Which of the following statements is true?
Statement 1- National products includes the production activity of the production units located in the economic territory.
Statement 2- Domestic product includes the production activity of the residents irrespective of whether performed within the economic territory or outside it.
Answer & explanation
Correct answer: option 4
Domestic products includes the production activity of the production units located in the economic territory.
National product includes the production activity of the residents irrespective of whether performed within the economic territory or outside it.
Domestic territory includes:
- Political frontiers including territorial waters and air space
- Embassies, consulates, military bases etc located abroad
- Ships, aircrafts operated by residents in 2 or more countries
- Fishing vessels, oil and natural gas etc operated by residents in international waters
In economics, in order to become a normal resident of a country, the following 2 conditions needs to fulfilled:
- Should have lived for more than 1 year
- The individual's economic interest must lie in that country