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In the context of Indian economy, which of the following measures is regarded as the National Income?
- a)Gross Domestic Product at market prices
- b)Net National Product at factor cost
- c)Gross National Product at factor cost
- d)Net National Product at market prices
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
In the context of Indian economy, which of the following measures is r...
Gross Domestic Product at market prices
- Gross Domestic Product (GDP) at market prices is the total value of all final goods and services produced within the geographical boundaries of a country in a specific time period, usually a year.
- It includes the value of goods and services produced by both domestic and foreign factors of production.
- However, GDP does not take into account income earned by Indian factors of production outside the country, while it includes income earned by foreign factors of production within the country.
Gross National Product at factor cost
- Gross National Product (GNP) at factor cost is the total value of all final goods and services produced by the factors of production owned by the residents of a country, regardless of where the production takes place.
- It includes income earned by Indian factors of production both within and outside the country, while it excludes income earned by foreign factors of production within the country.
- GNP at factor cost is calculated by subtracting net indirect taxes (taxes minus subsidies) from GDP at market prices.
Net National Product at market prices
- Net National Product (NNP) at market prices is the total value of all final goods and services produced by the factors of production owned by the residents of a country after deducting depreciation or wear and tear of capital goods.
- NNP at market prices is calculated by subtracting depreciation from GNP at factor cost.
Net National Product at factor cost (Correct answer)
- Net National Product (NNP) at factor cost is the total value of all final goods and services produced by the factors of production owned by the residents of a country after deducting depreciation.
- It represents the income earned by the factors of production in the country.
- NNP at factor cost is calculated by subtracting indirect taxes (taxes minus subsidies) from NNP at market prices.
Conclusion
Among the given options, the correct measure of National Income for the Indian economy is Net National Product (NNP) at factor cost. This measure takes into account the total value of goods and services produced by the factors of production owned by Indian residents, after deducting depreciation and indirect taxes. It represents the income earned by the factors of production in the country and provides a more accurate portrayal of the economic activity and income generation within India.
- Gross Domestic Product (GDP) at market prices is the total value of all final goods and services produced within the geographical boundaries of a country in a specific time period, usually a year.
- It includes the value of goods and services produced by both domestic and foreign factors of production.
- However, GDP does not take into account income earned by Indian factors of production outside the country, while it includes income earned by foreign factors of production within the country.
Gross National Product at factor cost
- Gross National Product (GNP) at factor cost is the total value of all final goods and services produced by the factors of production owned by the residents of a country, regardless of where the production takes place.
- It includes income earned by Indian factors of production both within and outside the country, while it excludes income earned by foreign factors of production within the country.
- GNP at factor cost is calculated by subtracting net indirect taxes (taxes minus subsidies) from GDP at market prices.
Net National Product at market prices
- Net National Product (NNP) at market prices is the total value of all final goods and services produced by the factors of production owned by the residents of a country after deducting depreciation or wear and tear of capital goods.
- NNP at market prices is calculated by subtracting depreciation from GNP at factor cost.
Net National Product at factor cost (Correct answer)
- Net National Product (NNP) at factor cost is the total value of all final goods and services produced by the factors of production owned by the residents of a country after deducting depreciation.
- It represents the income earned by the factors of production in the country.
- NNP at factor cost is calculated by subtracting indirect taxes (taxes minus subsidies) from NNP at market prices.
Conclusion
Among the given options, the correct measure of National Income for the Indian economy is Net National Product (NNP) at factor cost. This measure takes into account the total value of goods and services produced by the factors of production owned by Indian residents, after deducting depreciation and indirect taxes. It represents the income earned by the factors of production in the country and provides a more accurate portrayal of the economic activity and income generation within India.
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In the context of Indian economy, which of the following measures is regarded as the National Income?a)Gross Domestic Product at market pricesb)Net National Product at factor costc)Gross National Product at factor costd)Net National Product at market pricesCorrect answer is option 'B'. Can you explain this answer?
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