There are only two producing sectors A and B in an economy. as well as windfall gains (e.g., from lotteries) are excluded. (i) Gross National Product at Market Price (a) National Income (NNPFC) = Private Final Consumption Expenditure+ Government Final Consumption Expenditure + Net Domestic Capital Formation + Change in Stock Net Exports Net Indirect Taxes Net Factor Income to Abroad 71. 400. = 5500 + 250- 150 + 100 = 5850- 150 How should the following be treated in estimating National Income of a country? suppose if we include the price of wheat, then the price of floor and finally price of bread. Question 3. Such an increase along with deterioration of the capital stock value indicates economic stagnation. = 880-540 This is the market value of output, while income payments made to factors of production amount to Rs. Still, it only counts the value of the factors of production used to produce them, excluding indirect taxes and subsidies. It refers to the sum total of factor . Calculate National Income and Gross National Disposable Income from the following (Delhi 2011), Ans. =1850 + (400 + 500+1100 + 100 + (-50) Home Economy National Income accounting Methods of estimating National Income Income method. Precautions While Using Expenditure Method. (Foreign 2014) Download the PDF Question Papers Free for off line practice and view the Solutions online. 33. (i) Payment of bonus by a firm. Suppose a countrys economy produces $100 million worth of goods and services in a year, and the depreciation of its physical capital is $20 million. How should the following be treated while estimating National Income? An increase in NDP would indicate growing economic health, while a decrease would indicate economic stagnation. NCERT Solutions for Class 6, 7, 8, 9, 10, 11 and 12, 1. Ans. Measuring Economic Conditions: GNI or GDP? (ii) Value added method This approach or method is a way to avoid the problem of double counting. An increase in NI does not always indicate growth but may result from rising commodity prices.2. Private Income = Net Domestic Product at Factor Cost Accuring to Private Sector + NFIA + Current Transfer from Government + National Debt Interest + Net Current Transfers from Abroad Gross National Product at Market Price (GNPmp) = NDPFC + Net Indirect Taxes Net Factor Net Domestic Product (NDP) measures the total value of all goods and services produced in a country, adjusted for the depreciation of physical capital. (i) Social security contributions by employees is included in the estimation of National Income, as it is a part of compensation of employees and it is an earned income. 310 crore, (b) Gross National Disposable Income (GNDI) =NDPFC+ Net Indirect Tax + Net Factor Income fromAbroad + Depreciation + Net Current Transfer from Abroad (a) National income = NDP at factor cost-net factor income from abroad. (ii) Payment of interest by a government firm should not be included in the estimation of National Income, as it is a transfer payment. Sale and purchase of second-hand goods are excluded since they are not part of production of current year but commission paid on sale of second-hand goods is included as it is reward for rendering productive services. Give two examples of macroeconomic studies. 25.Giving reason, explain how should the following be treated while estimatingNational Income (All India 2012) Calculate intermediate consumption from the following data, Ans. 88.Giving reason, explain, how the following are treated in estimating National Income? 720 arab, 35. Displaying ads are our only source of revenue. 1650 crore, (b) By Expenditure Method Gross National Product at Factor Cost (GNPFC) = Private Final Consumption Expenditure+ Government Final Consumption Expenditure + Net Domestic Capital Formation + Consumption of Fixed Capital + Net Exports Net Indirect Taxes + Net Factor Income from Abroad and caffeine. Find Net Value Added at Market Price (Delhi 2012), 7. It is useful in comparing the economic output of different countries. It discusses how equilibrium of a consumer, a producer or an industry is attained. 29.Giving reason, explain how are the following be treated in estimation of NationalIncome by income method (All India 2010) (ii) Rent paid by embassy of Japan in India to a resident Indian. Computation of National Income (By Expenditure Method), 8. Methods of Calculating National Income, (i) Income method Calculate National Income from the following data (Delhi 2013), = Private Final Consumption Expenditure + Government Final Consumption Expenditure + Gross Domestic Capital Formation Net Imports Net Indirect Taxes Consumption of Fixed Capital + Net Factor Income from Abroad Ltd. Download books and chapters from book store. The frequency and scope of such replacements can vary by type of capital assets. = 750+ (-30)-500-60-100 = 500 + 10-200=Rs. (b) By Expenditure Method = Rs. The Income Method measures national income from the side of payments made to the primary factors of production in the form of rent, wages, interest and profit for their productive services in an accounting year. (ii) Interest paid by an individual on a loan taken to buy a car. Chapter Chosen. = 140-110 + 5 (ii) Profits earned by an Indian company from its branches in Singapore will be included while estimating National Income of India, as it is a factor income from abroad. (i) Remittances from non-resident Indians to their families in India. From the following data calculate Net Value Added at Factor Cost (Delhi 2011 c) The formula for NDP can be expressed as follows: Depreciation = Depreciation of capital assets such as equipment, vehicles, housing, and more. It is represented as follows: The NDP MP is the value of total goods and services produced within the nation minus depreciation. Calculate Gross National Product at Market Price and Net National Disposable Income from the following data (Delhi 2009 c), 80. (b) National Income = Gross Value Added (GVA) by A and B = (310 + 290) crores (ii) Interest on a car loan paid by a government owned company. = 3550-2850 = Rs. (iii) Expenditure on providing police services by the government Depreciation - cost allocated to a tangible asset over its useful life. Components of Final Expenditure: Above Village Hyper Market, Chandralyout Main Road, What is essential is that production is . 6570 crore, (b) Net National Disposable Income (NNDI) = GNPFC + Net Indirect tax Consumption of Fixed Capital+ Net Current Transfers from Rest of the World = 6570+ 800 100 + (70 40) Calculate Net National Product at Factor Cost and Gross National Disposable Income from the following: (Delhi 2014), 38. 11. Thus, it provides a clearer picture of a countrys economic performance. = 600 + (-10)-300 = Rs. (Delhi 2011), 56.Calculate Net Value Added at Factor Cost (NVAFC) = Value of Output (Sales + Change in Stock) Purchase ofIntermediate Goods Depreciation Net Indirect Taxes 62.Calculate(a) Gross Domestic Product at Market Price and 30.Giving reason, explain how are the following treated in estimating NationalIncome method (Delhi 2010 c) Switch; Flag; = 500+ (80-60)-350-90-50 The formula for Net Domestic Product (NDP) is as follows: GDP is the Gross Domestic Product, the total value of all goods and services produced in a country. = 2000 + 500 + 700 + 800 + 1500 You are free to use this image on your website, templates, etc., Please provide us with an attribution link. You can learn more about it from the following articles , Your email address will not be published. National Income (NNPFC) = Private Final Consumption Expenditure + Government FinalConsumption Expenditure + Net Domestic Fixed Capital Formation + Change in Stocks Net Imports Net Indirect Taxes + Net Factor Income from Abroad 1600 crore = 1000+100 + 130 + 50+100 + 20+200 = Rs. Meaning of macroeconomics "Macroeconomics is the study of overall averages and aggregates covering the whole economy and examines the interrelationship among various aggregates." (iii) Interest on public debt will not be included while estimating National Income, as it is the loan takenfor consumption purpose. (i)Interest on a car loan paid by an individual. 1. An example of data being processed may be a unique identifier stored in a cookie. 570 crore, 41. = 520-490 = Rs. = 920-110 = Rs. (vi) Gross National Product at FC: It is the sum total of factor incomes earned by normal residents of a country along with depreciation, during an accounting year. Domestic Income or NDP at FC. GDP = Total National Income + Sales Taxes + Depreciation + Net Foreign Factor Income. (b) Gross National Disposable Income (GNDI) =NNPFC+ Net Indirect Taxes + Consumption of FixedCapital Net Current Transfer to the Rest of the World Why is study of problem of unemployment in India a macroeconomic study? NDP accounts for capital that has been consumed over the year in the form of housing, vehicle, or machinery deterioration. = Rs. = 300 + 600 +150 + 50-90 + (-20) Ans. (i) Dividend received by a foreigner from investment in share of an Indian company. Ans. It is a measure of economic activities carried out by the residents of that countryboth domestically and while residing in a foreign country. NDP FC = GDP MP - Depreciation - Net Indirect Taxes NDP FC is also known as Domestic Income or Domestic factor income. = Rs. You must give reason in support of your answer. Teachoo gives you a better experience when you're logged in. We and our partners use cookies to Store and/or access information on a device. (ii) Net National Disposable Income (All India 2011), 57. This has been a guide to Net Domestic Product & its meaning. This concept is about NDP or net domestic product that serves as an important factor for determining the economic health of a country. It helps to solve the central problem of what, how and for whom to produce in the economy. 660 crore, 54. (ii) Rent free house to an employee by an employer will be included while estimating National Income, as it is a part of compensation to the employee. You are free to use this image on your website, templates, etc., Please provide us with an attribution link, Net Domestic Product at factor cost (NDP-FC), Gross Domestic Product vs Net Domestic Product. 355 crore, 81. You can email the site owner to let them know you were blocked. It concerns with the study of individual choice and. This differs from an expansion of factory operationsfor example, the opening of a new site, adding to the total number of factories. = Rs. What Is GDP and Why Is It So Important to Economists and Investors? Value Added Method/Product Method/Output Method By this method, the total value of all the final goods and services produced in an economy during a given time period are estimated to obtain the value of domestic income. = 500 + 100 +200 +50-40-70- 120- (- 10) 810 crore From the following data calculate Net Value Added at Factor Cost (Delhi 2011 c), Ans. It is that part of economic theory which deals with the behaviour of national aggregates. The resulting total is called Domestic Income or Net Domestic Product at FC (NDP FC)- By adding net factor income from abroad to domestic income, we get National Income (NNP FC)- Mind, in income method national income is measured at the stage when factor incomes are paid out by enterprises to owners of factors of productionland, labour, capital and enterprise. (i) The value of intermediate goods should not be included. It does not matter whether the producer is the normal resident or foreigner. Net Value Added at Factor Cost (NVAFC) = Sales + Change in Stock (Closing Stock- Opening Stock)- Purchase of Intermediate Goods Consumption of Fixed Capital Indirect Tax GDP = Value of Output + Indirect Taxes Subsidies, The measure of a countrys overall economic performance, The measure of a countrys economic output available for consumption or investment, Does not take into account the depreciation of physical capital, Does not take into account indirect taxes and subsidies, Commonly used as a broad indicator of economic activity, Provides a more accurate picture of a countrys economic output, useful in long-term economic analysis. Choice and a better experience when you 're logged in 7, 8 to. Received by a foreigner from investment in share of an Indian company rising commodity prices.2 a new site, to... A and B in an economy on a device Income payments made to factors of production amount to Rs,. 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