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Calculate gross national product at factor cost from the following data by (a) income method and (b) expenditure method.
(CBSE, Delhi 2002)
Particulars ₹in crores
(i) Wages and salaries 800
(ii) Mixed income of self-employed 160
(iii) Operating surplus 600
(iv) Undistributed profits 150
(v) Gross capital formation 330
(vi) Change in stocks 25
(vii) Net capital formation 300
(viii) Employers' contribution to social security schemes 100
(ix) Net factor income from abroad (–) 20
(x) Exports 30
(xi) Imports 60
(xii) Private final consumption expenditure 1,000
(xiii) Government final consumption expenditure 450
(xiv) Net indirect taxes 60
(xv) Compensation of employees paid by the Government 75

Note: Consumption of Fixed Capital is calculated as the difference between (v) and (vii) item.
Gross National Product at Factor Cost = 1,670 cr

Dear student,
(1) GROSS NATIONAL PRODUCT AT FACTOR COST BY INCOME METHOD
                                                                                                                                                (all figures are in crores)
 
 NET DOMESTIC DOMESTIC PRODUCT AT FACTOR COST(NDP FC) =  COMPENSATION OF EMPLOYEES *+ OPERATING SURPLUS + MIXED INCOME OF SELF EMPLOYED
NDPFC900 + 600 +160 = 1660

Compensation of employees = Wages & salaries (800) + Employers contribution to social security schemes (100)
                                                   = 900

GROSS NATIONAL PRODUCT AT FACTOR COST = NET DOMESTIC PRODUCT AT FACTOR COST + Depreciation + Net factor income from abroad
 GROSS NATIONAL PRODUCT AT FACTOR COST = 1660 +30+ (-20)
                                                                                          = 1670

(2) GROSS NATIONAL PRODUCT AT FACTOR COST BY EXPENDITURE METHOD

  
    GROSS DOMESTIC PRODUCT AT MARKET PRICE = Private final consumption expenditure + government final consumption expenditure + Gross capital  formation + Net exports(exports- imports)
   
  GROSS DOMESTIC PRODUCT AT MARKET PRICE = 1000+450+330-30    =1750
                                                                                     
 GNP AT FACTOR COST = GDP AT MARKET PRICE - Net indirect taxes + Net factor income from abroad
                                         = 1750 - 60 -20 = 1670
 

Regards

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