Solution

COMPUTATION OF NATIONAL INCOME

Class 12 - Economics
1. Net Value Added at Factor Cost
Sales= Price×Output
= 25×1000
= 25,000
Value of output= Sales + Change in stock
= 25,000+(-500)
= 24500
GVAmp=Value of output- Intermediate cost
= 24,500- 7000
= 17,50
NVAmp = GVAmp- Depreciation
= 17,500-1000
= 16,500.
NVAfc = NVAmp- Net indirect taxes.
= 16,500-5000.
= 11,500. Crores.

a
2. Gross Value Added at Factor Cost by firm X

nk
= Sales + Change in stock (Closing stock - Opening stock) - Purchase of intermediate products + Subsidy
= 750 thousand + (40 thousand - 50 thousand) - 450 thousand + 60 thousand
= Rs. 350 thousand.

e
Therefore GVAfc is equal to Rs. 350 thousand.

Go
3. i. Value of output of Firm A
= Total sales + Value of unsold stock
= (Sales to Firm B + Sales to Firm C + Sales to Households) + Value of unsold stock
= (80 + 50 + 30) + 10 = ₹ 170 crore
Value of output of Firm B sh
= Sales to Firm C + Sales to Firm D + Exports + Sales to Government
= 70 + 40 + 30 + 5 = ₹ 145 crore
ii. Value added by Firm B = Value of output- intermediate consumption
e
= Value of output of Firm B - Purchases by Firm B from Firm A
ail

= 145 - 80 = ₹ 65 crore
4. NVAFC = (iii × iv) + v - vi - ii + vii - i
= (2000 × 10) + (-50) - 10000 - 400 + 500 - 600
yS

= Rs. 9450.
5. By Value Added method:
Gross Value Added at Factor Cost
= Sales + Change in stock - Purchase of raw materials + Subsidies
ab

= 180 lakh + 15 lakh - 100 lakh + 10 lakh

= Rs.105 lakh.
Therefore GVAfc = 105 lakh.
dd

6. As per the value-added method,

GVA= value of output - intermediate consumption
Items (₹)
uA

Sales (note 1) 20000

plus: Net change in stocks (-) 50

Ed

Value of output 19950

minus: Intermediate consumption (note 2)

(-) 10000
(Purchases of raw materials)

GVA at market prices 9950

minus: Net product taxes (note 3) (-) 300

GVA at basic prices 9650

minus: Net production taxes (-) 600

GVA at factor cost 9050

Note:
i. Sales = Output sold × Price per unit = 2000 units × ₹ 10 = ₹ 20000
ii. Import of raw materials is already included in Purchase of raw materials. Import of machines is not included in intermediate consumption.
iii. Net product taxes = Product taxes - Product subsidies = 400 - 100 = ₹ 300
7. Net Value Added at Factor Cost (NVAFC)
= Sale of wheat by the farmer in the local market
+ Procurement of wheat by the government from the farmer + Consumption of wheat by the farming family during the year + Subsidy - Expenditure on the maintenance of existing capital
stock
= 6,800 + 200 + 50 + 20 - 100 = ₹ 6,970 crore
8. Depreciation = Value of Durable Goods

Life Span
= = Rs 1 lakh
10

10

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 Net Value Added at Factor Cost(NVAFC) = Sales + Unsold Output Produced During the Year - Single use Producer Goods - Depreciation on Durable use Producer Goods - Taxes on
Production
= 20 + 2 - 5 - 1 - 1 = Rs. 15 lakhs
9. NVA​FC = GVA​MP - Depreciation - NIT
NVAFC = (i) - (ii) - (iv) - [(iii) - (v)]
= 800 - 200 - 20 - [30 - 50]
= ₹ 600 crores
10. Sales = Units of Output × Price Per Unit of Output
Sales = 1,000 × 30
Sales = Rs. 30,000 crores
Value of Output is given by
= Sales + Change in Stock
Value of Output = 30,000+ (1,000)
Value of Output= Rs. 31,000 crores, where
Change in Stock = Closing Stock - Opening Stock
Change in Stock = 3,000 - 2,000 = Rs. 1,000 crores
Hence, Gross Value Added at Factor Cost is given by
(GVAFC) = Value of Output - Intermediate Cost - Net Indirect Taxes (Excise Duty + Sales Tax)
= 31,000-12,000-(2,500+ 3,500) Gross Value Added at Factor Cost (GVAFC)
= Rs. 13,000 crores
Therefore, Gross value added at factor cost is Rs 13,000 crores.

a
11. Gross Value Added at Market Price (GVAMP) = (Domestic Sales + Exports) + Net Change in Stocks - Single use Producer Goods

nk
Gross Value Added at Market Price (GVAMP) = (200 + 10) + (-10) - 120 = ₹ 80 lakhs
Therefore, GVAMP is ₹ 80 lakhs

e
12. As per Value added method,
GDP at market price = value of output- intermediate consumption

Go
It is adjusted to get NNP at FC.
Items (₹ in crore) (₹ in crore)

Value of output of all sectors (note 1) esh 1300

minus: Cost of intermediate inputs purchased by

all sectors (note 2) (-) 550

Gross Domestic Product at Market Price 750

il
(GDPmp)
Sa

Adjustments:

minus: Consumption of fixed capital of all sectors (-) 80

minus: Indirect taxes paid by all sectors (-) 50

by

plus: Subsidies received by all sectors 20

plus: Net factor income from abroad (NFIA) (note 3) (-) 10 (-) 120

National Income (NNPfc) 630

a

Note:
dd

i. Value of output of all sectors = Value of output of primary sector + Value of output of secondary sector + Value of output of tertiary sector
= 800 +200 + 300
= ₹ 1300 crore
uA

ii. Cost of intermediate inputs purchased by all sectors

= 400+100 + 50
= ₹ 550 crore
iii. NFIA = Factor income received by the residents from rest of the world - Factor income paid to non-residents
Ed

= 10 - 20
= (-) ₹ 10 crore
13. Gross Value Added at Factor cost
Sales= Output×Price
=2,000×20
=40000.
Value of Output=Sales+Change In Stock
=40,000+(-500)
=39500.
GVAmp= Value of output- Intermediate Cost.
= 39500-15,000
=24,500.
NVAmp=GVAmp-Depreciation.
= 24,500-2000
= 22,500.
NVAfc= NVAmp-Net Indirect Taxes.
= 22,500-(-3000)
= 25,500 crores.
14. Calculation of Gross Value Added at Factor Cost :
Particulars Amount(in Rs.)

Domestic sales 3000

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 + Exports +500

+Change in Stock +(-100)

- Intermediate Consumption - 2,000

- Indirect Taxes - 250

GVAFC 1,150 lakhs

15. Formula to calculate Net Value Added at Market Price:
NVAmp= (Output sold × Price per unit of uutput) + (Closing stock - Opening stock) - Intermediate cost - Depreciation.
= (900 × 40) + (1,000 - 800) - 20,000 - 700
= 36,000 + 200 - 20,000 - 700 = 36,200 - 20,700.
= Rs. 15,500 crores.
From the value of output we subtract intermediate cost to get gross value added and from that we subtract depreciation to get net value added.
16. Value of output of firm A
= Sales + Change in stock
= Sales + Exports + Closing stock - Opening stock
= 110 + 30 + 20 - 35
= 160 - 35
= ₹ 125 lakhs
Value added by firm A = value of output- intermediate consumption
= Value of output - Purchases - Imports

a
= 125 - 50 - 30

nk
= 125 - 80
= ₹ 45 lakhs
Value of output of firm B

e
= Sales + Change in stock
= Sales + Closing stock - Opening stock

Go
= 90 + 20 - 30
= 110 - 30
= ₹ 80 lakhs
Value added by firm B = Value of Output- Intermediate consumption
= Value of output - Purchases
esh
= 80 - 50
= ₹ 30 lakhs
17. Value of output = Sales + Change in Stock
il
Value of output = 500 + 50
= 550
Sa

Gross Value Added at Market Price (GVAMP) = Value of output - intermediate Consumption
(GVAMP) = 550 - 300
= Rs. 250 lakhs
by

Net Value Added at Factor Cost (NVAfc) = GVAmp - Consumption of Fixed Capital - Net Indirect Taxes (NIT)
NVAFC = 250 - 20 - 70
= Rs. 160 lakhs
a

18. Net Value Added at Factor Cost

dd

Value of output= sales+ change in stock

= 300+20
= 320
uA

GVAmp= Value of output- Intermediate cost.

= 320-120
= 200.
NVAmp=GVAmp- Depreciation.
Ed

= 200-30
= 170.
NVAfc = NVAmp- Net indirect taxes.
= 170- 15
= 155. Crores.
19. By using value added method:
GDP at MP= Value of output - Intermediate consumption
a. Net Domestic Product at factor cost by the production method
= Value of output + Subsidies - Indirect taxes - Consumption of fixed capital - Purchase of raw materials and services from other firms
= 770 + 15 - 75 - 10 - 250
= 785 - 335
= ₹ 450 crore
b. Net National Product at factor cost by the expenditure method
= Private final consumption expenditure + Government final consumption + Gross domestic capital formation + Closing stock + Net exports + Net factor income from abroad - Opening
stock - Consumption of fixed capital + Subsidies - Indirect taxes
= 455 + 25 + 40 + 5 + 10 + (-)5 - 15 - 10 + 15 - 75
= 550 - 105
= ₹ 445 crore
20. (i) No, because national income includes the factor income of all the factors of the nation. It does not analyse the distribution of income of every Indian. Some people might have a very high
income while others' income might be negligible. Thus 8% growth of national income does not mean the equivalent growth of every Indian. Moreover, if the national income is calculated on

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 a Nominal GDP basis then we cannot accurately judge whether this 8% growth is because of the rise in price or of production. If it is because of rise in price then inflationary growth must be
discounted from it.
(ii) NDP​FC = GDP​MP - Depreciation - Net Indirect Taxes
100 = ( Value of output - Intermediate consumption) - 10 - (20 - 5)
100 + 10 + 15 = Value of Output - 75
Value of Output = Rs 200 Crore
21. (i) a) This Expenditure by the Govt. is not included in National income as it is transfer Payment and does not correspond to the flow of goods and services
b) This Expenditure will help people to get their lives back on track. It will add to their consumption expenditure. Also, if some expenditure is incurred to rebuild their houses, it will add to
the capital formation in the city.
(ii) GVA​MP of Sector A= Sales + Change in stocks - Purchase of raw material by A
= 5000 + (250 - 500) - 2500
= Rs 2250 crore
GVA​MP of Sector B = Sales + Change in Stocks - Purchase of raw material by B
= 10000 - 1000 - 3000
= Rs 6000 crore
22. (i) National Income Accounting:
a. National income Accounting helps in identifying specific economic achievements of a country.
b. It provides an objective base of evaluation and review of policies implemented.
c. It indicates the specific contribution of each sector of the economy.
d. Combined with additional detailed information on national income, policy measures can be devised to narrow them down.
e. It helps the authorities in quantifying the problem of income and wealth inequalities and take corrective steps

a
f. In spite of certain limitations, it is a measure of economic production if not overall welfare.

nk
(ii) Given = NDP​FC
NDP​FC = GDP​MP - Consumption of fixed capital - Net indirect taxes
= (Sales - Intermediate Cost + Change in stock) - Consumption of fixed capital - Net indirect taxes

e
560= Sales - 1000 - 30 -60 - 60

Go
Sales = 1710 Lakh
23. By using income method,
NDP at FC = compensation of employees+ operating surplus+ mixed income of self employed
a. National Income by income method
= Mixed income of the self-employed + Compensation of employees + Rent + Interest + Profits + Factor income received from the rest of the world - Factor income paid to the rest of the
esh
world
= 200 + 170 + 40 + 30 + 25 + 10 - 15
= 475 - 15
= ₹ 460 crore
il
By using Value added method,
Sa

GDP at MP= value of output - intermediate consumption

a. National Income by output method
= Value of output of primary sector + Value of output of other sectors - Raw materials etc. purchased by the primary sector - Raw materials etc. purchased by the other sectors -
Depreciation + Subsidies - Indirect taxes + Factor income received from the rest of the world - Factor income paid to the rest of the world
by

= 1,000 + 400 - 500 - 300 - 55 + 20 - 100 + 10 - 15

= 1,430 - 970
= ₹ 460 crore
a

Gross Value Added by A

Gross Value Added by A Gross Value Added by B
24. and B
dd

= Sales by A + Change in Stock of A (Closing Stock - Opening Stock) - Purchases of Raw = Sales by B + Change in Stock of B - Purchase of Raw
= GDPmp
Materials by A Materials by B
uA

= 1,000 + (50 - 100) - 500 = 950 - 500 = 2,000+ (-200)-600 = 1,800-600 = 450 + 1,200
= Rs. 450 crores = Rs. 1,200 crores = Rs. 1,650 crores

National Income (NNPFC) = GDPmp - Consumption of Fixed Capital - Indirect Taxes + Net Factor Income from Abroad
Ed

= 1,650 - 180 - 120 + 20

= Rs. 1,370 crores
25. National income can be viewed from 3 different angles:
As the sum total of value addition in the economy (value-added method)
As the sum total of income generated in the economy (income method)
as the sum total of expenditure on the final goods and services produced in the economy. (Expenditure method)
i. GDP by Value Added Method (Production phase)
Value-added (VA) = Value of output-Intermediate consumption
VA by Firm A = 50 - 0
= ₹ 50 lakh
VA by Firm B = 200 - 50 (purchases of cotton by Firm B from Firm A)
= ₹ 150 lakh
Hence, GDP = VAby Firm A + VAby Firm B
= 50 + 150
= ₹ 200 lakhs
ii. GDP by Income Method (Distribution phase)
Distributions of factor incomes of firms A and B
Firm A Firm B

Wages 20 60

Operating surplus

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 (profits, rent and interest) 30 90
Thus, GDP = Sum total of factor incomes paid by Firms A and B
= Total wages received by workers of Firms A and B + Total operating surplus distributed by Firms A and B
= (20 + 60) + (30 + 90)
= 80 + 120
= ₹ 200 lakh
iii. GDP by Expenditure Method (Disposition phase)
GDP = Sum of final expenditures, i.e. expenditures on goods and services for end-use
In the given question, the final expenditure is expenditure by consumers on cloth.
Therefore, GDP = ₹ 200 lakh
Thus, all three methods of estimating GDP gives us the same answer.
26. Calculation of National Income:
(NNPFC)= Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Capital Formation - Net Imports -Net Indirect Tax - Net Factor Income to
Abroad
= 600 + 100 + 110 - 20 - (120 - 20) - 5
= 810 - 125
= Rs. 685 arab.
Hence, National Income is the income is the net monetary value of final goods and services produced by the normal residents of a country which is also known as Net National Product at
factor cost.
27. GDPMP = Government final consumption expenditure + Private final consumption expenditure + Gross domestic Capital formation [Gross domestic fixed capital formation + Change in
stock (Closing stock - Opening stock)] + Net exports

a
2500 = 500 + 1000 + Gross domestic fixed capital formation + [200 - 300] + (-50)

nk
2500 = 500 + 1000 - 100 - 50 + Gross domestic Fixed capital formation
2500 - 1350 = Gross domestic fixed capital formation
Gross domestic fixed capital formation =1150 crore.

e
28. Net National Product at Market Price is:
NNPmp= Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Fixed Capital Formation + Change in Stock (Closing Stock - Opening

Go
Stock) + Net Exports (Exports - Imports) - Net Factor Income to Abroad
= 600 + 100 + 80 + (10 - 20) + (50 - 60) - 30
= 780 - 50
= Rs. 730 Arab.
esh
Net National Product at market price is the net market value of all final goods and services produced by the normal residents of a country during a period of one year.
29. Gross National Product at Market Price
GNP​MP= GDP​MP + Net factor income from abroad (-Net factor income to abroad)
GNPMP = Private final consumption expenditure + Government final consumption expenditure + Gross domestic capital formation [Net domestic fixed capital formation + Consumption of
il
fixed capital + Change in stocks (Closing stock - Opening stock)] - Net imports - Net factor income to abroad
Sa

= 1000 + 300 + 150 + (40 - 50) + 30 - 20 - (-) 10

= Rs.1460 Arab
Net National Disposable Income
= GNPMP - Consumption of fixed capital - Net current transfers to abroad
by

= 1460 - 30 - 5
= Rs.1425 Arab
30. Nominal GDP = Rs. 4400
Price Index = 110
a

Real GDP = ?
dd

Real GDP in terms of Nominal GDP and Price index is given by

Nominal GDP
Real GDP = Price index
× 100

4400
Real GDP = × 100
110
uA

Therefore, Real GDP = Rs. 4000

31. a. Expenditure Method:
GDPMP= Private final consumption expenditure + Government final consumption expenditure + [Gross domestic capital formation (Net domestic capital formation + Consumption of fixed
capital) + Change in stock ] + Net exports (or - Net imports)
Ed

GDPMP = 750 + 250 + (200 + 10 + 50) - (-40)

= Rs.1300 crore
GNPMP = GDPMP + Net factor income from abroad(or -Net factor income to abroad)
1300 - (-20).
= Rs.1320 crore
b. Net Current transfer from abroad:
NNDI = GNPMP - Consumption of fixed capital + Net current transfer from abroad
1100 = 1320 - 50 + Net current transfer from abroad
-170 = Net current transfer from abroad.
32. By Expenditure Method:
a. GDPmp = Gross investment + Net exports + Private consumption expenditure + Government purchases of goods and services
= ₹90 crore + ₹10 crore + ₹350 crore + ₹100 crore
= ₹550 crore
GDPMP = ₹550 crore
b. GDPfc = GDPmp - Net indirect taxes
= ₹550 crore - ₹5 crore
= ₹545 crore
GDPFC = ₹545 crore
33. Gross National Product at Market Price (GNPMP)= Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Capital Formation +
Depreuation-Net Imports - Net Factor Income to Abroad
= 800 + 300 + 200 + 100 - 30 - (-10)

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 = Rs. 1,380 crores
34. EXPENDITURE METHOD
1. GDP​MP=Private final consumption expenditure + Government final consumption expenditure + Gross domestic capital formation { Net domestic fixed capital formation +Change in
stocks (Closing stock - Opening stock) + Consumption of fixed capital }- Net imports
= 500 + 150 + 100 + 10 -10 + 50 - 20
= Rs.780 crore
GNP​MP = GDP​MP + Net factor income from abroad
= 780 -(-15)
= 795 crore
2. Net Current Transfer from Abroad
NNDI = NNPFC + NIT + Net current transfer from rest of the world......(i)
NNPFC = GNPMP - Depreciation - NIT
=795 - 50 - 35
= Rs.710 ,putting in ........(i)
750 = 710 + 35 + Net current transfer from Rest of the world
Rs.5 crore = Net current transfer from rest of the world.
35. By income method:
NDP at FC= compensation of employees+ operating surplus+ mixed income
National Income by Income Method
= Rent + Royalty + Wages and salaries + Social security contributions by employers + Interest + Profit - Net factor income paid to abroad
= 200 + 25 + 600 + 55 + 20 + 130 - 30

a
= 1,030 - 30

nk
= ₹ 1,000 crores
By Expenditure Method:
GDP at MP= final consumption expenditure+ gross domestic capital formation+ net Exports

e
National Income by Expenditure Method

Go
= Government final consumption expenditure + Private final consumption expenditure + Gross domestic capital formation + Net exports + Subsidies - Indirect taxes - Consumption of fixed
capital - Net factor income paid to abroad
= 100 + 800 + 120 + 70 + 10 - 60 - 10 - 30
= 1,100 - 100
= ₹ 1,000 crores
36. EXPENDITURE METHOD
esh
GDP​MP= Private final consumption expenditure + Government final consumption expenditure + Gross Domestic Fixed capital formation + Net Exports (or - Net imports )........(i)
We know, Gross domestic capital formation = Gross Domestic Fixed capital formation + Change in stock
GDCF = 200 + 50 = Rs.250, Putting in.........(i)
il
GDPMP = 500 + 100 + 250 + (-40)
Sa

= Rs.810 Arabs
NNPFC = GDPMP - Consumption of fixed capital/Depreciation + Net factor income from abroad - Net indirect taxes
= 810 - 70 - (-10) - 120
= 810 - 70 + 10 - 120
by

= Rs.630 Arabs
Net National Disposable income = NNPFC + Net indirect taxes + Net current transfers from the Rest of the world.
= 630 + 120 + (-30)
= Rs.720 Arabs
a

37. Gross Domestic Product at Market Price is calculated as:

dd

GDPmp= Private Final Consumption Expenditure + Government Final Consumption Expenditure + Gross Domestic Fixed Capital Formation + Change in Stock + Net Exports
= 400 + 90 + 80 + (20 - 10) + (10 - 15)
= 490+ 80+ 5
uA

= Rs. 575 crores

Net Domestic Product at Market Price is
NDPmp= GDPmp - Depreciation
Ed

= 575 - 25
= Rs. 550 crores.
To get net domestic product, we subtract depreciation from the gross domestic product. Other changes are not required here so far as the problem is concerned.
38. Net Domestic Product at Market Price is calculated as:
(NDPmp)= Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Capital Formation - Net Imports
NDPmp = 800 + 200 + 100 - (-20)
= Rs. 1,120 crores
Net Domestic Product at Factor Cost is calculated as:
(NDPfc) = NDPmp- Net Indirect Tax
NDPfc = 1,120 - 120
= Rs. 1,000 crores.
Therefore Net Domestic Product at factor Cost is termed as the Domestic Income.
39. Gross National Product at Factor Cost (GNPFC) by Income Method = Profits + Rent + Interest + Compensation of Employees - Net Factor Income to Abroad + Consumption of Fixed
Capital = 160 + 70 + 50 + 300 - 50 + 10
= Rs. 540 crores
Gross National Product at Factor Cost (GNPFC) by Expenditure Method
= Government Final Consumption Expenditure + Private Final Consumption Expenditure + Exports - Imports + Gross Domestic Capital Formation - Net Indirect Taxes - Net Factor Income
to Abroad = 200 + 400 + 65 - 95 + 80 - 60 - 50
= Rs. 540 crores
40. i. Value Added Method
Value Added (VA) = Value of output - Intermediate consumption

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 VA by Farmer = 100 - 0
= ₹ 100 crore
VA by Bakers = 200 - 50
= ₹ 150 crore
Thus, GDP at MP = VA by Farmers + VA by Bakers
= 100 + 150
= ₹ 250 crore
NDP at MP = GDP - Depreciation (value of capital consumption)
= 250 - 10
= ₹ 240 crore
ii. Expenditure Method
GDP at market price = Sum of final expenditures, i.e. expenditures on goods and services ( C+ I + G + X)
= Final consumption expenditures by consumers
= Purchases of wheat by consumers from Farmers + Purchases of Bread from Bakers
= 50 + 200
= ₹ 250 crore
NDP at market price= GDP - Depreciation
= 250 - 10
= ₹ 240 crore
GDP and NDP are the same using both methods.
41. Calculation of Gross National product at Factor Cost (GNPFC) :

a
Income method Expenditure method

nk
Compensation of Employees + Dividend+ Undistributed Profits + Corporate Tax + Private Final Consumption Expenditure+ Government Final Consumption Expenditure - Net Imports
Rent+ Interest + Net Factor Income from Abroad + Consumption of Fixed Capital + Gross Domestic Capital Formation - Net Indirect Tax+ Net Factor Income from abroad

= 600 + 150 + 80 + 50 + 120 + 80 + (-70) + 20 = 800 + 300 - 50 + 150 - 100 + (-70)

e
= Rs. 1,030 crores = Rs. 1,030 crores

Go
42. Expenditure Method:
GDPMP = Private final consumption expenditure + Government final consumption expenditure + Gross domestic capital formation + Net exports
GDPMP = 210 + 50 +(40 + 25) + (-5) = Rs.320 crore
Gross Domestic Capital Formation = Net Domestic Capital Formation + Consumption of Fixed Capital
NNPFC = GDPMP - Depreciation + NFIA - NIT
esh
(Indirect tax - Subsidies)
NNPFC = Rs.320 - 25 + 3 - (30 - 5)
NNPFC = Rs.273 crore
il

Income Method:
Sa

NNPFC = Compensation of employees + Opeating surplus + Mixed income + NFIA

NNPFC = (170 + 10) + (10 + 15 + 20 + 45) + 0 + 3
= Rs.273 crore
43. By Using Expenditure Method,
by

GDP at MP = C + I + G + X
Net Domestic Product at factor cost by Expenditure Method
= Private final consumption expenditure + Government final consumption expenditure + Net domestic fixed capital formation + Net change in stocks - Net imports - Indirect taxes
a

= 1,450 + 400 + 200 + (-) 50 - (-) 50 - 100

= 2,100-150
dd

= ₹ 1,950 crores
By using value added method,
GDP at MP = value of output- Intermediate consumption
uA

Net Domestic Product at factor cost by Production Method

= Value of output in the economic territory - Intermediate purchases in the primary sector - Intermediate purchases in the secondary sector - Intermediate purchases in the tertiary sector -
Indirect taxes - Consumption of fixed capital
= 4,100 - 600 - 700 - 700 - 100 - 50
Ed

= 4.100 - 2,150
= ₹ 1,950 crores
NDP at FC is same by using both methods.
44. (a) GDPMP = Government final consumption expenditure + Private final consumption expenditure + Gross domestic Capital formation [Net Domestic capital formation + Consumption of
fixed capital) + Net export
= (xi) + (vi) + [(ix) + (v)] + (ii)
= 100 + 400 + [50 + 10] + 10 = 100 + 400 + 60 + 10 = 570 Crore
NDPFC = GDPMP – Depreciation (Consumption of fixed capital) – Net Indirect Tax (indirect tax – Subsidies)
= 570 – (v) – (iii)
= 570 – 10 – 50 = 510 Crore
(b) NDPFC = Compensation of employees + operating surplus (Rent and royality + corporate tax + Interest + dividend + undistributed profit + Mixed income
510 = Compensation of employees + [(iv) + (vii) + (viii) + (x) + (xii) + (xiii)
510 = Compensation of employees + [20 + 10 + 30 + 22 + 5] + 23
; 510 = Compensation of employees + 87 + 23
Compensation of Employees = 510 – 110 = 400 Crore
45. Expenditure Method
GDPMP = Private final consumption expenditure + Government final consumption expenditure + Gross Domestic capital formation ( Net domestic capital formation + Consumption of fixed
capital ) + Net exports ( or - Net imports )
GDPMP = 900 + 450 + (280 + 120) + (-30)
GDPMP = Rs.1720
GNPMP = GDPMP + Net factor income from abroad ( or -Net factor income to abroad )

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 1720 + (-20) = Rs.1700 crore
Income Method
NDPFC = Compensation of employees + Operating surplus + Mixed income
Operating surplus = Rent + Royalty + Interest + Profit
NDPFC = 500 + (100 + 0 + 150 + 350) + 400
= Rs.1500
GNPMP = NDPFC + Depreciation + Net factor income from abroad + NIT
GNPMP = 1500 + 120 + (-20) + 100
GNPMP = Rs.1700 crore
46. a. GDPMP = Private final consumption expenditure + Government final consumption expenditure + Gross domestic capital formation(GDCF) + Net exports.....(i)
Gross domestic capital formation = Net domestic fixed capital formation + Depreciation + Change in stock
Putting values in equation......(i)
GDPMP = 1000 + 300 + {110 +100 + (20 - 20)} + 15
= Rs.1525 crore
GNPMP = GDPMP - Net factor income to abroad
GNPMP = 1525 - (-10)
= Rs.1535 crore
b. Net Current Transfer to abroad
NNDI (Net national disposable income) = NNPFC + NIT - Net current transfer to rest of the world.....(ii)
NNPFC = GNPMP - Consumption of fixed capital - NIT

a
= 1535 - 100 - 50

nk
= Rs.1385 crore
Putting values in equation ......(ii)
1500 = 1385 + 50 - Net current transfer to the rest of the world

e
Rs. (-) 65 crore = Net current transfer to rest of world

Go
47. a. By Income Method
NDP at FC= compensation of employees + operating surplus + mixed income of self-employed
Gross National Product at Factor Cost
= Compensation of employees + Operating surplus (Rent + Interest + Profit) + Consumption of fixed capital + Net factor income from abroad
esh
= ₹1,850 crore + (₹400 crore + ₹500 crore + ₹1,100 crore) + ₹100 crore + (-) ₹50 crore
= ₹1,850 crore + ₹2,000 crore + ^ 100 crore - ₹50 crore
= ₹3,900 crore
b. By Expenditure Method
Gross National Product at Factor Cost
il
= Private final consumption expenditure + Government final consumption expenditure + Gross domestic capital formation + Net exports-Net indirect taxes + Net factor income from abroad
Sa

= ₹2,600 crore + ₹1,100 crore + (₹500 crore + ₹100 crore) + (-) ₹100 crore - ₹250 crore
+ (-) ₹50 crore
= ₹2,600 crore + ₹1,100 crore + ₹600 crore - ₹100 crore - ₹250 crore - ₹50 crore
= ₹3,900 crore
by

Value of GNP at FC is same by both methods.

48. By using Expenditure Method:
GDP at MP = C + I + G + X
i. Net Domestic Product at factor cost by expenditure method
a

= Gross domestic capital formation + Net exports + Private final consumption expenditure - Indirect taxes + Subsidies + Government final consumption expenditure
dd

= 250 + (-)50 + 900 - 100 + 10 + 100

= 1,260 - 150
= ₹ 1,110 crore
uA

By value added method,

GDP at MP= Value of output- intermediate consumption
i. Net National product at factor cost by value added method
= Value of output - Value of intermediate consumption - Consumption of fixed capital - Indirect taxes + Subsidies + Net factor income from abroad
Ed

= (900 + 800 + 400) - (400 + 300 + 100) - 80 - 100 + 10 + (-)20

= 2,100 - 800 - 80 - 100 + 10 - 20
= 2,110 - 1,000
= ₹ 1,110 crore
49. Calculation of Gross National Product at Factor Cost :
By Income Method By Expenditure Method

GNPFC = Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic
GNPFC = Compensation of Employees + Profits + Rent + Interest +
Capital Formation + Consumption of Fixed Capital + Net Exports - Net Indirect Taxes + Net Factor Income from
Consumption of Fixed Capital + Net Factor Income from Abroad
Abroad

= 1,000 + 500 + 200 + 60 + (- 20) - 80 + (- 10)

= 800 + 400 + 250 + 150 + 60 + (-10)
= 1,760 - 110
= Rs. 1,650 crores
= Rs. 1,650 crores
50. By expenditure method,
GDP at MP= Consumption expenditure+ investment expenditure+ government expenditure+ net Exports
Gross Fixed Capital Formation
= Gross domestic product at market price - Private final consumption expenditure
- Government final consumption expenditure - Net exports - Change in stock (Closing stock
- Opening stock)
= ₹2,500 crore - ₹1,000 crore - ₹500 crore - (-) ₹50 crore - (₹200 crore - ₹300 crore)
= ₹2,500 crore - ₹1,000 crore - ₹500 crore + ₹50 crore + ₹100 crore

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 = ₹1,150 crore
Gross fixed capital formation = ₹1,150 crore
51. Net National Product at Market Price(NNPMP)
= Compensation of Employees + Operating Surplus + Mixed Income + (Indirect Tax - Subsidies) - Net Factor Income to Abroad
= 1,400 + 200 + 600 + (100 - 20) + 10
= Rs. 2,280 crores
To get net national product, we add ' net income from abroad' to the formula.
52. Gross National Product at Market Price
(GNPmp)= Wages and Salaries+Profit after Corporation Tax+CorporationTax+Social Security Contributions by Employers+Rent+Interest+Mixed Income Self-Employed+Net Indirect
Taxes(NIT)+Net Factor Income from Abroad+ Consumption of Fixed Capital
= 400 + 150 + 50 + 50 + 100 + 70 + 300 + 140 + (- 10) + 80
= Rs. 1,330 arab.
Here, net factor income from abroad = Net factor income from abroad - net factor income to abroad.
0-10 = -10
Gross national product at market price is the gross market value of goods and services produced by the normal residents of a country so we deduct net factor income to abroad which is not
the country's income.
53. NDPFC=GDPMP-Consumption of fixed capital-Net Indirect taxes
=900*-50-(150-20)
=720 crores
*GDPMP= Sales - Intermediate costs + Change in stock (Closing stock - Opening stock)
= 2000 - 1000 + (100 - 200)

a
= Rs.900 crore

nk
Net National Disposable Income
NDPFC + Net Indirect tax - Net factor income to abroad - Net current transfer to abroad
= 720 + 130 - 30 + 10

e
= Rs.830 crore

Go
54. INCOME METHOD
We know, GNPMP= NDPFC + Consumption of fixed capital + Net Indirect Taxes - Net factor income to abroad(or +Net factor income from abroad)
Where NDPFC = Compensation of employees + Operating Surplus (Interest + Rent + Profits) + Mixed income of self-employed
or, NDPFC= 2,000 + (500 + 700 ++ 800 )+ 1,500 = Rs.5,500 crore esh
Substituting this value in the formula for GNPMP
GNPMP = 5,500 + 100 + 250 - 150
= Rs.5,700 crore
Note- Dividend & Export is of no use under this question.
il
55. Operating surplus refers to income from property and entrepreneurship. It includes rent, interest and profit.
Net Domestic Product at Factor Cost
Sa

= Gross domestic product at market price - Consumption of fixed capital - Indirect taxes
+ Subsidies
= ₹600 crore - ₹100 crore - ₹200 crore + ₹50 crore
= ₹350 crore
by

Operating Surplus
= Net domestic product at factor cost - Compensation of employees
= ₹350 crore - ₹300 crore
a

= ₹50 crore
Operating surplus = ₹50 crore
dd

56. (GNPmp) = Compensation of Employees + Rent + Interest + Royalty + (Profit After Tax + Corporation Tax) + Net Indirect Taxes - Net Factor Income to Abroad + Consumption of Fixed
Capital
= 800 + 300 + 400 + 40 + (250 + 50) + 50 - 10 + 30
uA

= Rs. 1,910 crore

57. Net Domestic Product at Factor Cost (NDPFC)
= Compensation of Employees + (Rent + Interest + Profit) + Mixed Income of Self Employeed
Ed

= 2,000 + (400 + 500 + 900) + 7,000

= Rs. 10,800 crores
National Income = NDPFC - Net Factor Income to Abroad = 10,800 - 50
= Rs. 10,750 crores
58. a. Income Method:
GNPFC = Compensation of employees + Operating surplus (Rent + Interest + Profits) + Net factor income from abroad + Depreciation
= 1850 +(400 + 500 + 1100) + (-)50 + 100
= Rs.3900 crore.
b. Expenditure Method:
GNPFC = Government final consumption expenditure + Private final consumption expenditure + Gross domestic capital formation + Net exports + Net factor income from abroad - Net
indirect tax
= 1100 + 2600 + (500 +100) + (-) 100 + (-) 50 - 250
= Rs.3900 crore.
59. Net National Product at Factor Cost (NNPFC)
= Wages and Salaries + Social Security Contribution by Employers + Rent and Royalty + Profit + Interest - Net Factor Income to Abroad
= 800 + 100 + 300 + 500 + 400 - 50
= Rs. 2,050 arab.
Net Factor Income to abroad is the income of a foreigner, so it is deducted while calculating National Income.
60. Net Domestic Product at Market Price (NDPmp)
= Compensation of Employees + Mixed Income + Rent + Profit + Interest + Net Indirect Taxes = 4,000 + 8,000 + 800 + 1,500 + 70 + 1,000
= Rs. 15,370 crores

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61. Net Domestic Product at Factor Cost is:
(NDPFC)= Compensation of Employees + Rent + Interest + Profit + Mixed Income
= 3,000 + 500 + 800 + 1,500 + 5,000
= Rs. 10,800 crores
Gross National Product at Market Price is:
(GNPmp) = NDPFC + Depreciation - Net Factor Income to Abroad + Net Indirect Taxes
= 10,800 + 200 - 100 + 400
= Rs. 11,300 crores.
The Gross National Product at market price is the gross market value of all the final goods and services produced by the normal residents of a country during a period of one year.
62. Net Domestic Product at Factor Cost (NDPFC)
=Rent + Wages and Salaries + Corporation Tax + Interest + Social Security Contribution by Employers + Dividends + Undistributed Profits
= 200 + 700 + 30 +150 +100 + 50 + 20
= Rs. 1,250 crores

National Income (NNPFC) = NDPFC + Net Factor Income from Abroad (NFIA)
= 1,250 + (-10)
= Rs. 1,240 crores
63. Net Domestic Product at Market Price is :
NDPmp= Compensation of Employees + Rent + Interest+ Profit + Mixed Income of Self Employed + Net Indirect Taxes
= 5,000 + 700 + 600 + 1,200 + 8,000 + 850
= Rs. 16,350 crores.

a
To get Net Domestic product at market prices, we add net indirect taxes to the formula. Since we do not need to find the gross product, we do not add consumption of fixed capital to the

nk
formula.
64. a. Income Method:
NDPFC = COE + OS (Rent + Royalty + Interest + Profit) + Mixed income

e
= 1200 + (300 + 200 + 600) + 0
National income = Rs.2300 crore

Go
NNP​FC = NDP​FC + NFIA
= 2300 + (-50)
= 2250 crore
b. Expenditure Method:
esh
GDPMP = Private final consumption expenditure + Government final consumption expenditure + GDCF (NDCF + Depreciation) + Net exports
= 1300 + 730 + (360 + 60) + (-20)
= Rs.2430 crore
NNPFC = GDPMP - Depreciation + NFIA - NIT
il
= 2430 - 60 + (-50) - 70
Sa

NNP​FC = Rs.2250 crore

65. Personal Disposable Income:
= Personal income - Direct personal tax - Miscellaneous receipts and fines paid by households.. ....( i )
Personal income = Private income - Corporate tax - Undistributed profits or Corporate saving
by

= 3000 - 350 - 600

= Rs. 2050 crores
Putting in equation.....( i )
Personal Disposal Income = 2050 - 300 - 0
a

= Rs.1750 crores.
dd

National Income (Income Method):

NDPFC = Compensation of employees + Operating surplus + Mixed income
Operating Surplus = Rent + Royalty + Interest + Profit
uA

Note: Net retained earnings of private enterprise is also known as profit

= 800 + (350 + 0 + 450 + 600 ) + 900
= Rs.3100 crores.
NNPFC = NDPFC + Net factor income from abroad
Ed

= 3100 + (-50)
= 3050 crores.
66. (i) Yes, the concept of Green GNP can be followed.
a. Green GNP measures national income or Output adjusted for the depletion of natural resources and degradation of the environment.
b. It will help to attain sustainable use of the natural environment and equitable distribution of benefits of development. A large number signifies greater Sustainability.
(ii) NDP​FC = Compensation of the employees + Mixed Income of the self employed + Operating surplus
Compensation of Employees = Wages + Employer's Contribution = 800+200= 1000
Mixed Income of Self Employed = 1000
Operating Surplus = Rent + Royalty + Interest + Profit
=1400+200+1500+500=3600
NDP​FC =1000+1000+3600
= Rs 5600 crore
GDP​FC = NDP​FC + Depreciation
= 5600 + 70
= Rs 5670 Crore
67. By income method,
NDP at FC= compensation of employees+
a. Net Domestic Income( NDP at FC)
= Mixed income of self-employed + Operating suplus + Compensation of employees
= ₹28,000 crore + ₹10,000 crore + ₹24,000 crore

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 = ₹62,000 crore
Net domestic income = ₹62,000 crore.
b. Gross Domestic Income (GDP at FC)
= Net domestic income + Depreciation
= ₹62,000 crore + ₹1,700 crore
= ₹ 63,700 crore
Gross domestic income = ₹63,700 crore.
c. Net National Income ( NNP at FC)
= Net domestic income + Net factor income from abroad
= ₹62,000 crore + (-) ₹300 crore
= ₹ 62,000 crore - ₹300 crore
= ₹ 61,700 crore
Net national income = ₹ 61,700 crore
d. Net National Product at Market Price( NNP at MP)
= Net national income + Indirect taxes - Subsidies
= ₹61,700 crore + ₹9,000 crore - ₹1,800 crore
= ₹ 68,900 crore
Net national product at market price = ₹ 68,900 crore
68. Income Method
NDPFC = Compensation of employees + Operating surplus + Mixed-income
= Rs.1900 + 720 + 0 = Rs.2620 crore

a
National income = NNP​FC = NDP​FC + Net factor income from abroad
= 2620 + (-20)

nk
= 2600 crore
Expenditure Method:
GDPMP = Private final consumption expenditure + Government final consumption expenditure + Gross domestic capital formation + Net exports (or - Net imports )

e
Gross Domestic Capital Formation = Net domestic capital formation + Depreciation

Go
GDPMP = 2000 + 600 ( 400 + 100 ) + 20
GDPMP = GDPMP - Depreciation + Net factor income from abroad - NIT
NNPFC = Rs.3120 - 100 + ( -20 ) - 400
= Rs.2600 crores
esh
69. Calculation of Gross Domestic Product at Factor Cost (GDPfc)
= Compensation of Employees + Profits + Rent + Interest + Gross Domestic Capital Formation - Net Fixed Capital Formation - Change in Stock = 800 + 200 + 150 + 100 + 300 - 200 - 50
= 1,550 - 250
Therefore,GDPfc= Rs. 1,300 crores
il
Sa

Calculation of Factor Income to Abroad:

= GNPmp - Net Factor Income From Abroad - Net Indirect Taxes
1,300 = 1,400 - (Factor income from abroad - Factor income to abroad) - 120
1,300 = 1,400 - (60 - Factor income to abroad) - 120
by

= 1,300 - 1,400 + 60 - 120

Therefore,Factor income to abroad = Rs. 80 crores
Answer:
i. Gross Domestic Product at Factor Cost= Rs. 1,300 crores
a

ii. Factor Income to Abroad= Rs. 80 crores

dd

70. Income Method:

NDPFC = Compensation of employees + Operating surplus (Rent + Royalty + Interest + Profits) + Mixed income
= 1500 crore + (300 + 0 + 400 + 500) crore + 0
uA

= Rs.2700 crore
GDPMP = NDPFC + Consumption of fixed capital + Net indirect taxes.
Note: Consumption of fixed capital = Gross Domestic fixed capital formation + Change in stock - Net domestic capital formation
Ed

= 700 crore + 100 crore - 650 crore

= Rs.150 crore
GDPMP = 2700 + 150 + 250
= Rs.3100 crore
Factor income from abroad:
= GNPMP - GDPMP
GDPMP = GNPFC + NIT (Net indirect taxes)
= 2800 crore + 250 crore
GNPMP = Rs.3050 crores
Net factor income from abroad = 3050 crore - 3100 crore= - 50 crore
Net factor income from abroad = Factor income from abroad - Factor income to abroad
-50 crore = Factor income from abroad - 120 crore
70 crores = Factor income from abroad.
71. Income Method:
NDPFC = Compensation of employees + Operating surplus (Rent + Interest + Profit) + Mixed income of self employed
= 2000 + (400 + 600 + 700) + 0
= Rs.3700 crores
GDPFC = NDPFC + Depreciation ......(i)
Consumption of fixed capital = Gross fixed capital formation + Change in stock - Net domestic capital formation
= 1050 + (250 - 150) - 1000
= Rs.150

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 Put in (i)
GDPFC = 3700 + 150
= Rs.3850 crores
Net factor income from abroad:
= GNPFC - GDPFC
= 3750 - 3850
= (-) Rs.100 crore
But, Net factor income from abroad = Factor income from abroad - Factor income to abroad
Or, Factor income to abroad = Factor Income from abroad - Net Factor Income from Abroad
= Rs.20 crore - (-) Rs.100 crore
= Rs.120 crore
72. a. NDPFC = (iv) + (ii) + (xi) + (xii)
= 1500 + 500 + 400 + 300
= ₹ 2700 Cr.
GDPMP = NDPFC + depreciation + NIT
= 2700 + [(viii + v) - vii] + (vi) (∵ dep. = GDCF - NDCF)
= 2700 + [(700 + 500) - 650] + 250
GDPMP = ₹ 3050 Cr.
b. Factor Income from abroad (FIFA) ( NFIFA = FIFA-FITA)
GNPFC = GDPMP - NIT + NFIFA

a
2800 = 3050 + 250 + NFIA
2800 = 2800 + (FIFA - FITA)

nk
0 = FIFA - 120
FIFA = ₹ 120 Cr.
NIT = NET INDIRECT TAX

e
NFIA = NET FACTOR INCOME FROM ABROAD

Go
NFITA = NET FACTOR INCOME TO ABROAD
73. Income Method:
NDPFC = Compensation of employees + Operating surplus + Mixed income
= (400 + 50) + (100 + 0 + 150 + 200) + 0
= Rs.900 Arab
esh
NDPMP = NDPFC + Net indirect tax
= 900 + 70
= Rs.970 Arab
il
Private Income = Income from domestic product accruing to government + Net factor income to abroad + Net current transfer from the Rest of the World + Current transfers from
government + National debt interest
Sa

NDPFC = Public + Private

900 = 120 + Private
Rs.780 = Private
Private income = 780 - (-20) - (-10) + 30 + 60
by

= 780 + 20 + 10 + 30 + 60
= Rs.900 Arab
74. Income method:
a

(NDPFC )= Compensation of employees (Wages and salaries + Employer’s contribution towards social security scheme) + Operating Surplus + Mixed-Income
= [(i) + (viii)] + (iii) + (ii)
dd

= [800 + 100] + 600 + 160

= 900 + 600 + 160 = 1660 Crore
GNPFC = NDPFC + Depriciation (Gross capital formation- Net capital Formation) + Net Factor Income from abroad
uA

= 1660 + [M - (vii) + (ix)]

= 1660 + [330-300] + (-20)]
= 1660 + 30 - 20 = 1670 Crore
Ed

Expenditure method:
​GDPMP = Government final consumption expenditure (Public final consumption expenditure) + Private final consumption expenditure + Gross domestic Capital formation + Net export
(Export - Import)
= (xiii) + (xii) + (v) + [(x) - (xi)]
= 450 + 1000 + 330 + [30 - 60]
= 1750 Crore
GNPFC = GDPMP + Net factor income from abroad - Net Indirect Tax
= 1750 + (ix) - (xiv)
= 1750 + (- 20) - 60 = 1750 - 20 - 60
= 1670 Crore.
75. Net National Product at Market Price (NDPMP):
= Compensation of employees + Operating surplus + Mixed income +Indirect tax
= 1400 +200 + 600 + (100 - 20)
= Rs.2280 crore
NNPMP = NDPMP - Net factor income to abroad
= 2280 - 10
= Rs.2270 crore
Private Income:
= Income from Domestic product accruing to Private Sector + Net Factor Income from Abroad + Net Current Transfer from the Rest of the World + Current transfers from Government +
National Debit Interest
NDPFC = Income from Domestic product accruing to Public Sector + Income from Domestic product accruing to Private Sector NDPFC = NNPMP - Net Factor Income from Abroad - Net
Indirect tax

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= 2270 - (-10) - [100 - 20]
= 2270 + 10 - 80 = 2200
2200 = 350 + Income from Domestic product accruing to Private Sector
1850 = Income from Domestic product accruing to Private Sector
Private Income = 1850 + (-10) + (-30) + 50 + 70
Private Income = Rs.1930 crore

a
e nk
Go
esh
il
Sa
a by
dd
uA
Ed

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