Find out the Gross National Product by Income and Expenditure
Methods and prove that results are same by both the methods :
SI.No.
Items
Rs. (in Crore)
Domestic consumption
60,000
(ii) Depreciation
800
(iii) Profit
18,000
(iv) Net investment from abroad
4,000
(v) Wages
45,000
(vi) Gross domestic investment
16,800
(vii) Interest
9,000
8,000
(viii) Rent
Answers
Answer:
1. Why should the aggregate final expenditure of an economy be equal to the aggregate factor payments? Explain. [3 Marks]
Ans: The sum of final expenditures in an economy must be equal to the income received by all the factors of production taken together (final spending on final goods, it does not include spending on intermediate goods). This follows from the simple idea that the revenues earned by all the firms put together must be distributed among the factors of production as salaries, wages, profits, interests earning and rents.
2. What is the difference between planned and unplanned inventory accumulation? Write down the relation between change in inventories and value added of a firm. [3 Marks]
Ans: Planned Inventory. It refers to changes in the stock inventories that have occurred in a planned way. In a situation of planned inventory accumulation, firm will plan to raise its inventories. Unplanned Inventory. It refers to changes in the stock of inventories that have occurred in an unexpected way. In a situation of unplanned inventory accumulation, due to unexpected fall in sales, the firm will have unsold stock of goods.
Value added of a firm (GVA) = Gross value of output produced by the firm – Value of intermediate goods used by the firm.
OR
GVA = Value of sales by the firm + Value of change in inventories – Value of intermediate goods used by the firm