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Questions
Distinguish between net export and net factor income from abroad.
Distinguish between Net Factor Income from Abroad (NFIA) and Net Exports (X − M).
Solution
| Sr. No. | Net export | Net factor income from abroad (NFIA) |
| 1. | The difference between a nation's total imports (M) and exports (X) is known as net exports. | The difference between foreign residents' income and their income is known as the NFIA. |
| 2. | Net exports = X − M | NFIA = Factor Income from Abroad – Factor Income Paid to Abroad |
| 3. | Includes internationally traded goods and services. | Includes foreign profits, rent, interest, and wages. |
| 4. | It calculates the GDP contribution of international trade. | GDP is converted into GNP (Gross National Product) with its support. |
| 5. | Related to the exchange of goods and services. | Related to transactions involving income from the factors of production. |
| 6. | Indicates if a nation has a trade deficit or surplus. | Displays the income coming in or going out as a result of factor services. |
Notes
Students should refer to the answer according to their preferred marks.
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