Which of the following items is included in the calculation of Gross National Product (GNP)?
Answer and explanation
Correct answer: Wages earned abroad by a resident of the country
GNP includes current factor income earned by the country’s normal residents, whether they produce inside the country or abroad. Hence, wages earned abroad by a resident are included in the country’s GNP as foreign factor income received. Income earned by a foreign company inside the country is associated with domestic production and is counted in GDP, not national income. The resale of an old car does not represent current production, and an old-age pension is a transfer payment rather than payment for current productive services. Therefore, B is the only suitable answer.
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What is the correct answer to this question?
Wages earned abroad by a resident of the country
Why is this the correct answer?
GNP includes current factor income earned by the country’s normal residents, whether they produce inside the country or abroad. Hence, wages earned abroad by a resident are included in the country’s GNP as foreign factor income received. Income earned by a foreign company inside the country is associated with domestic production and is counted in GDP, not national income. The resale of an old car does not represent current production, and an old-age pension is a transfer payment rather than payment for current productive services. Therefore, B is the only suitable answer.
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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