Q2. What is the solution to the problem of double counting in the estimation of nationa Q3.is Profit earned by a company in India, which is owned by a non-resident included in the estimation of national income. Give reason.
Answers
Answer:
To avoid double counting, either the value of the final output should be taken into the estimate of GNP or the sum of values added should be taken. 4. Double counting is to be avoided under value added method
Profits earned by a company in India which is owned by a non-resident. Yes, it will be included in the domestic factor income as profits are earned within the domestic territory of India.
Answer:
1) National income is the subject matter of Macro Economics.
Explanation:
Macroeconomics focuses on how income levels are determined in the economy. Also, it studies the causes behind fluctuations in the income levels and accordingly what strategies can be adopted to accelerate growth in national income. Thus, national income is the subject matter of macroeconomics.
2) GDPFC = GDPMP − Net Indirect Taxes
Explanation:
Market price (MP) includes indirect taxes levied by the government on different goods and services and subsidies. These should be deducted from it to get the actual factor price. In other words,when the Gross Domestic Product (GDP) is expressed in terms of factor cost, the impact of subsidies and indirect taxes is not taken into consideration. Thus,
GDPFC = GDPMP− Net Indirect Taxes
GDPFC = GDPMP− (Indirect Taxes − Subsidies)
3) In India, the responsibility for the calculation of national income rests with Central Statistical Organization.
Explanation:
In year 1955, the responsibility of calculation of national income was given to the Central Statistical Organisation (CSO).
4) National income is flow concept.
Explanation:
National income is a flow concept. This is because it refers to the flow of final goods and services in an economy.
5) Paper purchased by a publisher is intermediate good.
Explanation:
Intermediate goods are the goods which are used as a raw material in the production of final goods Accordingly, paper purchased by a publisher is an intermediate good. This is because the publisher would then further use the paper for the books he will publish.