WBCS.LIVE practice question

Which specific macroeconomic component must be added to Gross Domestic Product (GDP) to mathematically calculate Gross National Product (GNP)?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. Net Factor Income from Abroad
  2. Subsidies
  3. Capital Depreciation
  4. Indirect Taxes

Correct answer and explanation

Correct answer: Net Factor Income from Abroad

Explanation: āœ… Correct Answer: A) Net Factor Income from Abroad šŸ“š Explanation: Gross Domestic Product (GDP) explicitly measures the total market value of all final goods and services produced strictly within the geographical boundaries of a country. To logically convert this to Gross National Product (GNP), economists must accurately add the Net Factor Income from Abroad (NFIA). NFIA fundamentally represents the difference between the aggregate income earned by citizens working abroad and the income earned by foreign nationals residing within the domestic economy.