71. (Delhi 2009). The national income (NI) is an aggregate value of the total production of goods and services by a nations residents pertaining to a particular accounting year. Intermediate Goods Consumption of Fixed Capital Indirect Taxes = 750-450 = Rs. = Rs. Calculate Net National Product at Market Price and Gross National Disposable Income from the following: ( All India 2014). = Rs. 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. Difference Between Monetary Policy and Fiscal Policy, Your Mobile number and Email id will not be published. (ii) Government final consumption expenditure. = Rs. In other words, the NDP-FC is calculated by subtracting the indirect taxes and adding the subsidies to the value of output, which is the value of all goods and services produced within a countrys borders. = 750 690 = Rs. Since net value added by an enterprise is the result of services of factors of production, therefore, the same is distributed in the form of money income (rent, wages, interest, etc.) How will you treat the following while estimating National Income of India? Only factor incomes which are earned by rendering productive services are included. (i) Family members working free on the farm owned by the family. 62.Calculate(a) Gross Domestic Product at Market Price and (iii)Purchase of taxi by a taxi driver. Net Value Added at Factor Cost (NVAFC) = Value of output (Sales + Change in Stock) Purchase ofRaw Materials Consumption of Fixed Capital + Subsidies 1. = NNPFC+ Net Indirect Tax + Consumption of Fixed Capital Net Current Transfer to Abroad = 685 + (120-20) + 35 -(- 15) = [800 + (40 50)] 500 [200 -180] + 60 In other words, it accounts for the reduction in the value of the countrys assets due to aging, wear and tear, or obsolescence. Particulars = 5500 + 250- 150 + 100 = 5850- 150 (iii) Purchase by a foreign tourists will be included while estimating National Income as it is consideredas exports of goods and services. This concept is about NDP or net domestic product that serves as an important factor for determining the economic health of a country. = 300+200 + 700-120-150 + 20 , , 700 crore, 11. Such an increase along with deterioration of the capital stock value indicates economic stagnation. The net domestic product is defined as the net value of all the goods and services produced within a countrys geographic borders. Net Domestic Product at Factor Cost (NDPFC) Net Value Added at Factor Cost (NVAFC) = Value of Output (Sales + Change in Stock)-Purchase of NDP is a more accurate measure of a countrys economic output, as it considers the wear and tear of physical capital, which is a key factor in long-term economic growth. (a) National Income (NNPFC) = Private Final Consumption Expenditure + Government Final Consumption (ii) Expenditure method Give reasons for your answer. 88.Giving reason, explain, how the following are treated in estimating National Income? = 790-500-20+60 Calculate Net Value Added at Factor Cost from the following data, Ans. 990 crore. 2. 735 crore, 84. 75. 1390 crore, 51. Calculate sales from the following data (Delhi 2013), 3. The resulting total is called Domestic Income or Net Domestic Product at FC (NDPFC)- By adding net factor income from abroad to domestic income, we get National Income (NNPFC)- 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) Remittances from non-resident Indians to their families in India. = 700+100+10-130 = Rs. From the following data calculate Net Value Added at Factor Cost (Delhi 2011), Ans. Here is a comparison of Gross Domestic Product (GDP) and Net Domestic Product (NDP) in a table format: Net Domestic Product at market price (NDP MP) is a measure of a countrys economic output that considers the production of all goods and services within its borders and the market prices at which they are sold. = Rs. It is measured by aggregating monetary values of final goods and services produced during that financial year. 73.Calculate National Income by Chapter Chosen. (iii) Purchase by foreign tourists. 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. Your Mobile number and Email id will not be published. As a result of the EUs General Data Protection Regulation (GDPR). Ans. GDP at factor cost is the same as GDP at market prices less net indirect taxes. (iii) Interest received on loans given to a friend for purchasing a car. 30 crore, 12. Ans. In other words, GDP measures the total value of all goods and services produced within a country. 5. =1850 + (400 + 500+1100 + 100 + (-50) Its main tools are aggregate demand and aggregate supply of the economy as a whole. 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. Hence, according to the value-added method: National Income = (NDP FC) + Net factor income from abroad. Expenditure Method: NI = C (household consumption) + G (government expenditure) + I (investment expense) + NX (net exports).3. Calculate Gross National Product at Factor Cost by = (800 + 50) (400 +100) 40 + 30 Calculate NDP at FC from the following data: Direct purchases from abroad by residents households, Direct purchase by non-residents in domestic market, GDP at MP = 400 + 100 + 50 - 150 - 20 + 100 = 480 croresNDP at FC = 480 - 60 - 20 = 400 crores. 3 Marks Questions Gross National Product: Gross National Product (GNP) is defined as the total market value of all final goods and services produced in a country during a specific period of time, usually one year. 555 crore, 83. (a) National Income (NNPFc)= Private Final Consumption Expenditure + Government Final Consumption Expenditure + Gross Domestic Fixed Capital Formation + Net Change in Stocks Net Imports Depreciation Net Indirect Tax Net Factor Income to Abroad It is that part of economic theory which deals with the individual parts of the economic system like individual households, individual firms, individual industries, etc. = 600 + (-10)-300 = Rs. It can be classified into following components: Net Domestic Product (NDP) measures the total value of all goods and services produced in a country, adjusted for the depreciation of physical capital. = 1600-300-(-20)+ 30+ 40+0 (ii) Yes, it is included while estimation of National Income as it is considered as a change in stock during the year. NDP is an important economic indicator because it provides a more accurate picture of a countrys economic output that is available for consumption or investment. We explain NDP at factor cost, its formula, examples, and comparison with gross domestic product. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. This is important as failure to take action would result in a decrease in the country's GDP. = 1450 + 400 + [200 + (- 50)] (-50) -100 = Rs. Question 3. Net Factor income to abroad: 3,200. National Income Accounting Book Chosen. The $80 million is the amount available for consumption or investment in the economy after accounting for the depreciation of physical capital. 70. 570 crore, 41. From the following data calculate Net Value Added at Factor Cost (Delhi 2011 c), Ans. It is computed by subtracting depreciation from the gross value. (i) Wheat grown by farmer but used entirely for familys consumption will be included while estimating National Income, as the production is done for self-consumption purpose and relate to current production. (a) Net National Product at Market Price and Calculate Net Domestic Product at Factor Cost by the expenditure method and production method (All India 2010), Ans. Net Domestic Product at Factor Cost (NDPFC) = Value of Output in Economic Territory-(Intermediate Purchase by Primary Sector+ Intermediate Purchase by Secondary Sector + Intermediate Purchase by Tertiary Sector)-Consumption of Fixed Capital Indirect Taxes Performance & security by Cloudflare. Also explain, two alternative ways of avoiding the problem. While that may take many years, barring unexpected damage or defects, there is a cycle of equipment failure and replacement. Required fields are marked *. (iii) Imputed value of self-consumed goods should be included, but self-consumed services should not be included. 680 crore (a) Gross National Product at Factor Cost (GNPFC) (i) Expenditure on fertilisers by a farmer is not included in the estimation of National Income as it is an intermediate consumption as fertilisers are meant for further production. Calculate National Income by the (i) Bonus paid to employees. 11. Please login :). Giving reason, explain whether the following are included in domestic product of India. (v) Transfer earnings like old age pensions, unemployment allowances, scholarships, pocket expenses, etc, should not be included. 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 Ans. Net Current Transfers to Abroad + National Debt Interest + Current Transfers by Government + Net Factor Income from Abroad 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. Meaning. (All India 2009). Home Economy National Income accounting Methods of estimating National Income Income method. = Rs. (a) Net Domestic Product at Factor Cost (NDPFC) = Wages and Salaries + Rent + Interest Paid byProduction Units + Corporation Tax + Dividends + Undistributed Profits + Social Security Schemes by Employers Calculate Net Value Added at Factor Cost (Delhi 2012), 6. (Python), Class 12 Computer Science (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. Givereasons for your answer. Giving reasons, explain how the following are treated while estimating National Income? It is a measure of the total value of all goods and services produced within a countrys borders, adjusted for the decline in the value of physical capital over time due to wear and tear, obsolescence, and other factors. , Ans id will not be included, but self-consumed services should not be.. Aggregating Monetary values of final goods and services produced within a countrys geographic borders there... ( Delhi 2011 c ), Ans Transfer earnings like old age pensions, unemployment,... ( v ) Transfer earnings like old age pensions, unemployment allowances,,! Indirect Taxes their families in India cfa and Chartered financial Analyst are Registered Trademarks owned by cfa Institute Net Added! 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