Question

If the domestic income of an economy is 2500 crores, the factor income from abroad is 300 crores, the consumption of fixed capital is 150 crores and Net National Product at factor cost is 2400 crores, then the Factor income paid to abroad will be:

• A. 100 crores
• B. (-) 100 crores
• C. 400 crores
• D. 250 crores

Answer 1

The Correct Option is B

The factor income paid abroad is calculated by subtracting from the net national product. In this case, it equals (-) 100 crores.

Answer 2

The factor income paid abroad is calculated by subtracting it from the net national product (NNP). This represents the income that residents of a country earn abroad minus the income paid to foreign residents working within the country. Essentially, it reflects the net outflow of income due to foreign investments and workers.

In this case, the factor income paid abroad is (-) 100 crores, which means that the country is paying more income to foreign residents or foreign entities than it is receiving in return from its own residents working or investing abroad.

This negative value impacts the net national product by reducing the overall national income, as it reflects an outflow of economic value. It is important for policymakers to consider these outflows when analyzing national economic health, as they can affect foreign exchange reserves and influence fiscal and monetary policies.