Calculation of National Income
Calculation of National Income: Overview
This topic covers concepts, such as, Calculation of National Income, Macroeconomic Model, Circular Flow of Income and Inventories etc.
Important Questions on Calculation of National Income
Calculate national income and gross national disposable income from the following:
| Particulars | ||
| (i) | Net current transfers to Abroad | |
| (ii) | Private Financial Consumption Expenditure | |
| (iii) | Subsidies | |
| (iv) | Government final Consumption Expenditure | |
| (v) | Indirect Tax | |
| (vi) | Net Imports | |
| (vii) | Consumption of Fixed Capital | |
| (viii) | Net Change in Stocks | |
| (ix) | Net Factor Income to Abroad | |
| (x) | Net Domestic Capital Formation |
Calculate Net Domestic Product at factor cost:
| Particulars | ||
| (i) | Interest | |
| (ii) | Compensation of Employees | |
| (iii) | Net Indirect Taxes | |
| (iv) | Rent and Profits | |
| (v) | Transfer Payments by Government |
Calculate the Net Value Added at factor cost from the following data:
| Particulars | ||
| (i) | Durable producer goods(with a lifespan of ten years) | |
| (ii) | Single-use producer goods | |
| (iii) | Sales | |
| (iv) | Unsold Goods (Stocks) | |
| (v) | Goods and Services Tax (GST) |
Calculate Gross Value Added at Market Price:
| Particulars | ||
| (i) | Depreciation | |
| (ii) | Domestic Sales | |
| (iii) | Change in Stocks | |
| (iv) | Exports | |
| (v) | Single-use producer goods |
Which of the following is not a 'factor payment'? (Choose the correct alternative)
Given the following data, find the missing values of 'Gross Domestic Capital Formation' and 'Wages and Salaries':
| Particulars | ||
| (i) | Mixed-Income of Self Employed | |
| (ii) | Net Indirect Taxes | |
| (iii) | Wages and Salaries | ? |
| (iv) | Government Final Consumption Expenditure | |
| (v) | Net Exports | |
| (vi) | Consumption of Fixed Capital | |
| (vii) | Net Factor Income from Abroad | |
| (viii) | Operating Surplus | |
| (ix) | National Income | |
| (x) | Profits | |
| (xi) | Gross Domestic Capital Formation | ? |
| (xii) | Private Final Consumption Expenditure |
Given the following data, find the missing values of 'Private Final Consumption Expenditure' and 'Operating Surplus':
| (i) | National Income | |
| (ii) | Net Indirect Taxes | |
| (iii) | Private Final Consumption Expenditure | ? |
| (iv) | Gross Domestic Capital Formation | |
| (v) | Profits | |
| (vi) | Government Final Consumption Expenditure | |
| (vii) | Wages and Salaries | |
| (viii) | Consumption of Fixed Capital | |
| (ix) | Mixed-Income of Self-Employed | |
| (x) | Operating Surplus | ? |
| (xi) | Net Factor Income from Abroad | |
| (xii) | Net Exports |
Given the following data, find the missing value of 'Government Final Consumption Expenditure' and 'Mixed-Income of Self Employed':
| (i) | National Income | |
| (ii) | Gross Domestic Capital Formation | |
| (iii) | Government Final Consumption Expenditure | ? |
| (iv) | Mixed-Income of Self-Employed | ? |
| (v) | Net Factor Income from Abroad | |
| (vi) | Net Indirect Taxes | |
| (vii) | Profits | |
| (viii) | Wages and Salaries | |
| (ix) | Net Exports | |
| (x) | Private Final Consumption Expenditure | |
| (xi) | Consumption of Fixed Capital | |
| (xii) | Operating Surplus |
Calculate (a) Operating Surplus, and (b) Domestic Income:
| (i) | Compensation of employees | |
| (ii) | Rent and interest | |
| (iii) | Indirect Taxes | |
| (iv) | Corporation Tax | |
| (v) | Consumption of fixed capital | |
| (vi) | Subsidies | |
| (vii) | Dividend | |
| (viii) | Undistributed profits | |
| (ix) | Net factor income to abroad | |
| (x) | Mixed income |
How will you treat the following while estimating the domestic product of a country? Give reasons for your answer:
'Gifts given by an employer to his employees on Independence Day.'
Government incurs expenditure to popularise yoga among the masses. Analyse its impact on gross domestic product and welfare of he people.
Calculate the net domestic product at factor cost and national disposable income from the following:
| Particulars | (Arab) | |
| (i) | Net Current Transfers to abroad | |
| (ii) | Government Final Consumption Expenditure | |
| (iii) | Net Indirect Tax | |
| (iv) | Private Final Consumption Expenditure | |
| (v) | Consumption of fixed capital | |
| (vi) | Gross Domestic fixed capital formation | |
| (vii) | Net imports | |
| (viii) | Closing stock | |
| (ix) | Opening stock | |
| (x) | Net factor income to abroad |
Calculate the 'net national product' at factor cost and 'private income' from the following:
| Particulars | (Arab) | |
| (i) | National Debt Interest | |
| (ii) | Wages and Salaries | |
| (iii) | Net Current transfers to abroad | |
| (iv) | Rent | |
| (v) | Transfer Payments by government | |
| (vi) | Interest | |
| (vii) | Net Domestic Product at factor cost accruing to government | |
| (viii) | Social Security contributions by employers | |
| (ix) | Net factor income paid to abroad | |
| (x) | Profits |
Explain the problem of double counting in estimating national income, with the help of an example. Also explain two alternative ways of avoiding the problem.
Why are exports included in the estimation of domestic product by the expenditure method? Can gross domestic product be greater than gross national product? Explain.
State any six precautions which must be taken while estimating factor income.
Explain the precautions that should be taken while estimating National Income by the expenditure method.
Discuss the various steps of expenditure method for calculating national income.
Explain in brief the various components of expenditure method.
Describe the steps involved in the estimation of national income by income method. State any two precautions that must be taken while estimating national income by this method.
