CA Foundation · Business Economics · Determination of National Income
An Indian economy has GDP at market prices of ₹900 crore, net factor income from abroad of ₹(-)20 crore (a net outflow), and depreciation of ₹60 crore. What is its NNP at market prices?
NNP at market prices is ₹820 crore. First GNP = 900 + (-20) = ₹880 crore because net factor income from abroad is negative. Then deduct depreciation of ₹60 crore, giving 880 - 60 = ₹820 crore.
- A₹820 croreCorrect
- B₹860 crore
- C₹980 crore
- D₹880 crore
Explanation
GNP = GDP + NFIA = 900 + (-20) = ₹880 crore. NNP at market prices = GNP - depreciation = 880 - 60 = ₹820 crore. Check: 900 - 60 = 840, then less 20 = 820. The option ₹880 crore is GNP, which forgets to deduct depreciation, and ₹860 crore wrongly adds NFIA of 20 and subtracts only 60 incorrectly.
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