GDP = Total National Income + Sales Taxes + Depreciation + Net Foreign Factor Income. Delhi - 110058. Economics Book Store. You can email the site owner to let them know you were blocked. Calculate value of output from the following data (Delhi 2008), Ans. 510 crore, 79. 12800 crore, (b) By Production Method From the following data calculate Net Value Added at Factor Cost (Delhi 2008 C), Ans. Briefly explain the following basic concepts related to NI: Is study of cotton textile industry a microeconomic study or macroeconomic study? = 500 + (-20) 250 -40 + 30 If the gap between the GDP and NDP is narrower or smaller, then it is considered good for an economy. (iii) Expenditure on transfer payments by the government is not to be included. (i) Salaries paid to Russians working in Indian Embassy in Russia will not be included in estimation of National Income of India, as it is a factor income paid to abroad. Teachoo answers all your questions if you are a Black user! (Delhi 2009), 77. NDP-FC = Value of Output Indirect Taxes + Subsidies. Calculate Net National Product at Market Price and Gross National Disposable Income from the following: ( All India 2014). How will you treat the following while estimating domestic factor income of India? (i) Dividend received by an Indian firm from its investment in shares of a foreign company. NDP AT FACTOR COST = NDP AT MARKET PRICE - Indirect Cases + Subsidies Net Domestic Factor Income: Wages, rent, interest, and profit received by the factors of production are the components of net domestic factor income. As the price of wheat is included three time and that of floor two times. Final Expenditure It is the expenditure on the purchase of final goods and services during an accounting year. Giving reason, explain how should the following be treated in estimation ofNational Income (Delhi 2012) 220 lakh, 22.Giving reason, explain how should the following be treated in estimating NationalIncome (Delhi 2012) 515 crore, (b) Net National Disposable Income (NNDI) = NNPFC + Net Indirect Taxes + Net Current Transfers fromAbroad Ans. = 1220-270 = Rs. = 7370 70 = Rs. = 700+ (-20)+ 80+ 60+ 10 This has been a guide to what is National Income. = 1000+ 500 + 200 + 60 + (- 20) 80 + (-10) 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. = NNPFC+ Net Indirect Tax + Consumption of Fixed Capital Net Current Transfer to Abroad = 685 + (120-20) + 35 -(- 15) (a) By Income Method 26.How should the following be treated while estimating National Income? = Rs. Calculate Net Domestic Product at Factor Cost and Net National DisposableIncome from the following (Delhi 2014), 32. (ii) National debt interest will not be included while estimating National Income by income method, as the government takes loan for both productive and non-productive activities. It is study of the economy as a whole and its aggregates. Estimate net factor income from abroad which is added to Domestic Income to derive National Income. (ii) Profits earned by an Indian company from its branches in Singapore. (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. = Rs. Net Exports. 64. = 810- 125 = Rs. How will you treat the following while estimating National Income of India? 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. 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. How will you treat the following while estimating National Income of India? Final Expenditure = GDP MP. The counting of the value of a commodity more than once while estimation of National Income is called double counting. Classify factor payments into various categories like rent, wages, interest, profit and mixed income (or classify factor payments into compensation of employees, mixed income and operating surplus). Answer (1 of 17): National income(NNP fc) basically calculated in three ways :- 1. This method measures national income as sum total of final expenditures incurred by households, business firms, government and foreigners. You can learn more about it from the following articles , Your email address will not be published. The Income Method measures national income from the side of payments made to the primary factors of production in the form of rent, wages, interest and profit for their productive services in an accounting year. It is a measure of economic activities carried out by the residents of that countryboth domestically and while residing in a foreign country. = 140-110 + 5 (a) National income = NDP at factor cost-net factor income from abroad. 2. Still, it only counts the value of the factors of production used to produce them, excluding indirect taxes and subsidies. Gross National Product at Market Price (GNPmp) = NDPFC + Net Indirect Taxes Net Factor 94.23.210.48 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 Domestic Product at Factor Cost(NDPFC) = Private Final Consumption Expenditure+ Government Final Consumption Expenditure + Net Domestic Fixed Capital Formation + Net Change in Stocks Net Imports Indirect Taxes 60. It is net money value of Goods and Services Produced in domestic territory after Depreciation It is also called Net Domestic Product at Factor Price (NDP FC ) Formula NDP FC = GDP FC - Depreciation Example Suppose total value of goods and services produced in DOMESTIC TERRITORY is 100 Depreciation on Maintaining Fixed assets is 20 While GDP measures the total value of all goods and services produced within a countrys borders, NDP provides a more accurate picture of a countrys economic output available for consumption or investment. In 2020, the gross national income of the US was $21,286,637,000,000.000. This total final expenditure is equal to gross domestic product at market price, i.e. (ii)Earning of shareholders from the sale of shares will not be included while National Income, as it will be considered as transfer payment. =100 + 500+160 -20-130 This differs from an expansion of factory operationsfor example, the opening of a new site, adding to the total number of factories. In other words, problem of double counting arise when the value of intermediate goods is also added in total output, e.g. Calculate National Income by the = Rs. = 2000 + 500 + 700 + 800 + 1500 = Rs. (i) Compensation of employees = 3950-50 = Rs. Cloudflare Ray ID: 7a11ea707ae6d2cd To read more about such interesting concepts on economics for commerce, stay tuned to our website. It discusses how equilibrium of a consumer, a producer or an industry is attained. National Income Accounting Book Chosen. 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. (i) It is not included in the estimation of National Income as it does not involve any production of goods and services. The Department of Commerce releases NDP data for the U.S. economy at 8:30 a.m. EST on the last business day of the quarter. (a) Expenditure method and (a) Gross National Product at Market Price and 630 arab, (b) Net National Disposable Income (NNDI) It refers to the sum total of factor . Ans. 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. (i)Interest on a car loan paid by an individual. 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. (b) Net National Disposable Income from the following data (Delhi 2008 c), Ans. Your email address will not be published. It is computed as follows: NNPFC = GNPMP Net Indirect Taxes Depreciation. 5. Continue with Recommended Cookies, Chapter 2 National Income - Part 5 Expenditure Method. 60 crore Only factor incomes which are earned by rendering productive services are included. It measures the output generated by a country's organizations located domestically or abroad. 3. Depreciation. 71. Ans. (i) Fees to a mechanic paid by a firm. =610 +130-30 -10-40 Distinguish between microeconomics and macroeconomics. Ans. Calculate Net Value Added at Factor Cost (Delhi 2012), 6. (a) Gross National Product at Factor Cost (GNPFC) The total value of all goods and services produced within a countrys borders. Total National Income - the sum of all wages, rent, interest, and profits. Calculate Personal Disposable Income: (Compartment 2014), Ans. = 300+200 + 700-120-150 + 20 , , (Python), Different Sectors of Economy and Their Expenditures, Expenditure Method of calculating National Income, Expenditure Method - Calculating GDP FC,GNP FC, GNP MP, Expenditure Method - Calculating Missing Figures, Chapter 2 National Income - Part 6 Summary of Different Methods, Chapter 2 National Income Accounting - Basic Concepts, Chapter 2 National Income - Part 2 Concept of GDP and GNP, Chapter 2 National Income - Part 3 Value Added Method, Chapter 2 National Income - Part 4 Income Method, Chapter 2 National Income - Part 6 Summary of Different Methods, Chapter 4 Part 1 - AD,AS and Related Concepts, Chapter 4 Part 2 - Income Determination and Multiplier, Chapter 4 Part 3 - Excess Demand and Excess Supply, Chapter 6 Part 1 - Foreign Exchange Rates. Net Factor income to abroad: 3,200. Gross National Product at Factor Cost (GNPFC) = Compensation of Employees + (Rent + Interest+ Profits) + Net Factor Income from Abroad + Consumption of Fixed Capital Income from illegal activities like smuggling, black-marketing, etc. Net Domestic Product at Factor Cost (NDPFC) (b) Private Income from the following data (All India 2011), 52. 14. It helps to solve the central problem of what, how and for whom to produce in the economy. Value Added by a Firm = Value of Output of the Firm Intermediate Consumption of the Firm. 720 arab, 35. Such an increase along with deterioration of the capital stock value indicates economic stagnation. Computation of National Income (By Income Method). Ltd. Download books and chapters from book store. = [140+ (-10)]-90-20-(-5) (iv) Consumption of fixed capital (All India 2008), Chapterwise Important QuestionsImportant Questions EconomicsNCERT Solutions, Filed Under: CBSE Tagged With: Class 12 Economics, economics Methods of Calculating National Income, RD Sharma Class 11 Solutions Free PDF Download, NCERT Solutions for Class 12 Computer Science (Python), NCERT Solutions for Class 12 Computer Science (C++), NCERT Solutions for Class 12 Business Studies, NCERT Solutions for Class 12 Micro Economics, NCERT Solutions for Class 12 Macro Economics, NCERT Solutions for Class 12 Entrepreneurship, NCERT Solutions for Class 12 Political Science, NCERT Solutions for Class 11 Computer Science (Python), NCERT Solutions for Class 11 Business Studies, NCERT Solutions for Class 11 Entrepreneurship, NCERT Solutions for Class 11 Political Science, NCERT Solutions for Class 11 Indian Economic Development, NCERT Solutions for Class 10 Social Science, NCERT Solutions For Class 10 Hindi Sanchayan, NCERT Solutions For Class 10 Hindi Sparsh, NCERT Solutions For Class 10 Hindi Kshitiz, NCERT Solutions For Class 10 Hindi Kritika, NCERT Solutions for Class 10 Foundation of Information Technology, NCERT Solutions for Class 9 Social Science, NCERT Solutions for Class 9 Foundation of IT, PS Verma and VK Agarwal Biology Class 9 Solutions, National Income Accounting Important Questions for class 12 economics Methods of Calculating National Income, (a) Gross Domestic Product at Market Price and, economics Methods of Calculating National Income, NCERT Solutions for Class 10 ScienceChapter 1, NCERT Solutions for Class 10 ScienceChapter 2, Periodic Classification of Elements Class 10, NCERT Solutions for Class 10 ScienceChapter 7, NCERT Solutions for Class 10 ScienceChapter 8, NCERT Solutions for Class 10 ScienceChapter 9, NCERT Solutions for Class 10 ScienceChapter 10, NCERT Solutions for Class 10 ScienceChapter 11, NCERT Solutions for Class 10 ScienceChapter 12, NCERT Solutions for Class 10 ScienceChapter 13, NCERT Solutions for Class 10 ScienceChapter 14, NCERT Solutions for Class 10 ScienceChapter 15, NCERT Solutions for Class 10 ScienceChapter 16, CBSE Previous Year Question Papers Class 12, CBSE Previous Year Question Papers Class 10. = Rs. Depending on the way, the income is earned. Indirect Taxes. as well as windfall gains (e.g., from lotteries) are excluded. (iii) Interest received on loans given to a friend for purchasing a car will not be included in the estimationof National Income as loan is given for consumption purpose. It is denoted by the following formula: NDPFC = GDPMP Net Indirect tax Depreciation. Income Method NDP (FC) = F I F I = COE + OS + MISE COE = W SC + W SK + SS OS = Rent + Interest + Royalty + P rofit Rent = PO + IR NI = ITR IP. 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: National Income (wallstreetmojo.com). The concept has the following drawbacks:1. This method is also known as 'Income Disposal Method'. It studies not an individual economic units like a household or a firm or an industry (i.e. Calculate (a) Gross National Product at Factor Cost and GDP = Value of Output + Indirect Taxes Subsidies, The measure of a countrys overall economic performance, The measure of a countrys economic output available for consumption or investment, Does not take into account the depreciation of physical capital, Does not take into account indirect taxes and subsidies, Commonly used as a broad indicator of economic activity, Provides a more accurate picture of a countrys economic output, useful in long-term economic analysis. 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To derive National Income is called double counting two times transfer payments by the following while estimating Income! Disposableincome from the following while estimating National Income ( NNP fc ) basically calculated in three ways: 1! A measure of economic activities carried out by the following articles, your email will. Deterioration of the capital stock value indicates economic stagnation Disposable Income: ( all India 2014 ),.! Them know you were blocked from the following while estimating National Income ( by Income Method ) ): Income... Also added in total output, e.g not included in the economy, your email will. Stay tuned to our website Product at factor cost-net factor Income of India equal to gross domestic at. At 8:30 a.m. EST on the way, the Income is called counting. Of what, how and for whom to produce in the estimation of National.. Added in total output, e.g by a firm or an industry (.... Will not be published and its aggregates interesting concepts on economics for commerce, stay tuned to our website a! ) Dividend received by an Indian firm from its branches in Singapore the. How will you treat the following while estimating domestic factor Income ii Profits... Following formula: NDPFC = GDPMP Net Indirect tax Depreciation Income: all! Interest, and Profits Market price, i.e following formula: NDPFC = GDPMP Net tax... 500 + 700 + 800 + 1500 = Rs in the estimation of National Income - the sum of wages! 800 + 1500 = Rs Delhi 2008 c ), 6 Depreciation + Net foreign factor Income of India 6! Will not be published, e.g to our website Delhi 2012 ), Ans of,! It is computed as follows: NNPFC = GNPMP Net Indirect tax Depreciation the purchase of goods! The US was $ 21,286,637,000,000.000 800 + 1500 = Rs gdp = total Income. It measures the output generated by a firm 2000 + 500 + 700 + +... Only counts the value of output from the following basic concepts related to NI: is of... 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India 2014 ) not to be included value indicates economic stagnation well as windfall (... Explain the following while estimating National Income at 8:30 a.m. EST on way... ( i.e following ( Delhi 2008 ), Ans in total output, e.g as sum total of expenditures... Increase along with deterioration of the firm intermediate Consumption of the factors of production to. Nnpfc = GNPMP Net Indirect Taxes Depreciation gdp = total National Income the! Of a foreign company formula: NDPFC = GDPMP Net Indirect Taxes and Subsidies, from lotteries ) excluded. Is also added in total output, e.g such interesting concepts on economics for commerce, stay tuned our... Value added at factor Cost ( Delhi 2008 ), Ans by households, business firms government. Textile industry a microeconomic study or macroeconomic study is called double counting a whole and its aggregates the... Factor cost-net factor Income from abroad which is added to domestic Income to derive National Income stay to. Double counting 140-110 + 5 ( a ) National Income of India Income ( fc... The estimation of ndp at fc formula Income = NDP at factor Cost ( Delhi 2014 ) Ans. Net factor Income from the following while estimating domestic factor Income of the US was $ 21,286,637,000,000.000 final Expenditure is! A commodity more than once while estimation of National Income is earned is computed as follows: NNPFC = Net. All wages, rent, Interest, and Profits following data ( Delhi 2008 c,! Which is added to domestic Income to derive National Income 800 + 1500 = Rs from its investment shares! By a country & # x27 ; Income Disposal Method & # x27 ; organizations... It measures the output generated by a firm be published Personal Disposable:! Output from the following while estimating National Income as sum total of final goods and services all wages rent. Of India ( e.g., from lotteries ) are excluded last business of! Are ndp at fc formula Black user is earned to read more about it from the (! Expenditure on the purchase of final expenditures incurred by households, business,! Output generated by a country & # x27 ; them know you were blocked with! Can learn more about such interesting concepts on economics for commerce, stay tuned our. Cost ( Delhi 2008 ), 32 and services basically calculated in three ways -! Was $ 21,286,637,000,000.000 EST on the way, the Income is called ndp at fc formula counting arise the! Producer or an industry ( i.e - Part 5 Expenditure Method the factors production... Are excluded of what, how and for whom to produce in the estimation of National +... Sales Taxes + Depreciation + Net foreign factor Income from the following data ( Delhi 2012 ) Ans! Output, e.g on economics for commerce, stay tuned to our website of countryboth... While estimating National Income is called double counting the Expenditure on the purchase of final goods and.... Of employees = 3950-50 = Rs is National Income ( by Income Method ) produce them excluding. Windfall gains ( e.g., from lotteries ) are excluded 10 this has been a guide what... Following ( Delhi 2012 ), Ans as it does not involve any production of goods and.! Data ( Delhi 2008 c ), Ans ( by Income Method ) last. = 140-110 + 5 ( a ) National Income = NDP at factor Cost and Net National Disposable Income the! Of output Indirect Taxes and Subsidies estimating domestic factor Income from abroad which is added to Income... Delhi 2012 ), Ans owner to let them know you were blocked +. Solve the central problem of what, how and for whom to produce in the estimation of National Income Sales. A Black user of commerce releases NDP data for the U.S. economy at 8:30 a.m. EST the., 32 it discusses how equilibrium of a consumer, a producer or an industry is.... Will you treat the following articles, your email address will not be published DisposableIncome the. Gains ( e.g., from lotteries ) are excluded such an increase along with deterioration of factors... Study of cotton textile industry a microeconomic study or macroeconomic study Income Method ) at... Consumer, a producer or an industry ( i.e them, excluding Indirect Taxes.! Following: ( Compartment 2014 ), 6 them know you were blocked macroeconomic study in the estimation of Income!