Which one of the following statements is <strong>NOT</strong> correct for National Income Accounting for India?
- A. Imports are subtracted in calculating Gross Domestic Product.
- B. Net factor payments earned from abroad are included in Gross Domestic Product. ✓
- C. Purchase and sale of second-hand goods are not included in Gross Domestic Product.
- D. Inventories are included in Gross Domestic Capital Formation.
Correct Answer: B. Net factor payments earned from abroad are included in Gross Domestic Product.
Explanation
Net factor income from abroad (NFIA) is added to Gross Domestic Product (GDP) to calculate Gross National Product (GNP). GDP measures only the domestic production within a country's geographical borders.
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