Depreciation = $40,000 Gross Domestic Product = $100,000 Factor Payments to Foreigners = $20,000 Factor Receipts from Abroad = $25,000 The National Income i...

Depreciation = $40,000
Gross Domestic Product = $100,000
Factor Payments to Foreigners = $20,000
Factor Receipts from Abroad = $25,000

The National Income is equal to

Answer Details

To calculate National Income, we can use the following formula: National Income = Gross Domestic Product (GDP) - Depreciation + Factor Receipts from Abroad - Factor Payments to Foreigners Plugging in the given values, we get: National Income = $100,000 - $40,000 + $25,000 - $20,000 National Income = $65,000 Therefore, the National Income is $65,000. Depreciation is subtracted from GDP because it represents the wear and tear on capital goods used in production. Factor payments to foreigners are payments made to foreign individuals and companies for factors of production such as labor and capital. Factor receipts from abroad are receipts earned by domestic individuals and companies for factors of production used abroad. These are added to or subtracted from GDP to arrive at the National Income, which is the income earned by domestic factors of production.