The relationship between which of the following is correct?
Show answer & explanation
Correct answer: D
Explanation
The correct answer is option 4 i.e. National income = NDP at factor cost + net factor income from abroad.
National income = NDP at factor cost + net factor income from abroad
This equation reflects that national income (also known as Net National Product at factor cost) is derived by adding net factor income from abroad to Net Domestic Product at factor cost. Net factor income from abroad accounts for the difference between income earned by the country's residents from foreign sources and income earned by foreign residents from domestic sources. This adjustment ensures that the national income reflects the total income earned by the country's residents, regardless of where it is generated.