ₹270 crore. The result is positive because residents’ receipts from abroad are greater than payments made to foreigners. The negative answer would reverse the required order of subtraction.

Correct answer: A. Depreciation is zero

Explanation: The defining relationship is NNP = GNP − depreciation. If GNP and NNP have the same value, the amount deducted from GNP must be zero; therefore depreciation is zero. NFIA determines the difference between GDP and GNP, while NIT determines the difference between market price and factor cost. Neither of those conditions follows from GNP equalling NNP.

Correct answer: A. ₹500

Explanation: Per-capita national income equals total national income divided by population. Therefore, per-capita income = ₹5,000 crore ÷ 10 crore people = ₹500 per person. The crore units in the numerator and denominator cancel during division. Option B incorrectly reports the total income, while options C and D result from incorrect division. Hence option A is the correct answer.

Correct answer: A. Net factor income from abroad

Explanation: The main difference between NDP and NNP is Net Factor Income from Abroad (NFIA). NDP measures the net value of production within a country’s domestic territory, whereas NNP measures the net value generated by the normal residents of a country. Therefore, NDP is converted into NNP by adding NFIA: NNP = NDP + NFIA. Depreciation is already removed because both measures are net aggregates.

Correct answer: B. NNP = NDP + NFIA

Explanation: The correct formula is NNP = NDP + NFIA, where NFIA means Net Factor Income from Abroad. NDP is a net domestic measure because depreciation has already been deducted, and it is based on production within domestic territory. To convert the domestic concept into the national concept, income earned by residents from abroad is added and income paid to foreign factors is accounted for through NFIA. Hence option B is correct.

Correct answer: C. NNP at factor cost

Explanation: In the traditional national-income framework, national income is NNP at factor cost. NNP represents net production of normal residents after deducting depreciation and includes net factor income from abroad; factor cost records factor remuneration. Thus option C is correct. GDP is domestic and gross, NDP is domestic rather than national, and GNP at market price includes indirect taxes net of subsidies.