CUET Preparation Today
Net National Product at factor cost (NNPFC) is defined as : |
Value of output received by the factors of production belonging to a country in a year The sum of the income earned by all factors in the production in the form of wages, profit, rent and interest etc, belonging to a country during a year. It includes net factor income from Abroad. The value of all final goods and services produced by the normal residents of country The Gross domestic product at market price less net product taxes |
The sum of the income earned by all factors in the production in the form of wages, profit, rent and interest etc, belonging to a country during a year. It includes net factor income from Abroad. |
The correct answer is option (2) : The sum of the income earned by all factors in the production in the form of wages, profit, rent and interest etc, belonging to a country during a year. It includes net factor income from Abroad. Option 2: The sum of the income earned by all factors in the production in the form of wages, profit, rent and interest etc, belonging to a country during a year. It includes net factor income from Abroad. Correct. This accurately describes National Income (NI), which is equivalent to NNPFC. It explicitly lists the factor incomes (wages, profit, rent, interest) and correctly includes Net Factor Income from Abroad (NFIA), reflecting the "National" aspect. 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. NNPFC=NNP at Market Price−Net product taxes - Net Production Taxes NNPFC= NDP (FC) +NFIA Option 1: Value of output received by the factors of production belonging to a country in a year. Incorrect. This is close but not precise. "Value of output received" is vague. NNPFC is specifically the sum of factor incomes. Option 3: The value of all final goods and services produced by the normal residents of country. This defines Net National Product at Market Price (NNPMP), not NNPFC. When we talk about the "value of final goods and services produced," we are inherently referring to their market value. To convert this to NNP at Factor Cost (NNPFC), you would need to subtract net indirect taxes (indirect taxes minus subsidies). Therefore, Option 3 includes these taxes and is not at factor cost. Option 4: The Gross domestic product at market price less net product taxes. Incorrect. GDP at market price less net product taxes (indirect taxes - subsidies) gives Gross Domestic Product at Factor Cost (GDPFC). This is "domestic" (within the country's borders) and "gross" (before depreciation). It's not NNPFC. |
