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Answer the Following Question. Define Net Exports. How is It Different from the Net Factor Income from Abroad? - Economics

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Short Note

Answer the following question.
Define net exports. How is it different from the net factor income from abroad?

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Solution

Net exports refer to the difference between the total exports and total imports of a country during an accounting year.
Net Exports = (Value of Exports – Value of Imports)
NFIA serves as the basis of the distinction between the National Income and the Domestic Income.

National Income = Domestic Income + NFIA
i.e. NNPFC = NDPFC + NFIA
Net Exports is equal to the value of exports minus value of imports whereas NFIA is equal to  Factor Income Earned from Foreign minus Factor Income Paid to the Foreigners.

Concept: Methods of Calculating National Income - Expenditure Method
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