Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

Which of the following equation is true?

  •  NNPMP = GDPMP - Depreciation + NFIA
  • GDPFC = NDPFC / NVAFC - Depreciation
  •  GNPFC = NDPFC - NFIA + Depreciation

 

Options:

Only 1

Only 3

Both 1 and 3

1, 2 and 3

Correct Answer:

Only 1

Explanation:

The corrected equations are as follows:

  • NNPMP = GDPMP - Depreciation + NFIA
  • GDPFC = NDPFC / NVAFC + Depreciation
  •  GNPFC = NDPFC + NFIA + Depreciation

In order to convert net into gross we add depreciation whereas, to convert domestic product to national product we need to add net factor income from abroad.