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Consider the following statements:
1. India’s GDP is more than its GNP.
2. Net Factor Income from Abroad (NFIA) is positive for India.
Which of the statements given above is/are correct?
- a)1 only
- b)2 only
- c)Both 1 and 2
- d)Neither 1 nor 2
Correct answer is option 'A'. Can you explain this answer?
Verified Answer
Consider the following statements:1. India’s GDP is more than it...
Answer & Explanation
a) 1 only. GNP = GDP + NFIA. India’s NFIA is negative. Thus India’s GDP is more than its GNP. NFIA = Factor income earned from abroad by residents – Factor income of non-residents in domestic territory.
Most Upvoted Answer
Consider the following statements:1. India’s GDP is more than it...
Explanation:
- GDP (Gross Domestic Product) is the total value of goods and services produced within a country's borders in a given time period. It includes both domestic and foreign factors of production.
- GNP (Gross National Product) is the total value of goods and services produced by a country's residents, regardless of their location, in a given time period. It includes only domestic factors of production, whether they are located within the country or abroad.
- Therefore, if a country's GDP is more than its GNP, it means that the country is earning more income from abroad than it is paying out to foreign residents.
- In India's case, the statement "Indias GDP is more than its GNP" is correct, because India has a positive Net Factor Income from Abroad (NFIA).
Net Factor Income from Abroad (NFIA):
- NFIA is the difference between the income earned by a country's residents from their investments abroad, and the income earned by foreign residents from their investments in the country.
- If a country's residents earn more income from their investments abroad than foreign residents earn from their investments in the country, the NFIA is positive. Conversely, if foreign residents earn more income from their investments in the country than the country's residents earn from their investments abroad, the NFIA is negative.
- In India's case, the NFIA has been positive in recent years, due to factors such as remittances from Indians working abroad, and profits earned by Indian companies with overseas operations.
- Therefore, the statement "Net Factor Income from Abroad (NFIA) is positive for India" is also correct.
Conclusion:
- In conclusion, both statements given in the question are correct. India's GDP is more than its GNP, and the country has a positive Net Factor Income from Abroad (NFIA).
- GDP (Gross Domestic Product) is the total value of goods and services produced within a country's borders in a given time period. It includes both domestic and foreign factors of production.
- GNP (Gross National Product) is the total value of goods and services produced by a country's residents, regardless of their location, in a given time period. It includes only domestic factors of production, whether they are located within the country or abroad.
- Therefore, if a country's GDP is more than its GNP, it means that the country is earning more income from abroad than it is paying out to foreign residents.
- In India's case, the statement "Indias GDP is more than its GNP" is correct, because India has a positive Net Factor Income from Abroad (NFIA).
Net Factor Income from Abroad (NFIA):
- NFIA is the difference between the income earned by a country's residents from their investments abroad, and the income earned by foreign residents from their investments in the country.
- If a country's residents earn more income from their investments abroad than foreign residents earn from their investments in the country, the NFIA is positive. Conversely, if foreign residents earn more income from their investments in the country than the country's residents earn from their investments abroad, the NFIA is negative.
- In India's case, the NFIA has been positive in recent years, due to factors such as remittances from Indians working abroad, and profits earned by Indian companies with overseas operations.
- Therefore, the statement "Net Factor Income from Abroad (NFIA) is positive for India" is also correct.
Conclusion:
- In conclusion, both statements given in the question are correct. India's GDP is more than its GNP, and the country has a positive Net Factor Income from Abroad (NFIA).
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Consider the following statements:1. India’s GDP is more than its GNP.2. Net Factor Income from Abroad (NFIA) is positive for India.Which of the statements given above is/are correct?a)1 onlyb)2 onlyc)Both 1 and 2d)Neither 1 nor 2Correct answer is option 'A'. Can you explain this answer?
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