Question

On the basis of the data given below, estimate the value of National Income (NNP_FC).

S. No.	Items	Amount (₹ in crore)
(1)	Private final consumption expenditure	2,000
(2)	Government final consumption expenditure	1,500
(3)	Gross domestic fixed capital formation	1,000
(4)	Addition to stock	400
(5)	Consumption of fixed capital	50
(6)	Net factor income from abroad	100
(7)	Net indirect Taxes	200
(8)	Net Exports	700

Answer 1

This question will be solved with the help of the Expenditure Method Formula for NNP_FC (Net National Product at Factor Cost):

NNP_FC = GDP_MP − Dep + NFIA − NIT

Expenditure method:

GDP_MP = PFCE + GFCE + GDCP + NX

Where,

PFCE - Private final consumption expenditure

GFCE - Government final consumption expenditure

GDCF - Gross domestic capital formation

NX - Net exports

GDP_MP = 2000 + 1500 + (1000 + 400) + 700

= 5600

NNP_FC = GDP_MP − Dеp + NFIA − NIT

= 5600 − 50 + 100 − 200

= 5450

Final answer - National Income (NNPFC)

= 5450 cr.