Correct Option
National Income (NI) is defined as the Net National Product (NNP) at factor cost. This measure represents the total income earned by all factors of production (land, labour, capital, and entrepreneurship) within an economy during a given period. These factor incomes include wages, rent, interest, and profits. NNP at factor cost is derived by excluding indirect taxes and including subsidies from NNP at market price, thereby reflecting the true earnings of the residents from their productive activities, free from the influence of government taxes or transfers.
Incorrect Options
Option (A) Net National Product at market price:
NNP at market price includes indirect taxes and excludes subsidies. This measure reflects the value of goods and services at the prices consumers pay in the market. It does not represent the actual income received by the factors of production, as it is influenced by government fiscal policies. Therefore, it is not equivalent to National Income.
Options (C) Net Domestic Product at market price and (D) Net Domestic Product at factor cost:
Both Net Domestic Product (NDP) at market price and NDP at factor cost refer to the income generated within the domestic geographical boundaries of a country. National Income, however, is a national concept, which accounts for the income earned by the normal residents of a country, regardless of where it is earned. It includes Net Factor Income from Abroad (NFIA), which is the difference between factor income received from abroad and factor income paid to abroad. Domestic product measures (like NDP) exclude NFIA, and thus do not represent National Income.