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MCQs · Q2

Q.Net Factor Income from Abroad (NFIA) is correctly defined as:

(a) Factor income received from abroad minus factor income paid to abroad
(b) Factor income paid to abroad minus factor income received from abroad
(c) GNP minus NNP
(d) GDP plus Consumption of Fixed Capital
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NFIA links the domestic concept (GDP) to the national concept (GNP): GNP=GDP+NFIAGNP = GDP + NFIA.

By definition, NFIA=Factor income received by residents from abroad−Factor income paid to non-residents within the countryNFIA = \text{Factor income received by residents from abroad} - \text{Factor income paid to non-residents within the country} — option (a).

Option (b) simply reverses the sign, which would make NFIA negative whenever a country's residents earn more abroad than non-residents earn domestically — the opposite of the correct relationship. Option (c) is incorrect because GNP minus NNP equals Depreciation, not NFIA. Option (d) is also incorrect — GDP plus Consump …

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