Question

Which of the following is true with regard to the calculation of Net Factor Income from Abroad (NFIA)?

• A. Multiply the income earned by Indians abroad by the income earned by foreigners in India.
• B. Add the income earned by Indians abroad to the income earned by foreigners in India.
• C. Subtract the income earned by foreigners in India from the income earned by Indians abroad.
• D. Divide the income earned by Indians abroad by the income earned by foreigners in India.

Answer 1

The correct option is C Subtract the income earned by foreigners in India from the income earned by Indians abroad.

NFIA stands for Net Factor Income from Abroad, which is one of the important components of calculating GNP or Gross National Product. The NFIA is calculated by subtracting the income earned by foreigners in India from the income earned by Indians in foreign countries. In other words,

Net Factor Income from Abroad = Income earned by Indians in foreign countries - Income earned by foreigners in India