ndp at fc formulandp at fc formula
23.Giving reason, explain how should the following be treated in the estimation ofNational Income (Delhi 2012) 14. 1360 crore, 45. Ask questions, doubts, problems and we will help you. (v) Transfer earnings like old age pensions, unemployment allowances, scholarships, pocket expenses, etc, should not be included. 660 crore, 54. PRODUCT METHOD (Value added method): Theory-only the value of final goods is to be included; otherwise there arises a problem of double counting. NDP is a measure of a countrys economic performance that considers the depreciation of physical capital, unlike GDP, which only reflects the sum of all goods and services produced within a countrys borders. Calculate Value Added Method/Product Method/Output Method By this method, the total value of all the final goods and services produced in an economy during a given time period are estimated to obtain the value of domestic income. It ascertains the economic performance, wealth, and growth of a country. 805 crore, 55. The resulting total is called Domestic Income or Net Domestic Product at FC (NDP FC)- By adding net factor income from abroad to domestic income, we get National Income (NNP FC)- Mind, in income method national income is measured at the stage when factor incomes are paid out by enterprises to owners of factors of productionland, labour, capital and enterprise. (ii) Net National Disposable Income (All India 2012), 50. 680 crore Let us have a look at the examples to understand the concept better. It is a measure of the total value of all goods and services produced within a countrys borders, adjusted for the decline in the value of physical capital over time due to wear and tear, obsolescence, and other factors. = Rs. Expenditure Method: NI = C (household consumption) + G (government expenditure) + I (investment expense) + NX (net exports).3. 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). By contrast, if a new housing community is developed, the construction of residences would be contributory to NDP. = 1220-270 = Rs. The total value of all goods and services produced within a countrys borders is adjusted for the depreciation of physical capital. (b) Private Income from the following data (All India 2008), 87. Giving reason, explain whether the following are included in domestic product of India. It is measured by aggregating monetary values of final goods and services produced during that financial year. The value added by a firm is the difference between value of output and the value of intermediate products of each firm of the country. suppose if we include the price of wheat, then the price of floor and finally price of bread. 60 lakh, 18.Calculate Net Value Added at Factor Cost from the following data, Ans. The $80 million is the amount available for consumption or investment in the economy after accounting for the depreciation of physical capital. It studies not an individual economic units like a household or a firm or an industry (i.e. 600 lakh, 16.Calculate Net Value Added at Factor Cost from the following data, Ans. 1. Though GDP is frequently cited when assessing the economic health of a country, NDP puts into perspective the pace at which capital assets degrade and must be replaced. (d) GDP at factor cost = NDP at factor cost - depreciation Answer: (c) See The Explanation 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. It facilitates standard of living comparisons between different nations. (i) Profits earned by a branch of foreign bank in India will be included in domestic income of India, as the profits are earned in domestic territory of India. In 2020, the gross national income of the US was $21,286,637,000,000.000. = 2000 + 500 + 700 + 800 + 1500 National Income equals Rent + Wages + Interest + Profit + Mixed-Income. It helps to solve the central problem of what, how and for whom to produce in the economy. (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. Expenditure + Net Domestic Capital Formation + Net Exports + Net Factor Income from Abroad- Net Indirect Taxes Likewise, sale proceeds of shares and bonds are not included. (ii) Operating surplus (rent, profit and interest) Net Domestic Product measures a countrys economic output that considers the depreciation of physical capital. In short, NDP FC = Compensation of Employees + Rent and Royalty + Interest + Profit + Mixed Income Step 4: Estimate net factor income from abroad (NFIA) to arrive at National Income: In the final step, NFIA is added to domestic income to arrive at National Income (NNP FC ), i.e. 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. Gross National Product: Gross National Product (GNP) is defined as the total market value of all final goods and services produced in a country during a specific period of time, usually one year. So, it is a part of domestic factor income. In other words, the NDP-FC is calculated by subtracting the indirect taxes and adding the subsidies to the value of output, which is the value of all goods and services produced within a countrys borders. (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. This method measures national income as sum total of final expenditures incurred by households, business firms, government and foreigners. Save my name, email, and website in this browser for the next time I comment. National Income (NNPFC) = Private Final Consumption Expenditure + Government FinalConsumption Expenditure + Net Domestic Fixed Capital Formation + Change in Stocks Net Imports Net Indirect Taxes + Net Factor Income from Abroad Gross National Product at Factor Cost (GNPFC) = Compensation of Employees + Profits + Rent+ Interest + Consumption of Fixed Capital + Net Factor Income from Abroad Teachoo gives you a better experience when you're logged in. 5500 crore = 300 + 600 +150 + 50-90 + (-20) Calculate National Income and Net National Disposable Income from the following (All India 2014), Ans. (a) By Expenditure Method Please login :). 2010 crore (a) Net Domestic Product at Factor Cost (NDPFC) = Private Final Consumption Expenditure+ Government Final Consumption Expenditure + Net Domestic Capital Formation + Net Exports Net Indirect Taxes (Indirect Taxes Subsidies), NDPFC= 250+ 50+ 30+ (- 10)- (20- 10) crore = 330 -20 =Rs. NDP at MP = GDP at MP (+) NFIA [Net Factor Income from Abroad] 3. (a) Gross National Product at Factor Cost (GNPFC) 94.23.210.48 100 only. Net Value Added at Factor Cost (NVAFC) = Value of Output [Sales + Change in Stock (Closing Stock Opening Stock)] Purchase of Raw Material Depreciation (Gross Capital Formation Net Capital Formation) + Subsidies = 300+ 200-(-50)+ 20+ 30 (i) National Income Such an increase along with deterioration of the capital stock value indicates economic stagnation. 85. (a) Gross National Product at Market Price and = 750 690 = Rs. Identify enterprises which employ factors of production (land, labour, capital and enterprise). 6. Ans. (iii) Investment expenditure or gross domestic capital formation. Study of problem of unemployment in India or general price level is a macroeconomic study because they relate to Indian economy as a whole.Let it be known that an English economist J.M. (ii) Purchase and sale of second hand goods should not be included. Estimate net factor income from abroad which is added to Domestic Income to derive National Income. 36. Value Added or Product Method: NI = GDP Depreciation Indirect Taxes + Overseas Net Factor Income., Following are the four components of NI accounts:1. 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. 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. Sales Taxes - consumer taxes imposed by the government on the sales of goods and services. (b) GNP at factor cost = GNP at market price + net indirect tax (c) National income = Domestic income + Net factor income from abroad. Intermediate Consumption of B The agriculture sector produces 100 units of crops with a value of $100 per unit for a total GDP of $10,000. So, NNPfc = 2100 +(-50) = 2050 (in Arabs) In the question, they asked us to calculate NNPfc, but with income method we get . Sum up all factor payments made within domestic territory to get Domestic Income (NDP at FC). Gross Value Added at Factor Cost (GVAFC) = Value of Output (Sales + Change in Stock)- Purchase of Raw Materials Indirect Tax (Sales Tax + Excise Duty) Gross Domestic Product at Market Price (GDPMP), Gross Domestic Product at Factor Cost (GDPFC), Net Domestic Product at Market Price (NDPMP), Net Domestic Product at Factor Cost (NDPFC), Gross National Product at Market Price (GNPMP), Gross National Product at Factor Cost (GDPFC), Net National Product at Market Price (PMP), Net National Product at Factor Cost (NNPFC). = 830-40-150-70 = Rs. = Rs. Calculate sales from the following data (Delhi 2008), Ans. Calculate (Delhi 2009). Calculate How will you treat the following while estimating National Income of India? Investment4. 73.Calculate National Income by = [140+ (-10)]-90-20-(-5) Meaning. 35 lakh, 17. An increase in NDP signifies a growing economy, while a decrease denotes economic stagnation. I have written it for you to memorize it. (ii) Interest paid by an individual on loan taken to buy a car will not be included while estimating Ntional Income, as loan is taken for consumption purpose. 71. It is concerned with the determination of equilibrium level of income and employment supply, inflation, unemployment, etc. Sum up all factor payments made within domestic territory to get Domestic Income (NDP at FC). (ii) Payment of corporate tax From the following data calculate Net Value Added at Factor Cost (Delhi 2011 c), Ans. 1650 crore, 69. (i) Salaries received by Indian residents working in Russian Embassy in India. (All India 2010) Net Value Added at Factor Cost (NVAFC) = Value of Output (Sales + Change in Stock)- (Purchase of Raw Material + Import of Raw Material) Consumption of Fixed Capital + Subsidies Machinery that is put to regular use may need parts replaced regularly until the entire piece of equipment is no longer usable. = 750+ (-30)-500-60-100 (iv) Imputed value of expenditure on goods produced for self consumption should be taken into account. Ans. Givereasons for your answer. From the following information about firm X, calculate Net Value Added at Factor Cost (Delhi 2008 C), Ans. This has been a guide to Net Domestic Product & its meaning. 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 How will you treat the following while estimating National Income of India? = Rs. The construction of new homes on previously unused real estate can also represent a gain for the NDP if the residences are not intended to replace defunct or demolished property. 1650 crore, (b) By Expenditure Method Gross National Product at Factor Cost (GNPFC) = Private Final Consumption Expenditure+ Government Final Consumption Expenditure + Net Domestic Capital Formation + Consumption of Fixed Capital + Net Exports Net Indirect Taxes + Net Factor Income from Abroad (ii)Earning of shareholders from the sale of shares will not be included while National Income, as it will be considered as transfer payment. Calculate Net National Product at Market Price and Gross National Disposable Income. Calculate national income or NNP at FC. 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