\n(v) Single Use Producer Goods<\/td>\n | 120<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nGross Value Added at Market Price (GVAMP<\/sub>) \n(Domestic Sales + Exports) + Net Change in Stocks – Single use Producer Goods \n= (200 +10) + (-10) – 120 = \u20b9 80 lakh<\/p>\nQuestion 29. \nCalculate Gross Value Added at Factor Cost. (Delhi 2012)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in crore)<\/td>\n<\/tr>\n | \n(i) Units of Output Sold (units)<\/td>\n | 1000<\/td>\n<\/tr>\n | \n(ii) Price Per Unit of Output<\/td>\n | 30<\/td>\n<\/tr>\n | \n(iii) Depreciation<\/td>\n | 1000<\/td>\n<\/tr>\n | \n(iv) Intermediate Cost<\/td>\n | 12000<\/td>\n<\/tr>\n | \n(v) Closing Stock<\/td>\n | 3000<\/td>\n<\/tr>\n | \n(vi) Opening Stock<\/td>\n | 2000<\/td>\n<\/tr>\n | \n(vii) Excise Duty<\/td>\n | 2500<\/td>\n<\/tr>\n | \n(viii) Sales Tax<\/td>\n | 3500<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nSales = Units of Output x Price Per Unit of Output \n= 1,000 \u00d7 30 \n= \u20b9 30,000 crore \nValue of Output \n= Sales + Change in Stock = 30000 + (1000) \n= \u20b9 31,000 crore, Where \nChange in Stock = Closing Stock – Opening Stock \n= 3000 – 2,000 = \u20b9 1000 crore \nHence, Gross Value Added at Factor Cost \n(GVAFC<\/sub>) = Value of Output – Intermediate Cost – Net Indirect Taxes (Excise Duty + Sales Tax) \n= 31,000 – 12,000 – (2,500 + 3,500) \nGross Value Added at Factor Cost (GVAFC<\/sub>) \n= \u20b9 13,000 crore<\/p>\nQuestion 30. \nCalculate Net Value Added at Factor Cost. (Delhi 2012)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in crore)<\/td>\n<\/tr>\n | \n(i) Consumption of Fixed Capital<\/td>\n | 600<\/td>\n<\/tr>\n | \n(ii) Import Duty<\/td>\n | 400<\/td>\n<\/tr>\n | \n(iii) Output Sold (units)<\/td>\n | 2000<\/td>\n<\/tr>\n | \n(iv) Price Per Unit of Output<\/td>\n | 10<\/td>\n<\/tr>\n | \n(v) Net Change in Stocks<\/td>\n | (-)50<\/td>\n<\/tr>\n | \n(vi) Intermediate Cost<\/td>\n | 10000<\/td>\n<\/tr>\n | \n(vii) Subsidy<\/td>\n | 500<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nSales = Output Sold \u00d7 Price Per Unit of Output \n= \u20b9 2000 \u00d7 10 = \u20b9 20,000 crore \nNow, Value of Output = Sales + Change in Stock \n= \u20b9 20000 + (-50) \n= \u20b9 19,950 crore \nGross Value Added at Market Price (GVAMP<\/sub>) \n= Value of Output – Intermediate Cost \n= \u20b9 19,950 – 10,000 \n= \u20b9 9,950 crore \nHence, \nNet Value Added at Factor Cost (NVAFC<\/sub>) \n= GVAMP<\/sub> – Consumption of Fixed Capital – Net Indirect Tax \n= 9,950 – 600 – (400 – 500) = \u20b9 9,450 crore \n[Where, Net Indirect Tax = Import Duty – Subsidy] [As import duty is an indirect tax]<\/p>\nQuestion 31. \nFind Net Value Added at Market Price. (Delhi 2012)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in crore)<\/td>\n<\/tr>\n | \n(i) Output Sold (units)<\/td>\n | 800<\/td>\n<\/tr>\n | \n(ii) Price Per Unit of Output<\/td>\n | 20<\/td>\n<\/tr>\n | \n(iii) Excise<\/td>\n | 1600<\/td>\n<\/tr>\n | \n(iv) Import Duty<\/td>\n | 400<\/td>\n<\/tr>\n | \n(v) Net Change in Stock<\/td>\n | (-)500<\/td>\n<\/tr>\n | \n(vi) Depreciation<\/td>\n | 1000<\/td>\n<\/tr>\n | \n(vii) Intermediate Cost<\/td>\n | 8000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nSales = Output Sold \u00d7 Price Per Unit of Output = 800 \u00d7 20 = \u20b9 16,000 crore \nNow, Value of Output = Sales + Net Change in Stock \n= 16000 + (-500) \n= \u20b9 15,500 crore \nNow, Gross Value Added at Market Price (GVAMP<\/sub>) = Value of Output – Intermediate Cost \n= 15,500 – 8,000 = \u20b9 7,500 crore \nHence, Net Value Added at Market Price \n(NVAMP<\/sub>) = GVAMP<\/sub> – Depreciation \n= 7,500 – 1,000 crore = \u20b9 6,500 crore<\/p>\nQuestion 32. \nFind Net Value Added at Market Price. (All India 2012)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in crore)<\/td>\n<\/tr>\n | \n(i) Depreciation<\/td>\n | 700<\/td>\n<\/tr>\n | \n(ii) Output Sold (units)<\/td>\n | 900<\/td>\n<\/tr>\n | \n(iii) Price Per Unit of Output<\/td>\n | 40<\/td>\n<\/tr>\n | \n(iv) Closing Stock<\/td>\n | 1000<\/td>\n<\/tr>\n | \n(v) Opening Stock<\/td>\n | 800<\/td>\n<\/tr>\n | \n(vi) Sales Tax<\/td>\n | 3000<\/td>\n<\/tr>\n | \n(vii) Intermediate Cost<\/td>\n | 20000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nNet Value Added at Market Price = (Output Sold \u00d7 Price Per Unit of Output) + (Closing Stock – Opening Stock) – Intermediate Cost – Depreciation \n= (900 \u00d7 40) + (1,000 – 800) – 20,000 – 700 \n= 36,000 + 200 – 20,000 – 700 = 36,200 – 20,700 \n= \u20b9 15,500 crore<\/p>\n Question 33. \nFind Gross Value Added at Factor Cost. (All India 2012)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in crore)<\/td>\n<\/tr>\n | \n(i) Units of Output Sold<\/td>\n | 2000<\/td>\n<\/tr>\n | \n(ii) Price Per Unit of Output<\/td>\n | 20<\/td>\n<\/tr>\n | \n(iii) Depreciation<\/td>\n | 2000<\/td>\n<\/tr>\n | \n(iv) Change in Stock<\/td>\n | (-)500<\/td>\n<\/tr>\n | \n(v) Intermediate Cost<\/td>\n | 15000<\/td>\n<\/tr>\n | \n(vi) Subsidy<\/td>\n | 3000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nGross Value Added at Factor Cost \n(GVAPC<\/sub>) = (Output Sold \u00d7 Price Per Unit) + Change in Stock – Intermediate Cost + Subsidy \n= 2000 \u00d7 20 + (-500) – 15000 + 3000 \n= \u20b9 40,000 – 15,500 + 3,000 \n= \u20b9 27,500 crore<\/p>\nQuestion 34. \nFind out Net Value Added at Factor Cost. (All India 2012)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in crore)<\/td>\n<\/tr>\n | \n(i) Price Per Unit of Output<\/td>\n | 25<\/td>\n<\/tr>\n | \n(ii) Output Sold (units)<\/td>\n | 1000<\/td>\n<\/tr>\n | \n(iii) Excise Duty<\/td>\n | 5000<\/td>\n<\/tr>\n | \n(iv) Depreciation<\/td>\n | 1000<\/td>\n<\/tr>\n | \n(v) Change in Stock<\/td>\n | (-)500<\/td>\n<\/tr>\n | \n(vi) Intermediate Cost<\/td>\n | 7000<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nNet Value Added at Factor Cost \n(NVAPC<\/sub>) = (Price Per Unit of Output x Output Sold) + Change in Stock – Intermediate Cost – Depreciation – Excise Duty \n= (25 \u00d7 1,000) – 500 – 7,000 – 1,000 – 5000 \n= 25,000 – 13,500 = \u20b9 11,500 crore<\/p>\nQuestion 35. \nFrom the following data, calculate Net Value Added at Factor Cost. (Delhi 2011)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in crore)<\/td>\n<\/tr>\n | \n(i) Purchase of Intermediate Goods<\/td>\n | 500<\/td>\n<\/tr>\n | \n(ii) Sales<\/td>\n | 750<\/td>\n<\/tr>\n | \n(iii) Import of Raw Materials<\/td>\n | 50<\/td>\n<\/tr>\n | \n(iv) Depreciation<\/td>\n | 60<\/td>\n<\/tr>\n | \n(v) Net Indirect Taxes<\/td>\n | 100<\/td>\n<\/tr>\n | \n(vi) Change in Stock<\/td>\n | (-)30<\/td>\n<\/tr>\n | \n(vii) Exports<\/td>\n | 20<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nNet Value Added at Factor Cost \n(NVAFC<\/sub>) = Value of Output (Sales + Change in Stock) – Purchase of Intermediate Goods – Depreciation – Net Indirect Taxes \n= 750 + (-30) – 500 – 60 – 100 \n= 750 – 690 = \u20b9 60 crore<\/p>\nQuestion 36. \nWhy are net exports included in national income? Explain. (Delhi 2012) \nAnswer: \nNet exports represent the excess of exports over imports. The goods exported are a part of domestic product of India. National income is the sum total of all goods and services i.e. the domestic product, produced by the residents. Tharefore, net exports are included in national income.<\/p>\n Question 37. \nClassify the following statements as revenue receipts or capital receipts. Give valid reasons in support of your answer. (All India 2019) \n(a) Financial help from a multinational corporation for victims in a flood affected area. \n(b) Sale of shares of a Public Sector Undertaking (PSU) to a private company, Y Ltd \n(c) Dividends paid to the Government by the State Bank of India. \n(d) Borrowings from International Monetary Fund (IMF). \nAnswer: \n(a) Revenue receipt as neither impacts assets nor liabilities of the government. \n(b) Capital receipt as it reduces assets of the government. \n(c) Revenue receipt as if was no impact on assets or liabilities. \n(d) Capital receipt as it increases liabilities.<\/p>\n <\/p>\n Question 38. \nState any four precautions that are taken while calculating national income by expenditure method. (Delhi (C) 2016) \nOr \nWhat precautions (any four) should he taken while estimating national income by expenditure method? (All India (C) 2015) \nAnswer: \nWhile using expenditure method, the following precautions are required to be taken, related to the calculation of National Income<\/p>\n \n- Only final expenditure is to be taken into account to avoid error of double counting.<\/li>\n
- Expenditure on second hand goods is not to be included, because value of second hand goods has already been accounted for during the year of their production.<\/li>\n
- Expenditure on shares and bonds is not to be included in total expenditure, as these are mere paper claims and are not related to the production of final goods and services.<\/li>\n
- Expenditure on transfer payments by the government is not to be included.<\/li>\n
- Imputed value\/estimated value of expenditure on goods produced for self-consumption should be taken into account, as these goods are reflected in the estimation of Gross Domestic Product (GDP).<\/li>\n<\/ul>\n
Question 39. \nHow are the following treated while calculating national income? Give reasons for your answer. (All India (C) 2016) \n(i) Receipts from sale of land. \n(ii) Profits earned by the branch of an Indian bank in France. \nAnswer: \n(i) Receipts from sale of land Land is a free gift of nature and hence its sale would not be included while calculating national income. \n(ii) Profits earned by the branch of an Indian bank in France Since profit is being earned by a normal resident of India, therefore it will be included as factor income earned from abroad.<\/p>\n Question 40. \nHow should the following be treated while calculating national income? Give reasons for your answer. (All India (C) 2016) \n(a) Profits earned by a branch of foreign bank in India. \n(b) Salary received by Indian employees working in American embassy in India. \nAnswer: \n(a) Profits earned by a branch of foreign bank in India Since the profit is being earned by a branch of foreign bank, it will be considered as factor income to abroad and hence will not be included. \n(b) Salary received by Indian employees working in American embassy in India As this salary is being received by an Indian employee (normal resident of India) from a foreign country in India, therefore it will be included as factor income from abroad.<\/p>\n Question 41. \nHow should the following be treated while calculating national income? Give reasons for your answer. (All India (C) 2016) \n(i) Interest received by households from banks. \n(ii) Dividend received by shareholders. \nAnswer: \n(i) Interest received by households from banks Money deposited with banks is used for productive purposes. Bank is a production unit. Therefore, interest received is a factor income and hence should be included. \n(ii) Dividend received by shareholders is a part of the profits of production units which is distributed to the owners or shareholders. Therefore, it is included as it is a component of national income.<\/p>\n Question 42. \nHow should the following be treated in the calculation of national income? Give reasons for your answer. (Delhi (C) 2016) \n(i) Government expenditure on street lighting. \n(ii) Sale of an old house. \nAnswer: \n(i) Government expenditure on street lighting It is government’s final consumption expenditure and is included while calculating national income as a component of expenditure method. \n(ii) Sale of an old house It does not add to the current flow of goods and services. Its value was included in the national income during the year when it was newly constructed.<\/p>\n Question 43. \nHow should the following be treated while calculating national income? Give reasons for your answer. \n(i) Purchases by foreign tourists. \n(ii) Purchase of shares by a domestic firm. (Delhi (C) 2016) \nAnswer: \n(i) Purchases by foreign tourists Such expenditure by foreign tourists on domestic product is treated as export of goods and services. Therefore, it is included while calculating national income. \n(ii) Purchase of shares by a domestic firm Purchase of shares is merely a financial transaction not resulting in any production of goods and services, therefore, it is not included while calculating national income.<\/p>\n Question 44. \nHow should the following be treated in the calculation of national income? Give reasons for your answer. (Delhi (C) 2016) \n(i) Interest on public debt \n(ii) Bonus given to railway employees \nAnswer: \n(i) Interest on public debt It is not included in the calculation of national income because interest on public debt is interest on loan taken by the government for consumption purpose and not for investment. \n(iii) Bonus given to railway employees It is included in the estimation of national income because bonus given to employees is a part of compensation of employees which is a component of income method of calculating National Income.<\/p>\n Question 45. \nFrom the following data, calculate Net Value Added at Factor Cost. (Delhi (C) 2015)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in lakhs)<\/td>\n<\/tr>\n | \n(i) Sales<\/td>\n | 300<\/td>\n<\/tr>\n | \n(ii) Opening Stock<\/td>\n | 10<\/td>\n<\/tr>\n | \n(iii) Depreciation<\/td>\n | 30<\/td>\n<\/tr>\n | \n(iv) Intermediate Consumption<\/td>\n | 120<\/td>\n<\/tr>\n | \n(v) Exports<\/td>\n | 50<\/td>\n<\/tr>\n | \n(vi) Change in Stock<\/td>\n | 20<\/td>\n<\/tr>\n | \n(vii) Net Indirect Taxes<\/td>\n | 15<\/td>\n<\/tr>\n | \n(viii) Net Factor Income to Abroad<\/td>\n | 10<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nNet Value Added at Factor Cost (NVAFC<\/sub>) \n= Sales + Change in Stock – Intermediate Consumption – Depreciation – Net Indirect Taxes \n= 300 + 20 – 120 – 30 – 15 = \u20b9 155 lakh<\/p>\nQuestion 46. \nDescribe the expenditure method of calculating Gross Domestic Product at Market Price. (All India (C) 2015) \nAnswer: \nFor calculating Gross Domestic Product at Market Price (GDPMP<\/sub>) by this method, following steps should be taken- \nStep I Estimation of final expenditure \nIt is the expenditure on the purchase of final goods and services during an accounting year. It is broadly classified into four categories<\/p>\n\n- Estimation of private final consumption expenditure The total expenditure on final goods and services by individuals, households and non-profit private institution which are serving society are termed as private final consumption expenditure.<\/li>\n
- Estimation of government final consumption expenditure The expenditure on final goods and services by the government and government organisations are termed as government final consumption expenditure.<\/li>\n
- Estimation of investment expenditure The expenditure incurred by the firms (producers) on capital goods are termed as investment expenditure. It is also referred to as gross domestic capital formation.<\/li>\n
- Estimation of net export It is the difference between exports and imports during an accounting year.<\/li>\n<\/ul>\n
Step II Summation of above expenditures \nThe sum of all the above expenditure on final products of all the sectors of the economy gives us Gross Domestic Product at Market Price (GDPMP<\/sub>).<\/p>\nQuestion 47. \nCalculate Gross Value Added at Factor Cost. (All India (C) 2015)<\/p>\n \n\n\nContents<\/td>\n | \u20b9 (in lakhs)<\/td>\n<\/tr>\n | \n(i) Domestic Sales<\/td>\n | 3000<\/td>\n<\/tr>\n | \n(ii) Change in Stock<\/td>\n | (-)100<\/td>\n<\/tr>\n | \n(iii) Depreciation<\/td>\n | 300<\/td>\n<\/tr>\n | \n(iv) Intermediate Consumption<\/td>\n | 2000<\/td>\n<\/tr>\n | \n(v) Exports<\/td>\n | 500<\/td>\n<\/tr>\n | \n(vi) Indirect Taxes<\/td>\n | 250<\/td>\n<\/tr>\n | \n(vii) Net Factor Income from Abroad<\/td>\n | (-)50<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n Answer: \nGross Value Added at Factor Cost (GVAPC<\/sub>) \n= (Domestic Sales + Exports) + Change in Stock – Intermediate Consumption – Indirect Taxes \n= (3,000 + 500) + (-100) – 2,000 – 250 \n= \u20b9 1150 lakh<\/p>\nQuestion 48. \nWhat precautions should be taken while estimating national income by income method? (All India (C) 2015) \nAnswer: \nWhile using income method for computing National Income, the following precautions should be taken (any 4)<\/p>\n | | | | | | | | | |