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Question
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 |
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Solution
Given Data: Private Final Consumption Expenditure (PFCE) = ₹ 1,000
Government Final Consumption Expenditure (GFCE) = ₹ 550
Net Domestic Capital Formation (NDCF) = ₹ 380
Consumption of Fixed Capital (Depreciation) = ₹ 170
Net Exports (X − M) = − ₹ 30
Net Factor Income from Abroad (NFIA) = − ₹ 20
Net Indirect Taxes (NIT) = ₹ 150
Formula: GDCF = NDCF + Depreciation
= ₹ 380 + ₹ 170
= ₹ 550 crore
GDPMP = Private final consumption expenditure + Government final consumption expenditure + Gross Domestic Capital Formation + Net Export
= ₹ 1,000 + ₹ 550 + ₹ 550 + ₹ (−30)
= ₹ 2,070
GNPMP = GDPMP + Net Factor Income from Abroad
= ₹ 2,070 + ₹ (–20)
= ₹ 2,050 crore
NNPFC = GDPMP – Depreciation + NFIA – NIT
= ₹ 2,070 – ₹ 170 + ₹ (−20) – ₹ 150
= ₹ 1,730 crore
RELATED QUESTIONS
An economy is in equilibrium. Find investment expenditure :
National income =1200
Autonomous consumption expenditure=150
Marginal Propensity to consume =0.8
From the data given below about an economy, calculate (a) investment expenditure and (b) consumption expenditure.
|
(i) |
Equilibrium level of income |
5,000 |
|
(ii) |
Autonomous consumption |
500 |
|
(iii) |
Marginal propensity to consume |
0.4 |
Answer the following question.
Define net exports. How is it different from the net factor income from abroad?
Which of the following is the method of measuring National Income?
Which is the equilibrium condition of circular flow in the four sector model?
Which one is included in the four-sector model?
State and discuss any two precautions to be considered while estimating national income by Expenditure Method.
Under the Expenditure Method, national income is estimated by adding:
In the expenditure equation, what does \(C\) represent?
Which formula gives National Income at Factor Cost?
Depreciation is also called:
Which expression correctly defines Net Indirect Taxes?
What does NFIA stand for?
Which of the following is a service included in Private Final Consumption Expenditure?
Government investment expenditure includes infrastructure such as:
In the second step of the Expenditure Method, expenditure is classified into:
Which item must be excluded because it represents expenditure on goods already included in final production?
Which of the following is excluded from the Expenditure Method?
Why are purchases and sales of financial assets excluded?
The Expenditure Method measures national income from which side of the economy?
