Question

Rupees (in crores)
Q9) Calculate net domestic product at factor cost:
Particulars
1 interest. 700
2 Compensation of employees. 3000
3. Net indirect tax. 500
4.Rent and profit. 700
5. Transfer payments by government. 10​

Answer 1

Answer:

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.

It is for this question -From the following data, calculate National Income by Income method and Expenditure method:

Item Rs. in crores

(i) Compensation of employees 700

(ii) Government final consumption expenditure 750

(iii) Net factor income from abroad (-) 10

(iv) Net exports (-) 15

(v) Profits 600

(vi) Net indirect taxes 60

(vii) Mixed income of self-employed 350

(viii) Rent 200

(ix) Interest 310

(x) Private final consumption expenditure 1100

(xi) Net domestic capital formation 385

(xii) Consumption of fixed capital 65

Explanation:

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Answer 2

Concept

NDP at FC is equal to sum total of value added at factor cost or net domestic product at factor cost and net factor income from abroad.

Given

Interest=700

compensation of employees=3000

net indirect tax=500

rent and profit=700

transfer payments by government=10

To find

Net domestic product at factor cost?

Explanation

Net domestic at factor cost according to income method is equal to:

compensation of employees + profits +rent +interest +mixed income-net factor income to abroad

Net domestic at factor cost=3000+700+700-10-500

=3890

Hence net domestic at factor cost is Rs. 3890 crores.

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