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Question

Mention the situation in which following equations will hold true:
(i) National Income = Domestic Income
(ii) GDPFC>GDPMP
(iii) NNPFC<NDPFC
(iv) GDPFC=GDPMP
(v) Domestic Income is greater than National Income.

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Solution

(i) National Income = Domestic Income: this situation will be seen when There will be no Net factor income from abroad.
(ii) GDP(at FC) >GDP(at MP) : This situation will be seen when Subsidies will be more than indirect tax.
(iii) NNP(at FC) <NDP(at FC): This situation will be seen when net factor income from abroad is negative.
(iv) GDP(at FC) =GDP(at MP) : This situation will be seen when net indirect tax is zero.
(v) Domestic Income is greater than National Income: This situation will be seen when net factor income from abroad is negative.

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