Question

Which of the following is a correct measure of the National Income?
(a) Net National Product at factor cost
(b) Net National Product at market prices
(c) Net National Product at market prices + Net indirect taxes
(d) Net National Product at factor cost – Net indirect taxes

Answer 1

Answer:

I think the correct option is b

Answer 2

Option A - ‘Net National Product at factor cost’

■ National Income :-

• ‘National Income’ and ‘Net National Product at factor cost’ are the same thing.

• National Income = NNP at factor cost = NNP at market prices – (Indirect taxes – Subsidies) = NNP at market prices – Net indirect taxes (Net indirect taxes = Indirect taxes – Subsidies)

• NNP at factor cost is the sum of income earned by all factors in the production in the form of wages, profits, rent, and interest, etc., belonging to a country during a year.

• It is the National Product and is not bound by production in the national boundaries. It is the net domestic factor income added with the net factor income from abroad.

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