Which of the following are true about national income and related aggregates?

(A) National income includes factor income earned from abroad but does not include factor income paid abroad.
(B) Domestic income does not include factor income earned from abroad but includes factor income paid to abroad.
(C) Domestic income include both factor income earned from abroad and factor income paid to abroad
(D) National income can never be smaller than domestic income.

Choose the correct answer from the options given below:

(A) and (B) only

The correct answer is Option (1) → (A) and (B) only

(A) National income includes factor income earned from abroad but does not include factor income paid abroad — True.
National Income = Domestic Income + Net Factor Income from Abroad (NFIA).
NFIA = Factor Income Earned from Abroad − Factor Income Paid Abroad.
So, only income earned from abroad is included (net of payments).

(B) Domestic income does not include factor income earned from abroad but includes factor income paid to abroad — True. Domestic income refers to income generated within the domestic territory of a country, so it includes factor income paid to foreigners, but excludes income earned from abroad.

(C) Domestic income includes both factor income earned from abroad and paid to abroad — False. Only income generated within the country is included; hence, foreign earnings are excluded.

(D) National income can never be smaller than domestic income — False. If factor income paid abroad exceeds income earned from abroad, then NFIA becomes negative, making national income smaller than domestic income.