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. = 600 + (-10)-300 = Rs. = 1000 + 250+150 + 640 -30=Rs. (b) Expenditure method from the following data (All India 2009), Ans. Calculate Gross Value Added at Factor Cost (Delhi 2012), 5. Ltd. Download books and chapters from book store. (i) Interest paid by banks on deposits. = Rs. Calculate Gross National Product at Market Price and Net National Disposable Income from the following data (Delhi 2009 c), 80. (i) Expenditure on fertilisers by a farmer is not included in the estimation of National Income as it is an intermediate consumption as fertilisers are meant for further production. Ans. Uploaded by . From the following data calculate Net Value Added at Factor Cost (Delhi 2011 c) 28.Giving reason, explain the treatment assigned to the following while estimatingNational Income (All India 2011) Ans. 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. = 2000 + 500 + 700 + 800 + 1500 (ii) Payment of salaries to its staff by an embassy located in New Delhi will not be included in domestic income of India, as it is not a part of domestic territory of India. = 3500 + 50 2000 500 350 (b) Production method from the following data (Delhi 2011), Ans. 73.Calculate National Income by As the price of wheat is included three time and that of floor two times. = 600 + 100 + 110-20-(120-20)-5 = 800+ 400+ 250+150+ 60+ (-10) = Rs. (ii) Addition to stocks during a year. (a) Net Domestic Product at Factor Cost (NDPFC) = Wages and Salaries + Rent + Interest Paid byProduction Units + Corporation Tax + Dividends + Undistributed Profits + Social Security Schemes by Employers 5700 crore, 46. It helps to solve the central problem of 'full employment of resources' in an economy.Be it noted that macroeconomic theory is also called 'Theory of Income and Employment' because it tries to explain how level of income and employment is determined in an economy and how unemployment can be removed. Ans. = 850-520 Distinguish between microeconomics and macroeconomics. Using this, they can better understand the resources available for consumption or investment in the country. What Is GDP and Why Is It So Important to Economists and Investors? (ii) Payment of salaries to its staff by an embassy located in New Delhi. 510 crore, 79. Ans. (iii) Capital gains to Indian residents from sale of shares of a foreign company. (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. The net domestic product (NDP) is calculated by subtracting the value of depreciation of capital assets of the nation such as machinery, housing, and vehicles from the gross domestic product (GDP). National income is the total value of all economic activities carried out in production capacities owned and run by a nations residents. 950 crore This compensation may impact how and where listings appear. = 810 + 60 + 80-(-10) Requested URL: byjus.com/commerce/income-method/, User-Agent: Mozilla/5.0 (iPhone; CPU iPhone OS 14_7_1 like Mac OS X) AppleWebKit/605.1.15 (KHTML, like Gecko) Version/14.1.2 Mobile/15E148 Safari/604.1. Depending on the way, the income is earned. Net Value Added at Factor Cost (NVAFC) = Value of Output (Sales + Change in Stock) Intermediate Cost- Depreciation Net Indirect Tax (ii) Profits earned by an Indian company from its branches in Singapore. 4. (b) Private Income from the following data (All India 2011), 52. Calculate Computation of National Income (By Income Method). Calculate intermediate consumption from the following data, Ans. 94.23.210.48 = 200-[80+ 20+ (15 -5)] = Rs. 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 Today its Indias top website and an institution when it comes to imparting quality content, guidance and teaching for IAS Exam. 30.Giving reason, explain how are the following treated in estimating NationalIncome method (Delhi 2010 c) 1360 crore, 45. = 185+15 (i) National Income (iii) Entertainment tax received by government. Government Spending3. Only factor incomes which are earned by rendering productive services are included. (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. NDP = Net domestic product GDP = Gross domestic product Depreciation = Depreciation of capital assets such as equipment, vehicles, housing, and more As the NDP takes into account the depreciation of capital assets, it is considered to be superior to the GDP as a measure of well-being of a nation. (b) Gross National Disposable Income (GNDI) =NNPFC+ Net Indirect Taxes + Consumption of FixedCapital Net Current Transfer to the Rest of the World = 1220-270 = Rs. Calculate National Income and Gross National Disposable Income from the following (Delhi 2011), Ans. (a) National income = NDP at factor cost-net factor income from abroad. It is represented by the following formula: F denotes Foreign Production by Nations Residents. Ans. Please include what you were doing when this page came up and the Cloudflare Ray ID found at the bottom of this page. It is useful in comparing the economic output of different countries. Net Value Added at Factor Cost (NVAFC) = Value of output (Sales + Change in Stock) Purchase ofRaw Materials Consumption of Fixed Capital + Subsidies = Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Fixed Capital Formation + Change in Stock + Net Export + Consumption of Fixed Capital Net Factor Income to Abroad Net Indirect Tax 37. (ii) Profits earned by an Indian bank from its abroad branches. Displaying ads are our only source of revenue. (a) Net National Product at Market Price and This would mean the purchased machine would qualify as a gain for the NDP. (i) Taking care of aged parents = Rs. = 400 340 = Rs. 680 crore There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. Calculate Net National Product at Market Price and Gross National Disposable Income. The NDP better assesses a countrys economic output by subtracting this value from GDP. = Rs. 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. + Government Final Consumption Expenditure + Net Domestic Fixed Capital Formation + Change in Stock + Consumption of Fixed Capital- Net Imports Net Indirect Tax Net Factor Income to Abroad (b) Net National Disposable Income from the following data (Delhi 2008), 82. = [140+ (-10)]-90-20-(-5) You must give reason for your answer. The problem of double counting can be avoided by the following two alternative ways: (a) By Income Method 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. NDP at FC = There are three different methods of determining NI:1. GNP FC = GDP FC + NFIA (ii) Net National Disposable Income (All India 2012), 50. While estimation of National Income. It deals with aggregates like national income, general price level and national output, etc. 4,000 crores + Rs. How will you treat the following while estimating National Income of India? Calculate Gross National Product at Market Price by production method and income method (All India 2010), 67. On the other hand, the Domestic Net Product at factor cost (NDP-FC) only considers the labor and capital used to produce them. This provides a more comprehensive picture of a countrys economic output, as it considers both the production of goods and services and the market prices at which they are sold, including the effect of government interventions. (i) Interest paid by banks on deposits will be included while estimating National Income by income method, as it is an income earned by depositors and bank uses these deposits for commercial purposes. (vi) Gross National Product at FC: It is the sum total of factor incomes earned by normal residents of a country along with depreciation, during an accounting year. = 1550 190 = 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. (a) Net Domestic Product at Factor Cost and Calculate National Income by the Calculate National Income and Private Income from the following data (All India 2008), Ans. It is the total value of domestic production minus net indirect taxes. = 30 + 5 = Rs. 600 crore, (NNPFC) = Gross Value Added by A and B Indirect Taxes Depreciation + Net Factor Income Abroad = 600-80-30+20= 620-110=Rs. Depreciation is the reduction in the value of physical capital due to aging, wear and tear, or obsolescence. How will you treat the following while estimating National Income of India? NDP = GDP - Depreciation N DP = GDP. (ii) Interest on a car loan paid by a government owned company. National Income (NNPFC) = Gross Value Added at Market Price by the Primary Sector+ Gross Value Added at Market Price by the Secondary Sector + Gross Value Added at Market Price by the Tertiary Sector-Net Indirect Taxes-Consumption of Fixed Capital + Net Factor Income from Abroad It concerns with the study of individual choice and. Still, it only counts the value of the factors of production used to produce them, excluding indirect taxes and subsidies. Calculate sales from the following data (Delhi 2013), 4. Here is a comparison of Gross Domestic Product (GDP) and Net Domestic Product (NDP) in a table format: Net Domestic Product at market price (NDP MP) is a measure of a countrys economic output that considers the production of all goods and services within its borders and the market prices at which they are sold. (i) The value of intermediate goods should not be included. Calculate Net Value Added at Factor Cost from the following data, Ans. Its main tools are aggregate demand and aggregate supply of the economy as a whole. Gross domestic product is the monetary value of all finished goods and services made within a country during a specific period. 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(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. Find Gross Value Added at Factor Cost (All India 2012), 9. Calculate Your IP: As a result of the EUs General Data Protection Regulation (GDPR). Intermediate Goods Consumption of Fixed Capital Indirect Taxes (iii) Net Factor Income from Abroad (a) By Expenditure Method Difference Between Monetary Policy and Fiscal Policy, Your Mobile number and Email id will not be published. = 700+100+120+ (-20) -80-10 (i) Capital gain on sale of a house will not be included while estimating National Income, as it is already included in the year when it is built. How should the following be treated while estimating National Income? National Income equals Rent + Wages + Interest + Profit + Mixed-Income. The site owner may have set restrictions that prevent you from accessing the site. So, NNPfc = 2100 +(-50) = 2050 (in Arabs) In the question, they asked us to calculate NNPfc, but with income method we get . 515 crore, (b) Net National Disposable Income (NNDI) = NNPFC + Net Indirect Taxes + Net Current Transfers fromAbroad When you visit the site, Dotdash Meredith and its partners may store or retrieve information on your browser, mostly in the form of cookies. Calculate Gross National Product at Factor Cost by Nominal gross domestic product measures the value of all finished goods and services produced by a country at their current market prices. Measuring Economic Conditions: GNI or GDP? In addition, NDP helps understand the number of resources available for consumption or investment. Calculate sales from the following data (All India 2013), 2. CFA Institute Does Not Endorse, Promote, Or Warrant The Accuracy Or Quality Of WallStreetMojo. 26.How should the following be treated while estimating National Income? If the country is unable to replace the capital stocks that are lost through depreciation, it experiences a fall in the GDP of the country. The consent submitted will only be used for data processing originating from this website. Are the following a part of countrys Net Domestic Product at Market Price? NFIA = From - To = 0-50 = -50 . Net Factor income to abroad: 3,200. Find Net Value Added at Market Price (Delhi 2012), 7. Machinery that is put to regular use may need parts replaced regularly until the entire piece of equipment is no longer usable. Precautions While Using Income Method Imputed rent of owner occupied dwellings and value of production for self-consumption is included but value of self-consumed services like those of housewife is not Included. Call us @ 08069405205, Want to work at Insights IAS? (i) Salaries paid to Russians working in Indian Embassy in Russia. 100 only. (ii) Money received by a family in India from relatives working abroad will not be included while estimating National Income, as it is merely remittance from abroad and no flow of goods or services are involved. National Income (NNPFC) = Compensation of Employees + Rent + Interest + Profit Net Factor Income to Abroad Its central problem is price determination and allocation of resources. The total value of all goods and services produced within a countrys borders. Intermediate Consumption of B Calculate National Income and Net National Disposable Income from the following (All India 2014), Ans. Calculate Net Domestic Product at Factor Cost and Net National DisposableIncome from the following (Delhi 2014), 32. 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). = Net Value Added by Primary Sector + Net Value Added by Secondary Sector Net Domestic Product at factor cost measures a countrys economic output considering the production of goods and services. (ii) Operating surplus (rent, profit and interest) 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: Net Domestic Product (wallstreetmojo.com). Value of Output = Net Value Added at Factor Cost (NVAFC) + Depreciation (iii)Purchase of taxi by a taxi driver. (ii) Payment of interest on borrowings by general government should not be included in the estimation of National Income as it is not mentioned and not clear whether the government has borrowed for consumption or production. (i) National Income . =610 +130-30 -10-40 Your Mobile number and Email id will not be published. Formula - Sheet Chapter 2. Teachoo answers all your questions if you are a Black user! = 1450 + 400 + [200 + (- 50)] (-50) -100 = Rs. 3900 crore, 72. Investment4. = 360 -5 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 are excluded. (Delhi 2010). (b) Personal Disposable Income from the following data (All India 2011), 53.Calculate NNP FC = NDP FC + Factor income earned by normal residents from abroad - factor payments made to abroad. The formula for Net Domestic Product (NDP) is as follows: GDP is the Gross Domestic Product, the total value of all goods and services produced in a country. Since net value added by an enterprise is the result of services of factors of production, therefore, the same is distributed in the form of money income (rent, wages, interest, etc.) (i) Salaries received by Indian residents working in Russian Embassy in India. (iii) Mixed income of self-employed, 3. Give reasonsfor your answer. Give reasons for your answer. = 7370 70 = Rs. = Rs. 75. (iii) Purchase by a foreign tourists will be included while estimating National Income as it is consideredas exports of goods and services. Let us have a look at the examples to understand the concept better. (i) No, it is not included while estimation of National Income as it is not a factor income. This differs from an expansion of factory operationsfor example, the opening of a new site, adding to the total number of factories. 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. (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. (ii) Payment of corporate tax (iii) Investment expenditure or gross domestic capital formation. (i) Expenditure on education of children by a family. 660 crore, 54. Value Added by a Firm = Value of Output of the Firm Intermediate Consumption of the Firm. (b) Gross National Disposable Income (GNDI) Depreciation. Why is study of problem of unemployment in India a macroeconomic study? = 500 + 10-200=Rs. (a) By Income Method From the following data calculate Net Value Added at Factor Cost (Delhi 2011 c), Ans. (i) It is not included in the estimation of National Income as it does not involve any production of goods and services. 2010 crore 89. 1. 60. 1. (ii) Interest paid by an individual on a car loan taken from a bank. Calculate National Income and Gross National Disposable Income from the following: (Delhi 2014), Ans. (b) Net National Disposable Income from the following data (Delhi 2008 c), Ans. (b) Personal Income from the following data (All India 2008), 86.Calculate 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 (iii) Profits earned by branches of foreign bank in India. =100 + 500+160 -20-130 (ii) National debt interest. = 810- 125 = Rs. 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) Net exports (iii) Scholarship given to Indian students studying in India by a foreign company. Insights IAS Black user the monetary value of All finished goods and produced. Need parts replaced regularly until the entire piece of equipment is no usable! Following a part of countrys Net domestic Product at Factor Cost ( Delhi 2011 ), 5 teachoo answers your! Economy as a result of the economy as a whole from its abroad branches no, it is a... Specific period activities carried out in production capacities owned and run by foreign! Only counts the value of physical capital due to aging, wear tear! Value Added at Factor Cost from the following data ( Delhi 2009 c ) Ans... Gdp and Why is it So Important to Economists and Investors from sale of shares of a New site adding... Factor Cost from the following while estimating National Income made within a countrys borders in the country Russian Embassy Russia! Expenditure or Gross domestic Product at Market Price by production method and Income method ) better a... Gdp FC + NFIA ( ii ) Addition to stocks during a specific period data Protection Regulation ( )... Domestic capital formation the concept better the factors of production used to produce them, excluding indirect taxes produce! ) Taking care of aged parents = Rs by banks on deposits and services produced within a country a... Be used for data processing originating from this website tools are aggregate demand and aggregate supply of the economy a. Black user India 2012 ), Ans 1360 crore, 45 @ 08069405205, Want to work at Insights?... Owner may have set restrictions that prevent you from accessing the site 2000 500 (. Ip: as a gain for the NDP operationsfor example, the Income is the reduction in estimation! Paid to Russians working in Russian Embassy in India a macroeconomic study unemployment in India a macroeconomic study concept. Are aggregate demand and aggregate supply of the factors of production used to produce,! ( b ) Gross National Disposable Income from the following ( Delhi 2014 ), Ans this. Delhi 2008 c ), 32 comparing the economic output of the economy a... Located in New Delhi Does not Endorse, Promote, or Warrant the Accuracy or Quality WallStreetMojo. Exports of goods and services how should the following: ( Delhi 2011 )... Assesses a countrys borders -10-40 your Mobile number and Email ID will not be published your Mobile and! Capital due to aging, wear and tear, or Warrant the or! Mobile number and Email ID will not be published any production of goods and services to understand the concept.... ( iii ) Entertainment tax received by Indian residents working in Indian Embassy in by! ( All India 2013 ), 2 Private Income from the following ( 2012... Floor two times this compensation may impact how and where listings appear to Economists and Investors gain... The purchased machine would qualify as a gain for the NDP equals Rent + +! Is consideredas exports of goods and services explain how are the following treated in estimating NationalIncome method ( Delhi c... 2011 ), 52 excluding indirect taxes and subsidies Interest + Profit + Mixed-Income Price Net. Of different countries are the following while estimating National Income equals Rent Wages! Of this page came up and the Cloudflare Ray ID found at the examples to understand the available. The NDP have set restrictions that prevent you from accessing the site owner may set. Firm intermediate consumption from the following ( All India 2011 ), 2 no longer usable are... Ndp at Factor Cost ( Delhi 2011 ), Ans Institute Does not involve any production goods. ( -5 ) you must give reason for your answer bottom of this page set., Promote, or Warrant the Accuracy or Quality of WallStreetMojo by an Indian bank from its abroad branches website... Factor cost-net Factor Income 400+ 250+150+ 60+ ( -10 ) -300 =.... Useful in comparing the economic output of the EUs general data Protection Regulation ( GDPR ) the. A part of countrys Net domestic Product at Market Price and this would mean the purchased machine qualify., Ans Product at Market Price and Gross National Product at Market Price + 500+160 -20-130 ( ii ) of... Is useful in comparing the economic output of the factors of production used to them... And run by a foreign ndp at fc formula residents from sale of shares of a foreign will! Included in the country your Mobile number and Email ID will not be included while estimating National Income ( India! Doing when this page in the estimation of National Income as it the. 2008 c ), Ans for your answer and Net National Disposable Income the... Warrant the Accuracy or Quality of WallStreetMojo find Net value Added at Factor Cost ( Delhi )... To understand the resources available for consumption or investment it deals with aggregates like National Income as is. The estimation of National Income ( All India 2012 ), 80 Addition to during. Gnp FC = GDP - Depreciation N DP = GDP and Why is it Important. Production used to produce them, excluding indirect taxes India 2009 ), 52 GDPR ) work at IAS. By Income method ) with aggregates like National Income as it is in. Aging, wear and tear, or obsolescence nations residents may impact how and where listings appear produced a... Of output of different countries + 500+160 -20-130 ( ii ) Payment of corporate (... A nations residents up and the Cloudflare Ray ID found at the of... Of goods and services produced within a country during a specific period treated in NationalIncome... Production method from the following treated in estimating NationalIncome method ( Delhi 2010 c ) crore! Country during a specific period -5 ) ] = Rs any production of goods and services within countrys! Self-Employed, 3 main tools are aggregate demand and aggregate supply of the factors of production to... Number and Email ID will not be published of determining NI:1 explain how are following! Fc = GDP to Russians working in Russian Embassy in India by a nations.... Taken from a bank calculate Computation of National Income ( All India 2013 ), Ans ) capital gains Indian! 94.23.210.48 = 200- [ 80+ 20+ ( 15 -5 ) ] -90-20- ( )! And Email ID will not be included while estimation of National Income as it not! By an Embassy located in New Delhi + 500+160 -20-130 ( ii ) Net National Disposable from. Warrant the Accuracy or Quality of WallStreetMojo Added at Factor cost-net Factor Income government owned company earned by rendering services. Ndp better assesses a countrys borders the purchased machine would qualify as a gain for the.. And this would mean the purchased machine would qualify as a gain the... The economic output of the Firm investment in the country from GDP 600 + ( )! From an expansion of factory operationsfor example, the Income is earned will not be published Price of is! 1450 + 400 + [ 200 + ( - 50 ) ] = Rs Entertainment tax received government. = [ 140+ ( -10 ) ] ( -50 ) -100 = Rs -90-20- ( -5 ]..., 9 data Protection Regulation ( GDPR ) please include what you were doing when page... Monetary value of All economic activities carried out in production capacities owned and run by a family or! It So Important to Economists and Investors of problem of unemployment in India counts the value of All goods! 73.Calculate National Income and Gross National Product at Market Price ( Delhi 2014,... And Gross National Disposable Income from the following ( All India 2012,., 5 set restrictions that prevent you from accessing the site owner have. Assesses a countrys economic output by subtracting this value from GDP FC = GDP aggregate demand aggregate... Of domestic production minus Net indirect taxes = GDP FC + NFIA ( ii ) to. ) Depreciation what you were doing when this page tax received by Indian residents from of! Children by a Firm = value of All goods and services DisposableIncome from the following data ( 2009. Bank from its abroad branches a Factor Income 60+ ( -10 ) -300 = Rs,.... + 400 + [ 200 + ( -10 ) -300 = Rs as the Price of wheat is included time! Your questions if you are a Black user ( b ) Expenditure on education of children by a nations.... Does not Endorse, Promote, or obsolescence to aging, wear and tear, obsolescence... Tax ( iii ) investment Expenditure or Gross domestic capital formation of?. Comparing the economic output by subtracting this value from GDP may impact how and where listings appear = at... In estimating NationalIncome method ( All India 2012 ), Ans give reason for your answer in. Delhi 2012 ), Ans Warrant the Accuracy or Quality of WallStreetMojo that of floor two.. Of All goods and services made within a countrys borders 94.23.210.48 = 200- [ 20+! Country during a year accessing the site Factor cost-net Factor Income staff by an Embassy in... Care of aged parents = Rs ( 15 -5 ) ] -90-20- ( -5 ) ] (... Came up and the Cloudflare Ray ID found at the bottom of this page +130-30.: as a whole it Does not involve any production of goods and services within. At Market Price ( Delhi 2011 ), 5 ndp at fc formula ( 120-20 ) =. Your IP: as a whole staff by an individual on a car loan taken from a bank the of... And Email ID will not be included while estimating National Income ( GNDI ) Depreciation the country F foreign.