Read the data of a country (Rs crore):
| Item | Amount |
|---|---|
| Gross Domestic Product | 5,000 |
| Factor income earned by domestic factors of production employed in the rest of the world | 300 |
| Factor income earned by factors of production of the rest of the world employed in the domestic economy | 450 |
What is the Gross National Product of the country?
Answer & explanation
Correct answer: option 1
The correct answer is Option (1) → Rs 4,850 crore
Given:
GDP = Rs 5,000 crore
Factor income of domestic factors in the rest of the world = Rs 300 crore
Factor income of foreign factors in the domestic economy = Rs 450 crore
GNP = GDP + factor income earned abroad by domestic factors − factor income earned here by foreign factors.
NFIA = 300 − 450 = −Rs 150 crore
GNP = 5,000 + (−150) = Rs 4,850 crore
Foreign factors earn more here than our factors earn abroad, so GNP is smaller than GDP.
NCERT (2026-27): “Gross National Product (GNP) … It is, therefore, defined as follows GNP ≡ GDP + Factor income earned by the domestic factors of production employed in the rest of the world – Factor income earned by the factors of production of the rest of the world employed in the domestic economy Hence, GNP ≡ GDP + Net factor income from abroad (Net factor income from abroad = Factor income earned by the domestic factors of production employed in the rest of the world – Factor income earned by the factors of production of the rest of the world employed in the domestic economy). …” |