Question

(a) Calculate National Income (in crores)
1. Private final consumption expenditure =900
2.Government final consumption expenditure = 400
3. Net Imports = 30
4. Gross Domestic Capital Formation = 180
5. Change in stock = 50
6. Net domestic fixed capital formation = 180
7. Net indirect taxes = 100
8. Net factor income from abroad = (-) 40
9. Profits = 100

Answer 1

Explanation:

National income (income method) = Compensation of employees + Profits + Rent + Interest + Mixed income of self employed - Net factor income to abroad = 700 + 600 + 200 + 310 + 350 - 10 = 2150 crores

National income (expenditure method) = Govt. final consumption expenditure+Net domestic capital formation+Net exports+Private final consumption expenditure-Net indirect taxes-Net factor income to abroad=750 + 385 - 15 + 1100 - 60 - 10 = 2150 crores.