What is added to domestic income to obtain national income?
Answer and explanation
Correct answer: Net factor income from abroad
National income is obtained by adding net factor income from abroad, or NFIA, to domestic income. The formula is National Income = Domestic Income + NFIA. NFIA is factor income received by residents from abroad minus factor income paid to non-residents. Intermediate consumption would create double counting, while old goods and transfer payments do not represent current factor income from production.
Frequently asked questions
What is the correct answer to this question?
Net factor income from abroad
Why is this the correct answer?
National income is obtained by adding net factor income from abroad, or NFIA, to domestic income. The formula is National Income = Domestic Income + NFIA. NFIA is factor income received by residents from abroad minus factor income paid to non-residents. Intermediate consumption would create double counting, while old goods and transfer payments do not represent current factor income from production.
Which subject and chapter does this question cover?
This is a Class 12 Economics question. Chapter: National Income and Related Aggregates. Topic: Methods of calculating national income - Expenditure Method.
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