Question

Q. Consider the following statements regarding Net Factor Income From Abroad (NFIFA):

Select the correct answer using the codes given below:

• A. 1 only
• B. 2 only
• C. 1 and 2
• D. None of the above

Answer 1

The correct option is A 1 only

Explanation:

Statement 1 is correct: Following are the three main components of NFIFA:

1. Net compensation of employees.
2. Net income from property and entrepreneurship (rent, interest, profit).
3. Net retained earnings of resident companies abroad.

Statement 2 is incorrect: NFIFA can be negative as well as positive. This is negative when income earned by foreigners from our country is more than the income earned by us from abroad and positive when the former is less than the latter.