Practicing Success
The difference between national income and domestic income is __________. Choose the correct answer from the following. |
Net indirect taxes Net factor income from abroad Consumption of fixed capital Intermediate goods |
Net factor income from abroad |
The correct answer is option (2) : Net factor income from abroad The difference between national income and domestic income is primarily accounted for by net factor income from abroad.
Net factor income from abroad takes into account the income earned by domestic factors of production (labor and capital) from foreign sources minus the income earned by foreign factors of production within the domestic economy. This includes wages, profits, and other factor incomes that flow into or out of the country. |