Advertisements
Chapters
Chapter 1: Microeconomics and Macroeconomics: Introduction
2: Demand and Law of Demand
3: Theory of Consumer Behaviour: Marginal Utility and Indifference Curve Analysis
4: Elasticity of Demand
5: Supply - Law of Supply and Price Elasticity of Supply
6: Market Mechanism: Equilibrium Price and Quantity in a Competitive Market
7: Laws of Returns - Returns to a Factor and Returns to Scale
8: Cost and Revenue Analysis
9: Forms of Market
10: Producer's Equilibrium
11: Determination of Equilibrium Price and Output Under Perfect Competition
SECTION 2: THEORY OF INCOME AND EMPLOYMENT
12: Theory of Income and Employment
SECTION 3: MONEY AND BANKING
13: Money: Meaning and Functions
14: Banks: Commercial Bank and Central Bank
SECTION 4: BALANCE OF PAYMENTS AND EXCHANGE RATE
15: Balance of Payments and Exchange Rate
SECTION 5: PUBLIC FINANCE
16: Fiscal Policy
17: Government Budget
SECTION 6: NATIONAL INCOME
18: National Income and Circular Flow of Income
19: National Income Aggregates
▶ 20: Methods of Measuring National Income
SECTION 7: PROJECT WORK
21: Project Work
22: Model Short Answer Questions
![Frank solutions for Economics [English] Class 12 ISC chapter 20 - Methods of Measuring National Income - Shaalaa.com](/images/economics-english-class-12-isc_6:557367fb4d974c67badae9e1dbdc022d.jpg "Frank solutions for Economics [English] Class 12 ISC chapter 20 - Methods of Measuring National Income")
Advertisements
Solutions for Chapter 20: Methods of Measuring National Income
Below listed, you can find solutions for Chapter 20 of CISCE Frank for Economics [English] Class 12 ISC.
Frank solutions for Economics [English] Class 12 ISC 20 Methods of Measuring National Income TEST YOURSELF QUESTIONS [Pages 407 - 411]
Select the correct option for each of the following questions: (1 mark each)
Which one of the following is not a component of compensation of employees?
Wages and salaries in cash
Employers’ contribution to social security schemes
Compensation in kind
Contribution of employees towards social security schemes
Which one of the following is not included in the estimation is national income?
Value of goods produced for self-consumption
Own account production of fixed assets
Services of housewives
Imputed rent of owner occupied houses
Which of the following incomes are included while estimating the national income by income methods?
Income in kind like part of the output produced for self-consumption
Illegal incomes like income from illegal activities
Income received from the sale of second-hand goods
Transfer incomes
Which of the following expenditures are not included while estimating national income by expenditure method?
Expenditure actual or imputed expenditure an all final product
Expenditure incurred on the purchase of second-hand goods
Expenditure on financial assets like shares and bonds
Expenditure on intermediate products
Which one of the following is not a component of domestic factor income?
Compensation of employees
Operating surplus
Mixed income of self-employed
Value of intermediate goods
Very Short Answer Questions (2 marks each)
Explain the various methods of measuring national income.
Which organisation estimates national income in India?
What are the three broad categories of industrial sectors?
How many sectors does CSO identify while calculating India’s national income?
What is value addition?
Why do we take value added in estimating national income?
Distinguish between value added at market price and value added at factor cost.
Distinguish between gross value added and net value added.
What is meant by intermediate consumption?
Mention the broad categories of income in the income method of estimation of national income.
State the main components of domestic factor income.
Define mixed income.
What is meant by compensation of employees?
What are various components of compensation of employees?
Distinguish between capital income and mixed income.
Define operating surplus.
State various components of operating surplus.
State the components of final expenditure.
State the main components of domestic factor income.
Define net exports.
Explain various types of investment expenditure.
Why do we add inventory investment to spending while calculating national income?
Why is government final consumption expenditure valued in terms of its cost to the government?
Why are net exports added in the total expenditure in measuring National income by Expenditure method?
Explain the identity of output, income and expenditure in national income accounting.
Why are exports included and imports excluded in the estimation of national income?
Distinguish between net export and net factor income from abroad.
Short Answer Questions
How would you treat the following item in estimating a country’s national product?
Sale of an old car
How would you treat the following item in estimating a country’s national product?
Purchase of shares in the stock market
How would you treat the following item in estimating a country’s national product?
Services of housewives
How would the domestic product be affected by the following transaction? Give reasons for your answer:
Sale of an old car by its owner and purchase of a new scooter with the money.
How would the domestic product be affected by the following transaction? Give reasons for your answer:
Sale of an old house through brokers who are paid a commission.
How is the following treated in national income calculation?
Intermediate goods
How is the following treated in national income calculation?
Pocket allowance of children
How is the following treated in national income calculation?
Owner-occupied houses
How is the following treated in national income calculation?
Pensions
How is the following treated in national income calculation?
Income from smuggling
Why are the services of housewives not included in national income? Should they be included?
Explain briefly the basis of the classification of production units into primary sectors.+
Explain briefly the basis of the classification of production units into secondary sectors.
Explain briefly the basis of the classification of production units into territory sectors.
What precautions are necessary while estimating national income by value-added method?
What precautions are necessary while estimating national income by income method?
Explain various components of incomes in the income method of estimating national income.
Explain the following component of the domestic factor income.
Compensation of employees
Explain the following component of the domestic factor income.
Operating surplus
Define compensation of employees.
What are various components of compensation of employees?
Why should the following be not included in national income? Give a reason.
Interest on national debt
Why should the following be not included in national income? Give a reason.
Income from the sale of an old TV set
Why should the following be not included in national income? Give a reason.
Payment of old-age pension by the government to its employees.
Why should the following be not included in national income? Give a reason.
Purchase of a truck to carry goods by a production unit.
How would you treat the following item in estimating a country’s national product?
Sale of an old car
Why are the following not included in the estimation of the national income?
winning a lottery
Explain various components of aggregate expenditure.
Define net income earned from abroad.
Describe the various components of Net income earned from abroad.
What are the main precaution needed to be taken in estimating national income through expenditure method?
Will the following be included in the national income of a country? Give a reason for your answer:
School fee paid by students
Will the following be included in the national income of a country? Give a reason for your answer:
Interest paid on loan taken to buy a personal car.
Will the following be included in the national income of a country? Give a reason for your answer:
Gifts received from abroad
Will the following be included in the national income of a country? Give a reason for your answer:
Furniture purchased by households.
Giving reason, state whether the following is treated in estimating national income:
Payment of fees to a lawyer engaged by a firm.
Giving reason, state whether the following is treated in estimating national income:
Rent free house to an employee by an employer.
Giving reason, state whether the following is treated in estimating national income:
Purchases made by foreign tourists.
Giving reason, state whether the following is treated in estimating national income:
Payment of income tax by an individual.
Giving reason, state whether the following is included in national income:
Services rendered by family members to each other.
Giving reason, state whether the following is included in national income:
Expenditure on construction of a house.
Giving reason, state whether the following is included in national income:
Gift received from employer.
Giving reason, state whether the following is included in national income:
Wheat grown by a farmer used for family consumption.
Explain briefly the net output (production) method or value-added method of estimating national income.
State the steps pertaining to the estimation of National Income by Value Added Method.
Explain clearly the income method of estimating national income of a country.
Explain the steps involved in calculating the National income by Income method.
Explain clearly the expenditure method of estimating national income.
State the steps pertaining to the estimation of National Income by Expenditure Method.
Explain the various methods of measuring national income.
Write any four practical difficulties in national income estimation.
Frank solutions for Economics [English] Class 12 ISC 20 Methods of Measuring National Income NUMERICAL PROBLEMS [Pages 411 - 417]
From the data given below, estimate the compensation of employees:
| (₹ in thousand) | |
| (i) Wages and salaries received by the staff in cash | 528 |
| (ii) Value of free housing facilities | 162 |
| (iii) Subsidy on lunch/dinner to the staff | 32 |
| (iv) Employer’s contribution to social security | 28 |
| (v) Compensation received by an injured worker from the insurance company | 10 |
From the following data relating to a firm, estimate the compensation of employees:
| (₹ in thousand) | |
| (i) Wages and salaries | 45 |
| (ii) Commission paid to sales staff | 15 |
| (iii) Value of free medical facilities | 5 |
| (iv) Value of subsidised food (element of subsidy) | 10 |
| (v) Travel allowance (towards actual expenses) | 25 |
From the following data about a firm estimate the compensation of employees:
| (₹ in 1000) | |
| (i) Commission paid to sales staff | 12 |
| (ii) Travelling allowance paid to staff towards actual expenses | 18 |
| (iii) Employer’s contribution to social security | 15 |
| (iv) Wages and salaries paid to staff | 155 |
| (v) Interest-free loan given to staff | 20 |
Calculate compensation of employees from the following data:
| (₹) | |
| (i) Wages and salaries in cash | 20,000 |
| (ii) Free accommodation by employers to employees | 4,000 |
| (iii) LIC premium paid by employees | 500 |
| (iv) Employers’ contribution to P.F. | 2,000 |
| (v) Income tax paid by employees | 5,000 |
Calculate operating surplus from the following data:
| (₹ in crore) | |
| (i) Royalty | 5 |
| (ii) Rent | 75 |
| (iii) Interest | 30 |
| (iv) Gross domestic product at factor cost | 400 |
| (v) Profit | 45 |
Estimate operating surplus from the following data:
| (₹ in crore) | |
| (i) Rent | 170 |
| (ii) Interest | 180 |
| (iii) Undistributed profit | 220 |
| (iv) Mixed income | 400 |
| (v) Dividends | 200 |
| (vi) Net indirect taxes | 210 |
| (vii) Corporation tax | 80 |
Calculate compensation of employees from the following data:
| (₹ in lakh) | |
| (i) Rent | 20 |
| (ii) Interest | 35 |
| (iii) Profit | 65 |
| (iv) Gross domestic product at factor cost | 350 |
| (v) Consumption of fixed capital | 10 |
| (vi) Mixed income of self-employed | 100 |
Estimate compensation of employees from the following data:
| (₹ in crore) | |
| (i) Value of output at market prices | 570 |
| (ii) Net indirect taxes | 60 |
| (iii) Interest | 20 |
| (iv) Rent | 35 |
| (v) Profit | 25 |
| (vi) Intermediate consumption | 120 |
| (vii) Consumption of fixed capital | 50 |
| (viii) Mixed income of self-employed | 100 |
Calculate operating surplus from the following data:
| (₹ in lakh) | |
| (i) Gross value added at market price | 120 |
| (ii) Depreciation | 10 |
| (iii) Wages and salaries (compensation of employees) | 30 |
| (iv) Net indirect taxes | 20 |
| (v) Mixed income of the self-employed | 15 |
From the data given below, estimate operating surplus:
| (₹ in lakh) | |
| (i) Wages and salaries | 232 |
| (ii) Value of output at market prices | 845 |
| (iii) Intermediate consumption | 418 |
| (iv) Indirect taxes | 80 |
| (v) Subsidies | 10 |
| (vi) Consumption of fixed capital | 25 |
On the basis of information given below, estimate:
- national income
- NDPMP by value added (net output) method
| (₹ in crore) | |
| (i) Gross value of output at market prices | 18,000 |
| (ii) Value of intermediate consumption | 5,500 |
| (iii) Depreciation | 1,500 |
| (iv) Indirect taxes | 800 |
| (v) Subsidies | 100 |
| (vi) Net factor income from abroad | (−) 250 |
From the following information, calculate:
- national income
- GNPMP by value added method
| (₹ in crore) | ||
| (i) | Value of output | |
| (a) Primary Sector | 1,200 | |
| (b) Secondary Sector | 900 | |
| (c) Tertiary Sector | 700 | |
| (ii) | Intermediate consumption of | |
| (a) Primary Sector | 100 | |
| (b) Secondary Sector | 300 | |
| (c) Tertiary Sector | 200 | |
| (iii) | Net factor income from abroad | 25 |
| (iv) | Consumption of fixed capital | 75 |
| (v) | Indirect taxes | 30 |
| (vi) | Subsidies | 10 |
From the following data, calculate:
- national income
- GDPFC by net output method
| (₹ in crore) | |
| (i) Value of output in primary sector | 2,000 |
| (ii) Intermediate consumption of primary sector | 200 |
| (iii) Value of output of secondary sector | 2,800 |
| (iv) Intermediate consumption of secondary sector | 800 |
| (v) Value of output of tertiary sector | 1,600 |
| (vi) Intermediate consumption of tertiary sector | 600 |
| (vii) Net factor income from abroad | −(30) |
| (viii) Net indirect taxes | 300 |
| (ix) Depreciation | 470 |
From the data given below, calculate Gross Domestic Product at market prices and National Income (NNPFC) using the Value Added Method:
| (₹ in crore) | |
| (i) Gross value of output in primary sector (at factor cost) | 950 |
| (ii) Gross value of output in secondary sector (at factor cost) | 470 |
| (iii) Gross value of output in tertiary sector (at factor cost) | 500 |
| (iv) Value of intermediate products in primary sector | 360 |
| (v) Value of intermediate products in secondary sector | 200 |
| (vi) Value of intermediate products in tertiary sector | 175 |
| (vii) Depreciation | 20 |
| (viii) Indirect tax | 35 |
| (ix) Subsidy | 10 |
| (x) Net factor income from abroad | 4 |
From the following data, calculate national income by:
- Income method
- Expenditure method
| (₹ in crore) | |
| (i) Compensation of employees | 800 |
| (ii) Private final consumption expenditure | 1,200 |
| (iii) Profits | 500 |
| (iv) Rent | 200 |
| (v) Government final consumption expenditure | 800 |
| (vi) Interest | 150 |
| (vii) Net factor income from abroad | 20 |
| (viii) Net indirect taxes | 190 |
| (ix) Mixed income of self-employed | 630 |
| (x) Net exports | (−) 30 |
| (xi) Net domestic capital formation | 500 |
| (xii) Consumption of fixed capital | 150 |
From the following data calculate national income by:
- Income method
- Expenditure method
| (₹ in crore) | |
| (i) Government final consumption expenditure | 1,000 |
| (ii) Profits | 700 |
| (iii) Net indirect tax | 110 |
| (iv) Private final consumption expenditure | 1,500 |
| (v) Net exports | (−) 20 |
| (vi) Compensation of employees | 1,200 |
| (vii) Rent | 200 |
| (viii) Interest | 270 |
| (ix) Net factor income from abroad | 30 |
| (x) Mixed income of self-employed | 600 |
| (xi) Gross domestic capital formation | 700 |
| (xii) Net domestic capital formation | 600 |
Calculate the national income and net domestic product at factor cost from the following data:
| (₹ in crore) | |
| (i) Wages and salaries | 120 |
| (ii) Rent | 60 |
| (iii) Interest | 25 |
| (iv) Dividend | 15 |
| (v) Undistributed profit | 50 |
| (vi) Corporation tax | 30 |
| (vii) Mixed income | 20 |
| (viii) Net factor income earned from abroad | 10 |
| (ix) Depreciation | 5 |
From the following data calculate:
- National income
- GDP at market prices by income method.
| (₹ crore) | |
| (i) Compensation of employees | 1,900 |
| (ii) Net factor income from abroad | (−) 20 |
| (iii) Rent | 200 |
| (iv) Interest | 150 |
| (v) Profits | 370 |
| (vi) Employees contribution is social security schemes | 80 |
| (vii) Consumption of fixed capital | 100 |
| (viii) Net indirect taxes | 400 |
Find out
- National income
- NDPFC by income method from the following data.
| (₹ crore) | |
| (i) Wages and salaries | 3,800 |
| (ii) Dividend | 500 |
| (iii) Rent | 200 |
| (iv) Interest | 150 |
| (v) Gross profits | 800 |
| (vi) Employer’s contribution to social security schemes | 200 |
| (vii) Net factor income from abroad | (−) 30 |
| (viii) Consumption of fixed capital | 40 |
| (ix) Net indirect taxes | 300 |
From the following data, calculate:
- NNP at factor cost (National income)
- GDP at market prices by expenditure method.
| (₹ crore) | |
| (i) Net indirect taxes | 800 |
| (ii) Net domestic fixed capital formation | 500 |
| (iii) Consumption of fixed capital | 100 |
| (iv) Private final consumption expenditure | 5,000 |
| (v) Government final consumption expenditure | 2,000 |
| (vi) Net factor income to abroad | 50 |
| (vii) Net exports | (−) 150 |
| (viii) Change in stock | (−) 30 |
From the data given below, calculate:
- NDP at market prices
- National income
| (₹ crore) | |
| (i) Private final consumption expenditure | 600 |
| (ii) Net exports | (−) 20 |
| (iii) Government final consumption expenditure | 100 |
| (iv) Net indirect taxes | 30 |
| (v) Net domestic capital formation | 70 |
| (vi) Net factor income from abroad | 10 |
Find out:
- National income
- GNP at market prices by expenditure method.
| (₹ crore) | |
| (i) Private final consumption expenditure | 400 |
| (ii) Indirect taxes | 65 |
| (iii) Net domestic capital formation | 120 |
| (iv) Government final consumption expenditure | 100 |
| (v) Consumption of fixed capital | 20 |
| (vi) Subsidies | 5 |
| (vii) Exports | 30 |
| (viii) Net factor income from abroad | (−) 10 |
| (ix) Imports | 40 |
Calculate:
- GDP at market prices
- National income by expenditure method from the data given below.
| (₹ crore) | |
| (i) Gross capital formation | 330 |
| (ii) Net capital formation | 300 |
| (iii) Net factor income from abroad | (−) 20 |
| (iv) Exports | 30 |
| (v) Imports | 60 |
| (vi) Private final consumption expenditure | 1,000 |
| (vii) Government final consumption expenditure | 450 |
| (viii) Net indirect taxes | 60 |
Calculate national income and operating surplus from the following data:
| (₹ crore) | |
| (i) Government final consumption expenditure | 800 |
| (ii) Net factor income from abroad | (−) 110 |
| (iii) Private final consumption expenditure | 900 |
| (iv) Net domestic capital formation | 200 |
| (v) Profit | 220 |
| (vi) Rent | 90 |
| (vii) Net exports | (−) 25 |
| (viii) Interest | 100 |
| (ix) Net indirect taxes | 165 |
From the following data, calculate GNPMP and NNPFC by Expenditure Method.
| ₹ (in crore) | |
| (i) Mixed income of self-employed | 450 crores |
| (ii) Compensation of employees | 550 crores |
| (iii) Private final consumption expenditure | 1000 crores |
| (iv) Net factor income from abroad | (−)20 crores |
| (v) Net indirect taxes | 150 crores |
| (vi) Consumption of fixed capital | 170 crores |
| (vii) Net domestic capital formation | 380 crores |
| (viii) Net exports | (−)30 crores |
| (ix) Profits | 400 crores |
| (x) Rent | 150 crores |
| (xi) Interest | 200 crores |
| (xii) Government final consumption expenditure | 550 crores |
Thinking Beyond...
As explained in this chapter, GDP does not include various transactions that take place in the underground economy. What do you understand by an underground economy?
Solutions for 20: Methods of Measuring National Income
Frank solutions for Economics [English] Class 12 ISC chapter 20 - Methods of Measuring National Income
Shaalaa.com has the CISCE Mathematics Economics [English] Class 12 ISC CISCE solutions in a manner that help students grasp basic concepts better and faster. The detailed, step-by-step solutions will help you understand the concepts better and clarify any confusion. Frank solutions for Mathematics Economics [English] Class 12 ISC CISCE 20 (Methods of Measuring National Income) include all questions with answers and detailed explanations. This will clear students' doubts about questions and improve their application skills while preparing for board exams.
Further, we at Shaalaa.com provide such solutions so students can prepare for written exams. Frank textbook solutions can be a core help for self-study and provide excellent self-help guidance for students.
Concepts covered in Economics [English] Class 12 ISC chapter 20 Methods of Measuring National Income are Net Product or Value Added Method, Precautions in the Estimation of National Income by Value-added Method, Difficulties in the Estimation of National Income by Value-added Method, Income Method, Expenditure Method, Precautions in the Estimation of National Income by Expenditure Method, Components of Net National Product at Factor Cost in its Three Phases, Methods of Measurement of National Income, Concept of National Income, Alternative Methods of National Income Estimation, Reconciling The Three Methods Of Estimating National Income, Transactions Included in National Income, Transactions not Included in National Income, The Identity of Output, Income and Expenditure, Significance of three Methods, Numericals on Income, Product and Expenditure Method.
Using Frank Economics [English] Class 12 ISC solutions Methods of Measuring National Income exercise by students is an easy way to prepare for the exams, as they involve solutions arranged chapter-wise and also page-wise. The questions involved in Frank Solutions are essential questions that can be asked in the final exam. Maximum CISCE Economics [English] Class 12 ISC students prefer Frank Textbook Solutions to score more in exams.
Get the free view of Chapter 20, Methods of Measuring National Income Economics [English] Class 12 ISC additional questions for Mathematics Economics [English] Class 12 ISC CISCE, and you can use Shaalaa.com to keep it handy for your exam preparation.
