Net National Product at factor cost (NNPFC) is defined as :
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → The sum of the income earned by all factors in the production in the form of wages, profit, rent and interest etc. belonging to a country during a year. It includes net factor income from Abroad
Net National Product at factor cost is the national income. It is the part of output that accrues to the factors of production of the country’s normal residents.
Option (1) Value of output received by the factors of production belonging to a country in a year — Incorrect. This is the definition of gross national product at factor cost. It is gross, so depreciation is still in it.
Option (2) The sum of the income earned by all factors in the production in the form of wages, profit, rent and interest etc. belonging to a country during a year. It includes net factor income from Abroad — Correct. It adds up all factor incomes and includes net factor income from abroad, which makes it national.
Option (3) The value of all final goods and services produced by the normal residents of country — Incorrect. This is gross national product at market prices. It still includes depreciation and net indirect taxes.
Option (4) The Gross domestic product at market price less net product taxes — Incorrect. This gives gross value added (GVA) at basic prices. It is gross and domestic, so depreciation is still in it and net factor income from abroad is left out.
NCERT (2026-27): Introductory Macroeconomics — Chapter 2: National Income Accounting, Table 2.4: Basic National Income Aggregates
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