A citizen of India working in Saudi Arabia earns a wage there. Her wage is included in:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → the GDP of Saudi Arabia and the GNP of India
GDP counts production within a country’s territory, so her wage is in Saudi Arabia’s GDP. GNP counts the earnings of a country’s own people, wherever they work, so it is also in India’s GNP.
Option (1) the GDP of India and the GNP of Saudi Arabia — Incorrect. It is the other way round: GDP is by place of work, GNP by whose earnings they are.
Option (2) the GDP of Saudi Arabia and the GNP of India — Correct. Saudi GDP by place of work; Indian GNP because she is an Indian.
Option (3) the GDP of India only — Incorrect. She works in Saudi Arabia, so her wage is not in India’s GDP.
Option (4) the GNP of Saudi Arabia only — Incorrect. Saudi GNP deducts the earnings of foreigners working there.
NCERT (2026-27): “2.3 Some Macroeconomic Identities Gross Domestic Product measures the aggregate production of final goods and services taking place within the domestic economy during a year. But the whole of it may not accrue to the citizens of the country. For example, a citizen of India working in Saudi Arabia may be earning her wage and it will be included in the Saudi Arabian GDP. But legally speaking, she is an Indian. Is there a way to take into account the earnings made by Indians abroad or by the factors of production owned by Indians? When we try to do this, in order to maintain symmetry, we must deduct the earnings of the foreigners who are working within our domestic economy, or the payments to the factors of production owned by the foreigners. …” |