Which of the following statements are correct about National Income aggregate ?
A. NNP - Depreciation = GNP
B. $NNP_{MP}$+Subsides = $NNP_{FC}$+Indirect Tax
C. GNP = GDP + Net factor income from abroad
D. $NNP_{FC}=NDP _{FC}$ + Net factor income from abroad
E. $GDP_{FC}=GDP_{MP}+NIT$
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is option (2) : B, C and D only
A. NNP - Depreciation = GNP : Incorrect. NNP = GNP - Depreciation
B. $NNP_{MP}$+Subsides = $NNP_{FC}$+Indirect Tax : Correct.
$NNP_{FC}$ = $NNP_{MP}$ - (Net Indirect taxes)
$NNP_{FC}$ = $NNP_{MP}$ - (Indirect taxes -Subsidies)
$NNP_{FC}$ = $NNP_{MP}$ - Indirect taxes + Subsidies
$NNP_{FC}$ + Indirect taxes = $NNP_{MP}$ + Subsidies
C. GNP- GDP + Net factor income from abroad:Correct.
D. $NNP_{FC}=NDP _{FC}$ + Net factor income from abroad : Correct
E. $GDP_{FC}=GDP_{MP} + NIT$ : This is incorrect.
Correct equation is $GDP_{FC}=GDP_{MP} - NIT$