How is the income earned by a foreign company operating in India treated in India's Gross National Product (GNP)?
Answer and explanation
Correct answer: It is not included in India's GNP because it belongs to foreign residents.
GNP measures production attributable to a country’s normal residents. Income earned in India by a foreign company is included in India’s GDP because production occurs domestically, but it is not part of India’s GNP because the income belongs to non-residents. Registration alone does not determine national residence.
Frequently asked questions
What is the correct answer to this question?
It is not included in India's GNP because it belongs to foreign residents.
Why is this the correct answer?
GNP measures production attributable to a country’s normal residents. Income earned in India by a foreign company is included in India’s GDP because production occurs domestically, but it is not part of India’s GNP because the income belongs to non-residents. Registration alone does not determine national residence.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Aggregates related to national income - GNP.
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