In which type of economic system is national income equal to domestic income because there is no net factor income from abroad?

Introduction / Context:
This question belongs to basic macroeconomics and national income accounting. It asks about the situation in which national income and domestic income are numerically equal. Understanding this relation helps learners distinguish between closed and open economies and to interpret national income statistics correctly.

Given Data / Assumptions:
- National income is compared with domestic income.
- The options mention Closed Economy, Open Economy, Developed Economy, Developing Economy and Mixed Economy.
- We assume standard textbook definitions where national income equals domestic income plus net factor income from abroad.

Concept / Approach:
The key formula is:
National income = Domestic income + Net factor income from abroad.
In a truly closed economy there is no economic interaction in the form of factor payments with the rest of the world, so net factor income from abroad is zero. Therefore national income equals domestic income. The approach is to recall this relationship and recognise that openness or development status, by itself, does not guarantee equality between the two measures.

Step-by-Step Solution:
Step 1: Recall the relation national income = domestic income + net factor income from abroad. Step 2: Note that in a closed economy there is no cross border flow of factor income such as wages, interest or profits. Step 3: With no net factor income from abroad, the additional term becomes zero, so national income equals domestic income. Step 4: Conclude that a Closed Economy best satisfies the condition given in the question.

Verification / Alternative check:
Another way to check is to imagine an Open Economy where residents work abroad or foreign firms earn income inside the country. In that case, net factor income from abroad will generally be positive or negative, and national income and domestic income will differ. Developed or developing status does not guarantee no external factor flows. This confirms that only a closed economy ensures equality in the simplest model.

Why Other Options Are Wrong:
An Open Economy is wrong because it explicitly allows international factor payments, so domestic income and national income normally differ.
Developed Economy is incorrect since developed countries are usually highly open, with large cross border capital flows and labour income flows.
Developing Economy is also wrong because many developing countries participate actively in global labour and capital markets.
Mixed Economy refers to the mix of public and private sectors, not to openness to foreign factor income, so it does not guarantee equality between the two measures.

Common Pitfalls:
Students sometimes focus on the words developed or developing and think that equality will occur in highly organised economies. Others may confuse national income with domestic product and forget the role of net factor income from abroad. Remembering the simple accounting identity and visualising an economy with no foreign factor transactions helps avoid these errors.

Final Answer:
Therefore, national income and domestic income are equal in a Closed Economy where net factor income from abroad is zero.