In GNP, payment abroad generally means which payment?
Answer and explanation
Correct answer: Payment of factor income to foreign residents
For GNP calculations, payment abroad normally refers to factor income paid to foreign residents for their productive services or ownership of factors within the domestic economy. Wages, rent, interest, and profit can be such payments. These payments are subtracted when calculating NFIA. Import bills pay for goods or services, gifts are transfers, and loan-principal repayment is a financial transaction, so none is the intended answer.
Frequently asked questions
What is the correct answer to this question?
Payment of factor income to foreign residents
Why is this the correct answer?
For GNP calculations, payment abroad normally refers to factor income paid to foreign residents for their productive services or ownership of factors within the domestic economy. Wages, rent, interest, and profit can be such payments. These payments are subtracted when calculating NFIA. Import bills pay for goods or services, gifts are transfers, and loan-principal repayment is a financial transaction, so none is the intended answer.
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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