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Calculate ‘Net National Product’ at Factor Cost and 'Private Income' from the Following: - Economics

Calculate ‘net national product’ at factor cost and 'private income' from the following:

    (Rs Arab)
1 National debt interest 60
2 Wages and salaries 600
3 Net current transfers to abroad 20
4 Rent 200
5 Transfer payments by the government 70
6 Interest 300
7 A net domestic product at factor cost accruing to government 140
8 Social security contributions by employers 100
9 Net factor income paid to abroad 50
10 Profits 300

 

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Solution

NNPFC = Wages and salaries + Employers contribution to social security + Rent + Interest + Profit - Net factor income to abroad

= 600 + 100 + 200 + 300 + 300 − 50 = Rs 1,450 arab

Private Income = = NNPFC − (−Net factor income to abroad) − Income from NDP accruing to govt. − Net factor income to abroad + Net current transfers from govt. − Net transfers to abroad + Interest on national debt

= 1450 + 50 − 400 − 50 + 70 − 20 + 60 = Rs 1,160 arab

Concept: Gross and Net Domestic Product (GDP and NDP)
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