Question

Identify the correct equation from the following:

• A. \( GDP_{MP} = NNP_{FC} + \text{Depreciation} \)
• B. \( NDP_{FC} = NNP_{FC} + \text{Net Indirect Taxes} \)
• C. \( GNP_{MP} = GDP_{MP} + \text{Net Factor Income from Abroad} \)
• D. \( NNP_{FC} = NDP_{MP} + \text{Depreciation} \)

Hint:

Familiarize yourself with national income accounting identities to quickly identify correct equations in macroeconomics.

Answer 1

The Correct Option is C

Step 1: Understanding the options.
- Option (A): Incorrect because \( GDP_{MP} \) is derived by adding Net Indirect Taxes and Depreciation to \( NNP_{FC} \).
- Option (B): Incorrect because \( NDP_{FC} = GDP_{MP} - Depreciation - Net Indirect Taxes \).
- Option (C): Correct because \( GNP_{MP} = GDP_{MP} + {Net Factor Income from Abroad} \) accurately represents the formula.
- Option (D): Incorrect because \( NNP_{FC} = NDP_{FC} + {Depreciation} \), not \( NDP_{MP} + {Depreciation} \).
Step 2: Conclusion.
The correct equation is \( GNP_{MP} = GDP_{MP} + {Net Factor Income from Abroad} \), so the answer is \( \mathbf{(C)} \).