Which statements are true in terms of basic national income aggregates:
(A) GNP at factor cost measures the value of output received by the factors of production belonging to a country in a year.
(B) GDP is the market value of all intermediate goods and final goods and services produced within a domestic territory of a country measured in a year.
(C) 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.
(D) GDP at factor cost is gross domestic product at market prices, less net product taxes.
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (C) and (D) only
(A) GNP at factor cost measures the value of output received by the factors of production belonging to a country in a year. — True. GNP is gross national product. ‘National’ means the output of the factors that belong to the country, wherever they work. ‘Factor cost’ means the value that the factors of production receive.
(B) GDP is the market value of all intermediate goods and final goods and services produced within a domestic territory of a country measured in a year. — False. GDP counts final goods and services only. The value of intermediate goods is already inside the value of the final goods. Adding them too would be double counting.
(C) 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. — True. NDP is net domestic product. ‘Domestic’ means within the territory of the country. ‘Net’ means after depreciation is taken out, and the income left is what the factors earn.
(D) GDP at factor cost is gross domestic product at market prices, less net product taxes. — True. Market prices are the prices consumers pay, and they include product taxes and subsidies. Factor cost refers to the prices that producers receive, so net product taxes are taken out.
NCERT (2026-27): Introductory Macroeconomics — Chapter 2: National Income Accounting
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