Profit received from abroad in GNP is what type of item?
Answer and explanation
Correct answer: Factor income received from abroad
Profit received by residents from business activity or productive assets located abroad is a return to a factor of production. It is therefore factor income received from abroad and forms part of NFIA. In the standard relationship, GNP equals GDP plus NFIA. Consumption expenditure is spending on final goods and services, depreciation measures capital wear, and imports are purchases from abroad; none of these describes the profit in the question.
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What is the correct answer to this question?
Factor income received from abroad
Why is this the correct answer?
Profit received by residents from business activity or productive assets located abroad is a return to a factor of production. It is therefore factor income received from abroad and forms part of NFIA. In the standard relationship, GNP equals GDP plus NFIA. Consumption expenditure is spending on final goods and services, depreciation measures capital wear, and imports are purchases from abroad; none of these describes the profit in the question.
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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