Determination of National IncomePYQ - May 2019 (Inter)Question 116 of 20
All Questions

GNP includes:

Options

AGDP + Net factor income from abroad
BGDP - Net factor income from abroad
CGDP + Depreciation
DGDP - Depreciation
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Correct Answer

✅ Option a — GDP + Net factor income from abroad

All Options:

  • AGDP + Net factor income from abroad
  • BGDP - Net factor income from abroad
  • CGDP + Depreciation
  • DGDP - Depreciation

Detailed Solution & Explanation

To determine the correct answer, let's break down the concept of GNP. • GNP stands for Gross National Product, which is the total value of goods and services produced by a country's citizens, regardless of where they are produced. • It includes the value of goods and services produced within the country, as well as the income earned by its citizens from abroad. • The formula for GNP is GDP (Gross Domestic Product) plus net factor income from abroad, which refers to the income earned by a country's citizens from foreign investments, minus the income earned by foreign citizens from domestic investments. • This means that GNP takes into account the income earned by a country's citizens from abroad, which is not included in GDP. The correct answer is right because it accurately reflects the definition of GNP. • Options that subtract net factor income from abroad or add/depreciation are incorrect because they do not align with the definition of GNP, as depreciation is a concept related to the reduction in value of assets over time and is not directly related to the calculation of GNP.

About This Chapter: National Income

Paper

Paper 4: Business Economics

Weightage

15%

Key Topics

Aggregates, Measurement, Keynesian Theory

A crucial chapter covering national income aggregates like GDP, GNP, NDP, NNP, and the methods of measuring national income (Income, Expenditure, and Output methods). It also introduces Keynesian Theory including the concepts of Aggregate Demand, Consumption Function, and the Multiplier.

View Official ICAI Syllabus

Exam Strategy Tip

Practice numerical questions on GDP/GNP calculations and the Multiplier. These are guaranteed marks in every exam. Also understand the circular flow of income clearly.

More Questions from Determination of National Income

Personal Income minus Direct Taxes equals:

If MPC is 0.8, the value of the investment multiplier is:

Depreciation is also known as:

National Income usually refers to:

In a two-sector economy, Aggregate Demand equals:

Which method is also known as the "Value Added Method"?

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