The sum of income earned by all factors of production in the form of wages, profits, rent and interest, etc., belonging to a country during a year, whether the production takes place within the national boundaries or not, is:
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → NNP at factor cost
Income of a country’s own factors, earned at home or abroad, is national. Income of factors is at factor cost, and it is net of depreciation. Together this is NNP at factor cost, the national income.
NDP at factor cost covers only incomes earned within the domestic territory.
NCERT (2026-27): “Table 2.4: Basic National Income Aggregates 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. “Table 2.4: Basic National Income Aggregates NDP at factor cost is the income earned by the factors in the form of wages, profits, rent, interest, etc., within the domestic territory of a country.” |