National income is generally measured as which of the following aggregate?
Answer and explanation
Correct answer: Net National Product at factor cost
In the standard national-income accounting framework, national income is identified with NNP at factor cost. The term net means that depreciation is deducted from the gross measure, while factor cost means that valuation is based on factor payments and excludes the net effect of indirect taxes. Thus, NNP at market price is not identical to national income until the appropriate tax and subsidy adjustment is made.
Frequently asked questions
What is the correct answer to this question?
Net National Product at factor cost
Why is this the correct answer?
In the standard national-income accounting framework, national income is identified with NNP at factor cost. The term net means that depreciation is deducted from the gross measure, while factor cost means that valuation is based on factor payments and excludes the net effect of indirect taxes. Thus, NNP at market price is not identical to national income until the appropriate tax and subsidy adjustment is made.
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.
