Multiple choice

Directions: Select the correct alternative from the given choices.

The term National Income represents

  1. Gross National Product at market prices minus depreciation

  2. Gross National Product at market prices minus net factor income from abroad

  3. Gross National Product at market prices minus depreciation and indirect taxes plus subsidies.

  4. Gross National Product at market prices minus depreciation plus net factor income from abroad.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

National Income equals GNP at market prices minus depreciation, then adjusted for indirect taxes (subtract) and subsidies (add). This represents the net value of goods and services produced. Option B incorrectly subtracts net factor income from abroad (that's for NNP), and Option D adds factor income instead of adjusting for taxes/subsidies.

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