Professional Documents
Culture Documents
National Income 2024 PDF SPCC - 5b584145 F12a 4f7f b464 2dcfcb6ef6eb
National Income 2024 PDF SPCC - 5b584145 F12a 4f7f b464 2dcfcb6ef6eb
INCOME
XII ECONOMICS
2023- 2024
MACRO
ECONOMICS
There are four sectors in an economy:
(i) Household sector (Consumers)
(ii) Firms (Producers)
(iii) Govt. sector (Government)
(iv) External sector (Rest of the world or
abroad)
Circular flow of income: It refers to circular flow of income in the production
process. Income is generated by household from firms and also they spend their
income in form of consumption expenditure to firms.
Circular flow of income in Two sector Economy
Nature
Phases of controlling
of circular flow of income
Generation
Phase
Distribution
Phase Disposition
Phase
Types of circular flow
Real flow Money flow
(i) Real flow: Real flow refers to flow of factor services from household to
firms and flow of goods services from firms to household.
• It measures the production volume.
• It also determines the growth process in economy.
• It is also called physical flow.
(ii) Money flow : Money flow refers to flow of money from firms to households
and household to firms, like flow of factor payments from firms to household
and flow of consumption expenditure from household to firms.
• It measures the flow of money supply in the economy.
• It is also called nominal flow
Difference between Stock & Flow
Basis Stock Flow
1. Meaning It refers to that variable which It refers to that variable which is measured
is measured at a particular at a particular period of time.
point of time.
2. Time Stock is not time dimensional Flow is time dimensional as measured only
Dimension as it is measured at a particular for a particular period of time.
point of time.
3. Nature It is a static concept. It is a dynamic concept.
4.Examples eg. wealth, distance of Delhi to e.g. pocket allowances, speed of a car
noida, stock of water in a tank, travelling Delhi to Noida, flow of water
bank deposits, capital, from tank, demand, supply, consumption
population on a particular date exp., savings, profit or loss, national
etc. income, production, GDP, Investment etc
Thank you
NEED YOUR LOVE & SUPPORT
Types of Goods in the Economy
Capital
Consumption/ Goods
Intermediate Consumer
Final goods Goods Goods
FINAL GOODS
These are those goods. Which is finally produced and ready for
use by their final users. Final users may be (i) consumer and (ii) producers.
(i) Consumers are the final user of clothes, shoes, food, etc.
(ii) Producers are the final user of plant and machinery.
# Expenditure on final consumer goods by the household is called
Final consumption expenditure
# Expenditure on final goods by the producer is called Investment
expenditure
Particulars Amount
Subsidies 400
Opening stock 100
Closing stock 600
Intermediate cost 3,200
Consumption of fixed capital 700
Profit 750
Net value added at factor cost 4,000
Q.6)Firm A buys from X inputs worth ₹ 500 crores and sells to firm B goods
worth ₹ 1,000 crores and to firm C goods worth ₹ 700 crores. Firm B
buys from Y inputs worth ₹ 200 crores and sells to firm C goods worth
₹ 1,500 crores and finished goods worth ₹ 2,000 crores to households.
Firm C buys from Z inputs worth ₹ 150 crores and sells finished goods
worth ₹ 4,150 crores to households. Calculate value added by firms A,
B and C and GDPMP.
Thank you
NEED YOUR LOVE & SUPPORT
INCOME METHOD
Q.1) Calculate find out net national product at market price
Particulars Amount in crores
Interest 400
Wages and salaries 1000
Net factor income to abroad (-) 20
Social security contribution by employers 100
Net indirect tax 80
Rent 300
Consumption of fixed capital 120
Corporation tax 50
Dividend 200
Undistributed profits 60
Q.2) Calculate National income
Particulars Amount
Compensation of employees 13,300
Wages in kind 200
Indirect taxes 3,800
Gross domestic fixed capital formation 6,200
Operating surplus 5,000
Mixed income of self-employed 16,100
Net factor income from abroad 300
Net exports -100
Q.3) Calculate the Operating Surplus
Particulars Amount
Sales 4,000
Compensation of employees 800
Intermediate consumption 600
Rent 400
Interest 300
Net indirect taxes 500
Consumption of fixed capital 200
Mixed income 400
Thank you
NEED YOUR LOVE & SUPPORT
EXPENDITURE METHOD
Q.1) Calculate Gross Domestic Product of Factor Cost from the following data
Particulars Amount
Private final consumption expenditure 800
Net domestic capital formation 150
Change in stock 30
Net factor income from abroad -20
Net indirect tax 120
Government final consumption expenditure 450
Net exports -30
Consumption of fixed capital 50
Q.2) Calculate Gross fixed Capital Formation from the following data
Particulars Amount
Private final consumption expenditure 1,000
Government final consumption expenditure 500
Net exports -50
Net factor income from abroad 20
Gross domestic product at market price 2,500
Opening stock 300
Closing stock 200
Thank you
NEED YOUR LOVE & SUPPORT
Q.1) From the following data, calculate (a) Value of output; (b) Intermediate consumption;
(c) Net value added at factor cost
Particulars Amount
Purchase of raw materials from domestic market 400
Increase in the unsold stock 60
Import of raw material 120
Domestic sales 1,200
Replacement of fixed capital 50
Power charges 20
Exports 200
Import of machinery 40
Goods and Services tax (GST) 10
Subsidy 30
Goods used for self consumption 10
Q.2) Calculate GNP at MP by income and expenditure method
Particulars Amount in crores
Net exports 15
Private final consumption expenditure 600
Consumption of fixed capital 30
Operating surplus 190
Net indirect taxes 105
Net factor income from abroad -5
Wages and salaries 520
Rent 60
Employers’ contribution to social security schemes 100
Government final consumption expenditure 200
Net capital formation 100
Q.3) Calculate NNP at FC by Income and Expenditure Method
Particulars Amount in crores
Mixed income of self employed 100
Gross fixed capital formation 300
Private final consumption expenditure 900
Net exports (-) 50
Subsidies 50
Government final consumption expenditure 150
Rent 60
Indirect taxes 250
Interest 200
Change in stock 50
Compensation of employees 400
Profit 340
Consumption of fixed capital 50
Net factor income from abroad 50
Q.4) Calculate Gross domestic product at factor cost and factor income to abroad
Embassies
Domestic Territory does not include:
1. Embassies and military establishments of a foreign country in India. e.g.
Chinese embassy in India is a part of domestic territory of China.
2. International Organizations like UNO, WHO, WTO, etc. located within the
geographical boundaries of a country
GDP and Welfare
But there are some exception of GDP welfare:
1. Distribution of GDP
2. Composition of GDP
3. Barter system exchange
4. Externalities
Thank you
KEEP ON SUPPORTING
Difference between Real GDP & Nominal GDP
Real GDP Nominal GDP
When GDP is measured at the base When GDP is measured at the
or constant year prices it is called current year prices it is called
Real GDP. Nominal GDP.
It is without effect of inflation. It is inflation adjusted GDP.
It is true indicator of economic It is not a true indicator of
growth and welfare. economic growth and welfare
GDP DEFLATOR/ PRICE INDEX
GDP deflator measures the change in the average level of prices of all the
goods and services that make up GDP.
GDP deflator is used to eliminate the effect of price changes and to
determine the real change in physical output.