Sum

Suppose the GDP at market price of a country in a particular year was Rs 1,100 crores. Net Factor Income from Abroad was Rs 100 crores. The value of Indirect taxes − Subsidies was Rs 150 crores and National Income was Rs 850 crores. Calculate the aggregate value of depreciation.

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#### Solution

National Income (NNP_{FC}) = Rs.850 crores

GDP_{MP} = Rs.1100 crores

Net factor income from abroad = Rs.100 crores

Net indirect taxes = Rs.150 crores

NNP_{FC} = GDP_{MP} + Net factor income from abroad − Depreciation − Net indirect taxes

Putting these values in the formula,

850 = 1100 + 100 − Depreciation − 150

⇒ 850 = 1100 − 50 − Depreciation

⇒ 850 = 1050 − Depreciation

⇒ Depreciation = 1050 − 850 = Rs.200 crores

So, depreciation is Rs.200 crores.

Concept: Macroeconomic Identities

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