Assignment - Economics & Management

Decisions

To calculate the Net Domestic Product at Factor Cost (NDPFC) by the expenditure
method and National Income by the value-added method, we'll follow these steps:

Step 1: Calculate Gross Domestic Product at Market Price (GDPMP)

GDPMP = Private final consumption expenditure + Government final consumption

expenditure + Gross Domestic Capital Formation + Net Exports GDPMP = 900 cr. +
100 cr. + 250 cr. + 50 cr. GDPMP = 1300 cr.

Step 2: Calculate Net Domestic Product at Market Price (NDPMP)

NDPMP = GDPMP - Depreciation (Consumption of Fixed Capital) NDPMP = 1300 cr.

- 80 cr. NDPMP = 1220 cr.

Step 3: Calculate Net Indirect Taxes (Taxes - Subsidies)

Net Indirect Taxes = Indirect Taxes - Subsidies Net Indirect Taxes = 100 cr. - 10 cr.
Net Indirect Taxes = 90 cr.

Step 4: Calculate Net Domestic Product at Factor Cost (NDPFC)

NDPFC = NDPMP - Net Indirect Taxes NDPFC = 1220 cr. - 90 cr. NDPFC = 1130 cr.

Step 5: Calculate National Income by the Value-Added Method

National Income = Value of Output - Value of Intermediate Consumption

For the Primary Sector: Value Added in Primary Sector = Value of Output (Primary
Sector) - Value of Intermediate Consumption (Primary Sector) Value Added in
Primary Sector = 900 cr. - 400 cr. Value Added in Primary Sector = 500 cr.

For the Secondary Sector: Value Added in Secondary Sector = Value of Output
(Secondary Sector) - Value of Intermediate Consumption (Secondary Sector) Value
Added in Secondary Sector = 800 cr. - 300 cr. Value Added in Secondary Sector =
500 cr.

For the Tertiary Sector: Value Added in Tertiary Sector = Value of Output (Tertiary
Sector) - Value of Intermediate Consumption (Tertiary Sector) Value Added in
Tertiary Sector = 400 cr. - 100 cr. Value Added in Tertiary Sector = 300 cr.
Now, calculate National Income by adding the value-added in all sectors and adding
net factor income from abroad:

National Income = Value Added in Primary Sector + Value Added in Secondary

Sector + Value Added in Tertiary Sector + Net Factor Income from Abroad National
Income = 500 cr. + 500 cr. + 300 cr. + 20 cr. National Income = 1320 cr.

So, the Net Domestic Product at Factor Cost (NDPFC) by the expenditure method is
1130 cr., and the National Income by the value-added method is 1320 cr.