When NFIA is positive, what will be the effect on GNP?
Answer and explanation
Correct answer: GNP will be greater than GDP
The relationship between the two aggregates is GNP = GDP + NFIA. If NFIA is positive, residents receive more factor income from abroad than foreign residents receive from the domestic economy. Adding this positive amount to GDP makes GNP greater than GDP. Equality occurs only when NFIA is zero.
Frequently asked questions
What is the correct answer to this question?
GNP will be greater than GDP
Why is this the correct answer?
The relationship between the two aggregates is GNP = GDP + NFIA. If NFIA is positive, residents receive more factor income from abroad than foreign residents receive from the domestic economy. Adding this positive amount to GDP makes GNP greater than GDP. Equality occurs only when NFIA is zero.
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.
