How is the wage earned by an Indian resident working abroad included in India’s GNP?
Answer and explanation
Correct answer: As part of net factor income received from abroad.
Wages received by an Indian resident for work performed abroad are factor income received from the rest of the world. Such receipts enter Net Factor Income from Abroad (NFIA), which connects GDP with GNP through the formula GNP = GDP + NFIA. The wage is not domestic production because the work occurred outside India, and it is not an import of a final good. If payments to foreign factors in India exceed receipts from Indian factors abroad, NFIA may be negative.
Frequently asked questions
What is the correct answer to this question?
As part of net factor income received from abroad.
Why is this the correct answer?
Wages received by an Indian resident for work performed abroad are factor income received from the rest of the world. Such receipts enter Net Factor Income from Abroad (NFIA), which connects GDP with GNP through the formula GNP = GDP + NFIA. The wage is not domestic production because the work occurred outside India, and it is not an import of a final good. If payments to foreign factors in India exceed receipts from Indian factors abroad, NFIA may be negative.
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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