Cookies collect information about your preferences and your devices and are used to make the site work as you expect it to, to understand how you interact with the site, and to show advertisements that are targeted to your interests. (Delhi 2009) (iii) Interest on public debt. = 3950-50 = Rs. Why is study of problem of unemployment in India a macroeconomic study? 2023 Zigya Technology Labs Pvt. (i) No, it is not included while estimation of National Income as it is not a factor income. How will you treat the following while estimating domestic factor income of India? Net domestic product (NDP) is an annual measure of the economic output of a nation that is adjusted to account for depreciation. It measures the output generated by a country's organizations located domestically or abroad. Calculate = 810- 125 = Rs. This could negatively impact laborers, as their role is now performed by a machine.3. 600 crore, (NNPFC) = Gross Value Added by A and B Indirect Taxes Depreciation + Net Factor Income Abroad = 600-80-30+20= 620-110=Rs. (i) Net Indirect Taxes (iii) Yes, it is included while estimation of National Income as it is an investment expenditure by the producer. = Rs. Calculate National Income by the (i) Family members working free on the farm owned by the family should included as it is a part of mixed income. The total value of all goods and services produced within a countrys borders. Calculate NDP at FC Particular Rs. It is represented by: The NNPMP is the net value of the goods and services generated by production capacities that are owned by residents. (iii) Entertainment tax received by government is not included while estimating the National Income ofIndia as it is a indirect tax and not included at factor cost. (ii) National debt interest should not be included in estimation of National Income as it is assumed that government borrows for consumption and hence, it is treated as transfer income. The net domestic product is defined as the net value of all the goods and services produced within a countrys geographic borders. (ii) Profits earned by a branch of an Indian bank in Canada. = 300+200 + 700-120-150 + 20 , , (a) Gross National Product at Factor Cost (GNPFC) 94.23.210.48 Net Domestic Product at Factor Cost (NDPFC) Instead of expanding the sprawl of the city, older buildings might be torn down and replaced by new construction intended to fill the same use as the predecessor building. = Rs. According to the formula, national income is calculated by adding together consumption, government expenditure, investments made within the country, net exports (exports minus imports), and foreign production by residents. (vii) If intermediate purchases are given, then imports are not included. (ii) Value added method This approach or method is a way to avoid the problem of double counting. Using this, they can better understand the resources available for consumption or investment in the country. 1950 crore, 66. NDP at FC = 480 - 60 - 20 = 400 crores. NDP is a useful tool for long-term economic analysis, as it considers the decline in the value of physical capital over time, which is an important factor for sustained economic growth. Calculate Net Domestic Product at Factor Cost and Net National DisposableIncome from the following (Delhi 2014), 32. Step 4 The last step of calculating National Income through the Income Method is the estimation of Net Factor Income from Abroad (NFIA). (ii) Payment of electricity bill by a school. 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). (a) Gross Domestic Product at Factor Cost and Find Gross Value Added at Factor Cost (All India 2012), 9. (ii) Interest paid by an individual on a loan taken to buy a car. Net Domestic Product measures a countrys economic output that considers the depreciation of physical capital. (i) Fees to a mechanic paid by a firm. Scribd is the world's largest social reading and publishing site. Calculate Gross National Product at Market Price by production method and income method (All India 2010), 67. (i) National Income . (b) Net National Disposable Income from the following data (Delhi 2008 c), Ans. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. Net Domestic Product (NDP) measures the total value of all goods and services produced in a country, adjusted for the depreciation of physical capital. CFA And Chartered Financial Analyst Are Registered Trademarks Owned By CFA Institute. = Net Value Added by Primary Sector + Net Value Added by Secondary Sector (a) Net Domestic Product at Factor Cost and (ii) National debt interest. You are free to use this image on your website, templates, etc., Please provide us with an attribution link. Identify enterprises which employ factors of production (land, labour, capital and enterprise). 3. Its distribution doesnt reflect the actual condition of the poor. = Rs. Final Expenditure It is the expenditure on the purchase of final goods and services during an accounting year. (All India 2010) It is computed as follows: NNPFC = GNPMP Net Indirect Taxes Depreciation. 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. (ii) Payment of corporate tax (i) Profits earned by a branch of foreign bank in India. (i) Only final expenditure is to be taken into account to avoid error of double counting. It is represented by: GNPMP = NNPFC + Net Indirect Taxes + Depreciation. The GDP of the country this year would be $100 million, and the NDP would be $80 million, calculated as follows: In this example, the NDP of $80 million is a more accurate measure of the countrys economic output, as it considers the wear and tear of physical capital. 960 crore, (a) Gross Domestic Product at Market Price and (v) Commission earned on account of sale and purchase of second hand goods is included. = Rs. 12800 crore, (b) By Production Method Download the PDF Question Papers Free for off line practice and view the Solutions online. = 1000 + 250+150 + 640 -30=Rs. 71. (a) Net National Product at Market Price As a result, it provides a more accurate picture of the available resources for consumption or investment. Consumption2. Briefly explain the following basic concepts related to NI: Is study of cotton textile industry a microeconomic study or macroeconomic study? (b) Gross National Disposable Income (GNDI) To read more about such interesting concepts on economics for commerce, stay tuned to our website. (b) Expenditure method from the following data (Delhi 2009), Ans. 7300 crore Give reasons for your answer. The agriculture sector produces 100 units of crops with a value of $100 per unit for a total GDP of $10,000. 2010 crore, 74. (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)Interest on a car loan paid by an individual. Estimate net factor income from abroad which is added to Domestic Income to derive National Income. Delhi - 110058. Income Method: NI = Rent + Compensation + Interest + Profit + Mixed Income.2. 59. All types of transfer income like old-age pension, unemployment allowance, etc. (i) National Income (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 680 crore (i) Dividend received by an Indian firm from its investment in shares of a foreign company. (i) Wheat grown by farmer but used entirely for familys consumption. Calculate Gross National Product at Market Price from the following data (All India 2013), Ans. = Rs. It is denoted by the following formula: NDPFC = GDPMP Net Indirect tax Depreciation. Thus, it provides a clearer picture of a countrys economic performance. Profit = Undistributed profit + dividends + corporate tax (corporate profit tax) This formula is not used in this question. Call us @ 08069405205, Want to work at Insights IAS? (ii) It is not included in the estimation of GDPMPbecause loans are not used for production purpose. 14. (Foreign 2014) 89. = 530-310 You are free to use this image on your website, templates, etc., Please provide us with an attribution linkHow to Provide Attribution?Article Link to be HyperlinkedFor eg:Source: Net Domestic Product (wallstreetmojo.com). (ii) Profits earned by an Indian company from its branches in Singapore. Give an example of showing the difference between microeconomics and. Examples are: Individual income, individual savings, price determination of a commodity, individual firm's output, consumers equilibrium. Calculate Gross National Product at Market Price and Net National DisposableIncome from the following: (Foreign 2014), 44. Likewise, sale proceeds of shares and bonds are not included. (ii) Rent free house to an employee by an employer. (iii) Expenditure on machines for installation in a factory will be included while estimating NationalIncome, as it is a final consumption expenditure by factory management. 70. (i) Gross National Product at Market Price Investopedia does not include all offers available in the marketplace. (iii) Interest received on loans given to a friend for purchasing a car. = 400 +100 + 50 + (-20) + 10- (30 5) (iii) Expenditure on purchasing a car for use by a firm. (iii) Brokerage on the sale/purchase of shares and bonds is to be included. It deals with individual income, individual prices and individual outputs, etc. It is used to measure the total economic output of a country, taking into account depreciation and capital consumption. Still, it only counts the value of the factors of production used to produce them, excluding indirect taxes and subsidies. NDP at MP = GDP at MP (+) NFIA [Net Factor Income from Abroad] 3. (v) Expenditure on shares and bonds is not to be included in Total Expenditure. (b) Private Income = NDPFC Domestic Product Accruing to Government The site owner may have set restrictions that prevent you from accessing the site. Income to Abroad + Consumption of Fixed Capital The acquisition of new machines for the new factory would represent a gain because the demand was driven by the need to increase the scope of the operations, rather than serve as a replacement. (ii) Purchase of tractor by a farmer. Intermediate products are ignored. Calculate Gross Value Added at Factor Cost (Delhi 2012), 5. = 500+ (80-60)-350-90-50 = Rs. (iii) Financial help received by flood victims are not included while estimating National Income, as it is akind of transfer payment. (iii) Capital gains to Indian residents from sale of shares of a foreign company. While that may take many years, barring unexpected damage or defects, there is a cycle of equipment failure and replacement. An increase in NDP signifies a growing economy, while a decrease denotes economic stagnation. As a result of the EUs General Data Protection Regulation (GDPR). (i) Final output or final product method In this method, only final products (goods and services) are added to obtain the GDP. 340 lakh, 20. Heres an example of how Net Domestic Product can be used to measure a countrys economic output: Consider a country with two industries, agriculture, and manufacturing. In other words, GDP measures the total value of all goods and services produced within a country. 830 crore 570 crore, 41. (ii) Rent paid by the embassy of Japan is not included in the domestic factor income as the embassy is a part of Japans domestic operation territory. (a) Income method and Net Value Added at Factor Cost (NVAFC) = Value of Output (Sales + Change in Stock)-Purchase of Calculate sales from the following data (Delhi 2008), Ans. at Factor Cost (NVAFc)+ Depreciation + (Sales Tax-Subsidy) Ans. (a) National Income (NNPFC) = Private Final Consumption Expenditure+ Government Final Consumption Expenditure + Net Domestic Capital Formation + Net Exports + Net Factor Income from Abroad Net Indirect Taxes (Indirect Taxes Subsidy) 43. Home Economy National Income accounting Methods of estimating National Income Income method. = 790-500-20+60 (ii) Net Current Transfers from Abroad (All India 2012), 49.Find out (b) National Income. (Python), Class 12 Computer Science 88.Giving reason, explain, how the following are treated in estimating National Income? If you would like to change your settings or withdraw consent at any time, the link to do so is in our privacy policy accessible from our home page.. Ans. (Delhi 2010). Calculate (ii) Corresponding to production for self consumption, the generation of income of economy to be taken into account. (i) Compensation of employees Today its Indias top website and an institution when it comes to imparting quality content, guidance and teaching for IAS Exam. = Rs. = 7370 70 = Rs. There are three different methods of determining NI:1. (ii) Money received by a family in India from relatives working abroad. 37. Depending on the way, the income is earned. Giving reason, explain how should the following be treated in estimation ofNational Income (Delhi 2012) (All India 2011), Ans. Formula - Sheet Chapter 2. = 300 + 600 +150 + 50-90 + (-20) Its main tools are demand and supply of particular commodity/factor. (iii) Interest received by an Indian resident from its abroad firms will not be included in domestic income of India as it is factor income from abroad. = (800 + 50) (400 +100) 40 + 30 Find Net Value Added at Market Price (All India 2012), 8. There are only two producing sectors A and B in an economy. In this theoretical example, the NDP considers the depreciation of physical capital, providing a more accurate picture of the countrys economic output. From the following data calculate Net Value Added at Factor Cost (Delhi 2011 c) We and our partners use data for Personalised ads and content, ad and content measurement, audience insights and product development. = 810 + 60 + 80-(-10) PRODUCT METHOD (Value added method): Theory-only the value of final goods is to be included; otherwise there arises a problem of double counting. 64. (b) National Income (All India 2009), Ans. It helps to solve the central problem of what, how and for whom to produce in the economy. With individual Income, individual firm 's output, consumers equilibrium cfa Institute 2008 c,! Reading and publishing site this image on your website, templates, etc., Please provide with! Cost and Net National DisposableIncome from ndp at fc formula following while estimating National Income given a. 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