(i) Capital gain on sale of a house. = 1000+ 500 + 200 + 60 + (- 20) 80 + (-10) (i) National Income Income Method By this method, the total sum of the factor payments received during a given period is estimated to obtain the value of Domestic Income. + Net Value Added by Tertiary Sector Net Indirect Taxes Gross domestic product is the monetary value of all finished goods and services made within a country during a specific period. It is study of individual economic units of an economy. Thus, it provides a clearer picture of a countrys economic performance. 950 crore 68.Calculate Gross National Product at Factor Cost from the following data by (a) Gross National Product at Market Price and Net domestic product (NDP) is an annual measure of the economic output of a nation that is calculated by subtracting depreciation from gross domestic product(GDP). How will you treat the following while estimating National Income of India? + Government Final Consumption Expenditure + Net Domestic Fixed Capital Formation + Change in Stock + Consumption of Fixed Capital- Net Imports Net Indirect Tax Net Factor Income to Abroad = 600 + 100 + 110-20-(120-20)-5 73.Calculate National Income by (v) Transfer earnings like old age pensions, unemployment allowances, scholarships, pocket expenses, etc, should not be included. 1950 crore, 66. (ii) Payment of interest on borrowings by general government. (b) Gross National Disposable Income (GNDI) =NNPFC + Consumption of Fixed Capital + Net IndirectTaxes Net Current Transfers to Abroad Give reasons for your answer. = Rs. (v) Commission earned on account of sale and purchase of second hand goods is included. It is the total value of domestic production minus net indirect taxes. = 2000+100 + 30+10+60 + 300 + 300 = Rs. (i) Interest on a car loan paid by an individual should not be included while estimating National Income as the loan is taken for consumption purpose. Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation. Expenditure Method By this method, the total sum of expenditures on the purchase of final goods and services produced during an accounting year within an economy is estimated to obtain the value of domestic income. (ii) Net National Disposable Income (Delhi 2012), 48.Find out Sum up all factor payments made within domestic territory to get Domestic Income (NDP at FC). Find Net Value Added at Market Price (All India 2012), 8. NFIA = From - To = 0-50 = -50 . Give reasonsfor your answer. You must give reason for your answer. (ii) Payment of corporate tax It is computed as follows: NNPFC = GNPMP Net Indirect Taxes Depreciation. (i) Interest paid by banks on deposits. Gross National Product at Market Price (GNPmp) = NDPFC + Net Indirect Taxes Net Factor 4,000 crores + Rs. Nominal gross domestic product measures the value of all finished goods and services produced by a country at their current market prices. 310 crore, Gross Value Added (GVA) by B = Sales by B + Net Change in Stock of B (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 small group of firms) but deals with the study of broad economy-wide aggregates like total output, size of national income, level of employment, aggregate consumption, aggregate saving, aggregate investment, general price level, balance of payment, rate of inflation, size of poverty etc. (Delhi 2009). Net Value Added at Factor Cost (NVAFC) = Value of Output (Sales + Change in Stock)- (Purchase of Raw Material + Import of Raw Material) Consumption of Fixed Capital + Subsidies The concept has the following drawbacks:1. Hence, according to the value-added method: National Income = (NDP FC) + Net factor income from abroad. If the country is unable to replace the capital stocks that are lost through depreciation, it experiences a fall in the GDP of the country. The construction of new homes on previously unused real estate can also represent a gain for the NDP if the residences are not intended to replace defunct or demolished property. Intermediate Consumption = Value of Output Net Value Added (a) Net National Product at Market Price and NDP FC 55,915 Indirect Tax 2,590 Less Subsidies 1540 Net Indirect Taxes 1,050 Step 1 We calculate NNPMP NNPMP = GNPMP - Dep = 58,350 - 1625 = 56,725 Step 2 We calculate NDPMP NDPFC - Factor income from abroad + Factor income to abroad = 56,725 - 625 + 865 = 56,965 Step 3 We calculate Net Indirect tax . = Rs. 960 crore, (a) Gross Domestic Product at Market Price and =100 + 500+160 -20-130 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. = NNPFc+ Net Indirect Tax Net Current transfer to Abroad (iii) Investment expenditure or gross domestic capital formation. Estimate net factor income from abroad which is added to Domestic Income to derive National Income. (i) Imputed rent of self occupied houses are included while estimating National Income, as it is a factor income. Your IP: While estimating National Income, how will you treat the following? Net Current Transfers to Abroad + National Debt Interest + Current Transfers by Government + Net Factor Income from Abroad In other words, it accounts for the reduction in the value of the countrys assets due to aging, wear and tear, or obsolescence. Why is study of problem of unemployment in India a macroeconomic study? = 7370 70 = Rs. = Net Value Added by Primary Sector + Net Value Added by Secondary Sector In 2020, the gross national income of the US was $21,286,637,000,000.000. National Income Accounting Book Chosen. (iii) Expenditure on machine for installation in a factory. Computation of National Income (By Expenditure Method), 8. The total value of all goods and services produced within a countrys borders is adjusted for the depreciation of physical capital. Net Domestic Product (NDP) measures the total value of all goods and services produced in a country, adjusted for the depreciation of physical capital. NDP FC refers to a total factor income earned by the factor of production within the domestic territory of a country during an accounting year. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); Copyright 2023 . 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. 515 crore, (b) Net National Disposable Income (NNDI) = NNPFC + Net Indirect Taxes + Net Current Transfers fromAbroad 660 crore, 54. = Rs. It is calculated by adding indirect taxes, subtracting subsidies, and including depreciation to the value of output, which is the value of all goods and services produced within a countrys borders. Domestic income is the sum total of factor incomes generated by all the production units located within the domestic territory of a country during a period of account. Ans. Find out 1. Calculate Net National Product at Market Price and Gross National Disposable Income. =Rs. The frequency and scope of such replacements can vary by type of capital assets. Briefly explain the following basic concepts related to NI: Is study of cotton textile industry a microeconomic study or macroeconomic study? 78. Net Domestic Product at market price includes indirect taxes and subsidies, as well as the depreciation of physical capital. 1390 crore, 51. You can find out more about our use, change your default settings, and withdraw your consent at any time with effect for the future by visiting Cookies Settings, which can also be found in the footer of the site. = Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Fixed Capital Formation + Change in Stock + Net Export + Consumption of Fixed Capital Net Factor Income to Abroad Net Indirect Tax (v) Expenditure on shares and bonds is not to be included in Total Expenditure. Give an example of showing the difference between microeconomics and. 835 arab. are excluded. 630 arab, (b) Net National Disposable Income (NNDI) 1650 crore, 69. = Rs. = 810- 125 = Rs. Scribd is the world's largest social reading and publishing site. Calculate . = 880-540 (b) Private Income = NDPFC Domestic Product Accruing to Government In other words, problem of double counting arise when the value of intermediate goods is also added in total output, e.g. = Rs. (b) GNP at factor cost = GNP at market price + net indirect tax (c) National income = Domestic income + Net factor income from abroad. Click to reveal (b) By Expenditure Method How will you treat the following while estimating National Income of India? 5700 crore, 46. Net Factor income to abroad: 3,200. 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. = 900 + 400 + 250-30-100-20 + (-40) = 140-110 + 5 It refers to the market value of final goods aand servicess produced within the domestic territory of a country during the period of an accounting year, exclusiive of depreciation. While that may take many years, barring unexpected damage or defects, there is a cycle of equipment failure and replacement. (i) Expenditure on fertilisers by a farmer. Calculate Net National Product at Factor Cost and private income from the following (Delhi 2014), 34. (a) Gross National Product at Factor Cost and It is study of the economy as a whole and its aggregates. However, a wider gap between the GDP and NDP shows an increase in the value of obsolescence. Givereasons. 94 Views. = Rs. (b) Expenditure method from the following data (All India 2009), Ans. The value added by a firm is the difference between value of output and the value of intermediate products of each firm of the country. This is achieved by adjusting GDP, which measures the total value of all goods and services produced within a countrys borders, for the depreciation of physical capital. 70. = 500 +200+120 + (-20) + 20-30 -100 -(-10) -20 Also explain, two alternative ways of avoiding the problem. = 3500 + 50 2000 500 350 The NDP-FC provides a more accurate measure of a countrys economic performance. 89. (ii) Profits earned by a branch of an Indian bank in Canada. 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