If NFIA is negative, what will be the relation between NNP and NDP?
Answer and explanation
Correct answer: NNP will be less than NDP
The relationship between the two aggregates is NNP = NDP + NFIA. If NFIA is negative, adding it is equivalent to subtracting its absolute value from NDP. Consequently, NNP becomes smaller than NDP. The two aggregates would be equal only if NFIA were zero, while a positive NFIA would make NNP greater than NDP. Hence, option A is correct.
Frequently asked questions
What is the correct answer to this question?
NNP will be less than NDP
Why is this the correct answer?
The relationship between the two aggregates is NNP = NDP + NFIA. If NFIA is negative, adding it is equivalent to subtracting its absolute value from NDP. Consequently, NNP becomes smaller than NDP. The two aggregates would be equal only if NFIA were zero, while a positive NFIA would make NNP greater than NDP. Hence, option A is correct.
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 - NNP.
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