Explain Various Types of Investment Expenditure. - Economics

Advertisements
Advertisements

Explain various types of investment expenditure.

Advertisements

Solution

Meaning:- Investment refers to the use of saving for purpose of production made by an individual or a business firm. The aim of investment is to acquire capital goods or assets e.g. Machinery, plant, factory building, raw materials etc.

Types of Investment Expenditure:-

1. Gross Investment:- It is the total investment in fixed assets like buildings, machines and in inventories (stock) during a year without deducting capital depreciation or capital consumption.

2. Net Investment:- Net investment is the gross investment minus capital consumption during a year. Capital consumption include:

  1. Depreciation of capital assets.
  2. Losses to capital assets due to fire, earthquakes, etc.

3. Autonomous Investment:- These are investments made by the government for the welfare and benefit of the people. These investments are made without any profit motives. This type includes investments made by the government in roads, railways, bridges, dams, communication facilities health and education facilities, exploration of oil and natural gases, etc.

4. Induced Investment:- These are investments made by the private sector or private entrepreneurs mainly for profit motive; it is prominent in capitalistic and free market economics. Private sector investment is mostly induced investment.

5. Financial Investment:- It is the investment expenditure made for the purchase of shares, bonds, securities, stock, etc. in the country during the year. This investment is expressed in money term.

6. Real Investment:- It is the investment made for creating new stock of real/physical capital assets such as machines, factory, buildings, tools and equipment, etc. in the country during a year. This investment is expressed in real/physical terms.

  Is there an error in this question or solution?
2014-2015 (March)

APPEARS IN

Video TutorialsVIEW ALL [1]

RELATED QUESTIONS

National income


With the increase in income, both consumption and savings increase.


Total Cost and Total Revenue.


Total Cost and Total Revenue.


Distinguish between Gross National Product and Net National Product.


In order to avoid double counting, value added approach is used.


Explain in detail ‘saving function’ with schedule and diagram.


Giving reason explain how should the following be treated in estimating national income:

i. Expenditure on fertilizers by a farmer.
ii. Purchase of tractor by a farmer.


If real income is Rs 400 and price index is 105, calculate nominal income.


Which of the following affects national income? (Choose the correct alternative)

(a) Goods and Service tax

(b) Corporation tax

(c) Subsidies

(d) None of the above


Explain the impact of rise in exchange rate on national income.


Giving reason explain how should the following be treated in the estimation of national income:

Purchase of refrigerator by a firm for own use


Giving reason explain how the following should be treated in the estimation of national income:

Payment of interest by a bank to an individual


Giving reason explain how the following should be treated in the estimation of national income:

Payment of interest by an individual to a bank


Giving reasons explain how should the following be treated in the estimation of national income:

Purchase of machinery by a factory for own use


Explain national income determination through the two alternative approaches. Use Diagram.


Investment made by the government is _____________ investment.(unplanned/gross/autonomous/induced)


Give reasons or explain the following

The propensity to save depends upon the level of income.


Give reasons or Explain the following statements

Services of housewives are excluded from national income.


In an economy, S = −100 + 0.6 Y is the saving function, where S is Saving and Y is National Income. If investment expenditure is 1,100, calculate:

(1) Equilibrium level of National Income

(2) Consumption expenditure at equilibrium level of National Income.


Fill in the blank using proper alternative given in the bracket:

 National income is ........ concept.


State whether the following statement is True or False 

Total Revenue = Total quantity x Price.


Define or explain the following concept.

Disposable income.


State whether the following statement is true or false.

Investment made by the government is autonomous investment.


Give reason or Explain the following statement :

Paid services are included in national income.


Explain the circular flow of national income.


Write Explanatory answer. (Any Two ) 

What is national income. Explain how national income is mesured by output method 


 State whether the following statements are TRUE or FALSE: 

Saving increases with increase in income.  


 Define of Explain the following concept. 

Net earnings from foreign trade  


Give reasons or explain the following statement:

The concept of national income has an important place in economic development. 


Write explanatory notes.  

Output method of measurement of national income. 

 


Give reasons or explain the following statements: 

 The net national income is less than gross national income. 


Answer in brief.

 Give different definitions of National Income. 


State whether the following statements are True or False with reason: 

Ten years period is considered for measuring National Income.


Answer the following question:

What is double counting of national income?


Answer the following question:

What are the features of national income?


Answer the following question:

Explain the concept of Gross domestic product at market prices.


Answer the following question:

State the precautions while using expenditure method to measure national income.


State with reason whether you agree or disagree with the following statement:

Gross National product and Gross Domestic product are same concepts.


State with reason whether you agree or disagree with the following statement:

The money value of intermediate goods is not included in the estimation of national income.


Answer in detail:
Explain the Output method of measuring National income.


Distinguish between:

Gross national product and Gross domestic product.


Distinguish between:
Net national product and Net domestic product.


Distinguish between:

Output method of measuring national income and Income method of measuring national income.


Distinguish between:
Gross National Product and Net National Product


Distinguish between:
National income at market prices and national income at factor cost


Write short note on:

Value added approach


Write short note on:

Expenditure method of measuring national income.


Write short note on:

Circular flow of national income


Write short note on:

Personal disposable income


Write short note on:

Net national product at factor cost


Define or explain the following concept:

Final goods


Define or explain the following concept:

National income


Define or explain the following concept:

 Personal income


Define or explain the following concept:

Depreciation


Give reason or explain the following statement:

National income at factor cost includes subsidy.


Give reason or explain the following statement:

National income estimates are accurate in India.


Give reason or explain the following statement:

Old age pension is transfer income.


Give reason or explain the following statement:

Paid services are included in national income.


State whether the following statement is true or false.

National income is computed every year.


State whether the following statement is true or false.

Inclusion of value of intermediate goods leads to double counting.


State whether the following statement is true or false.

GDP includes net income from abroad.


State whether the following statement is true or false.

Financial year in India is leap year.


Match the following groups:

Group A Group B
1) Income method a) Personal income – direct taxes
2) Unemployment allowance b) Money value of goods and services
3) Disposable Income c) Factor cost method
4) National Income d) Personal income subsidy
5) NNP(MP) e) Transfer payment
    f) GNP(MP) - Depreciation
    g) Output method
    h) Transfer income

Fill in the blank with appropriate alternatives given below

In India, the responsibility for the calculation of national income rests with _________.


Fill in the blank with appropriate alternatives given below

National income is __________ concept.


Fill in the blank with appropriate alternatives given below

Paper purchased by a publisher is __________.


Distinguish between the following.

Personal income and Disposable income


Answer the following question.
Define the problem of double counting in the computation of national income. State any two approaches to correct the problem of double counting.


Identify and explain the following concept:

Shobha collected data regarding the money value of all final goods and services produced in the country for the financial year 2018-2019.


Complete the following statement.

NNP is obtained by ______.


Assertion and Reasoning type question.

Assertion (A): In national income, value of only final goods and services produced in the economy are considered.

Reasoning (R): National income is always expressed in monetary terms.


Study the following table, figure, passage and answer the question given below it.

Components of GNP
for the year 2018
In crores
Consumption 200
Investment 300
Govt.Expenditure 400
Net export - 100
Net receipts  - 50
Depreciation 100

A. Complete the formula

GNP = C + `square` + G + (X - M) + `square` (1m)

B. Calculate Gross National Product & Net National Product from the above data. (3m)


  1. Explain the concept of product (real flow) with the help of above diagram. (2m) 
  2. Explain the concept of Money flow with the help of above diagram. (2m)

PASSAGE

Corona has slowed down the economy Lockdown imposed to contain the spread of Corona virus had resulted in closure of manufacturing and business activities. During this financial year, the economy is expected to move towards a contractionary phase rather than expansionary phase. This has been stated in the budget. This is the first paperless budget in the history of India. At the same time, it is the third post-independence budget to be presented at a time when the economy is shrinking. The budget shows a fiscal deficit of more than 5%.

The Union Finance Minister has presented a budget that seeks to accelerate the economy by balancing the impact of Corona on the economy on one hand and growing expectations of all sectors on the other. A significant increase in the allocation for Healthcare by 137% is a feature of this budget. In this budget, the expected revenue for the year 212-2022 is Rs. 34,35, 000crore and the expected expenditure is Rs. 35,83, 000 crore.

Attempts have been made to boost infrastructure, education, agricultural production, employment generation and industry, but the Income tax status quo has remained the same. The budget provides Rs.16.5 lakh crore for agricultural credit, Rs. 223,000 crore for health facilities, Rs. 3 lakh crore for Power Distribution Scheme, Rs. 15,700 crore for Small and Medium Enterprises and Rs. 20,000 crore for Government Bank Capital.

  1. What is the percentage increase in the provision for Healthcare? (1 mark) 
  2. Mention the sectors that have been promoted in this budget. (1 mark) 
  3. Express your personal opinion based on the above information regarding the budget ( 2 marks)

Net National product at factor cost is also known as


Which is the largest figure?


Per capita income is obtained by dividing the National income by the ______.


GNP =______ + Net factor income from abroad.


GNP =______ + Net factor income from abroad.


NNP stands for______.


When net factor income from abroad is deducted from NNP, the net value is______.


Write the formula for calculating GNP.


What is the difference between NNP and NDP?


Trace the relationship between GNP and NNP.


Define GDP deflator.


Write a short note on per capita income.


Differentiate between personal and disposable income.


Explain briefly NNP at factor cost.


What is the solution to the problem of double counting in the estimation of national income?


Explain the meaning of non-market activities.


GNP at MP = ____________.


NNPMP =


The market price of all final goods of a country in a year is known as:


NNPMP =?


Which of the following is not a component of domestic income?


Identify and explain the following concept.

Shobha collected data regarding the money value of all final goods and services produced in the country for the financial year 2019-20.


Give economic term:

The volume of commodities and services turned out during a given period counted without duplication.


Share
Notifications



      Forgot password?
Use app×