Which of the following is also known as national income?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → NNPFC
Net National Product at factor cost is called national income. It is the total income earned by the factors of production of the country, after taking away depreciation (net) and indirect taxes less subsidies (factor cost) from the value of output.
Why the other options are incorrect
Option (1) NNPMP — Incorrect. It is valued at market prices, so it still includes net indirect taxes.
Option (2) GDPFC — Incorrect. It is gross (depreciation not taken away) and domestic (net factor income from abroad not added).
Option (3) GDPMP — Incorrect. It is gross, domestic and at market prices, the widest of these measures.