Question

Income generated from Aircrafts of Air India operating between Canada and England would be added to the domestic income (NDPFC) of ____________.

• A. Canada
• B. England
• C. Both Canada and England
• D. India

Hint:

Domestic income depends on location, while national income depends on ownership (residency).

Answer 1

The Correct Option is D

Step 1: Understanding the Concept:
Domestic Income (\(NDP_{FC}\)) includes all factor income generated within the 'domestic territory' of a country, regardless of whether it is earned by residents or non-residents.
Step 2: Detailed Explanation:
In macroeconomics, the definition of 'Domestic Territory' is wider than political frontiers.
According to the United Nations, domestic territory includes ships and aircraft operated by the residents of a country between two or more countries.
Since Air India is a resident airline of India, its aircraft are considered part of the domestic territory of India, no matter where in the world they are flying (e.g., between Canada and England).
Therefore, the income generated from these operations is added to India's domestic income.
Step 3: Final Answer:
The income is part of India's \(NDP_{FC}\) because the aircraft are part of India's economic territory.