Which of the following incomes is included in Gross National Product (GNP)?
Answer and explanation
Correct answer: Factor income earned abroad by the country's normal residents
GNP follows the residence principle and includes factor income earned by normal residents, even when they earn it abroad. Income earned domestically by foreign companies belongs to GDP and is removed through NFIA when calculating GNP. Second-hand sales are not current production, and pensions are transfer payments.
Frequently asked questions
What is the correct answer to this question?
Factor income earned abroad by the country's normal residents
Why is this the correct answer?
GNP follows the residence principle and includes factor income earned by normal residents, even when they earn it abroad. Income earned domestically by foreign companies belongs to GDP and is removed through NFIA when calculating GNP. Second-hand sales are not current production, and pensions are transfer payments.
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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