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प्रश्न
Answer in detail:
Explain the 'Final Good Approach' to avoid double counting of goods and services in the estimation of national income.
उत्तर
The final goods approach: Final goods refer to those goods and services that are meant for final consumption by the consumers. For example, a packet of cotton balls at a retail shop is a final good. Such cotton is ready to be used by the consumers for various purposes without any requirement of further value addition. Similarly, a car at a showroom is a final good, ready to be driven out on the roads. Intermediate goods refer to those goods that are not readily consumed for final consumption by the consumers. These goods are used only as inputs/ raw materials in the production process. According to this method, national income is estimated by taking the market value of the final goods and services produced in an economy during an accounting year and ignoring the value of intermediate goods.
This can be understood by the following example:
| Production stages | Value of input | Value of output | Value added |
| Milk(farmer) | 0 | 400 | 400 |
| Cheese(dairy) | 400 | 800 | 400 |
| Sweets(shopkeeper) | 800 | 1200 | 400 |
| Total value | 1200 | 2400 | 1200 |
Here, we have assumed that there is only one final product (sweets) and there are three stages of production i.e. there is milk, cheese and sweets. Milk is the only input in the production of cheese and cheese is the only input in the production of sweets.
Now, the final value of sweets produced is Rs 1200. So, the national income is Rs 1200.
If we would have summed the value of output at each stage, the total value of output at each stage would have been Rs 2400. The value of cheese (800) includes the value of milk (400), as well which has already been included at the farmer’s level. Similarly, the value of sweets (1200) includes the value of cheese (800), which too has been taken care of at the dairy level. Thus, estimating the value of output at each level counts the value of a commodity twice or double times. So, the value of national income is Rs 1200.
APPEARS IN
संबंधित प्रश्न
With the increase in income, both consumption and savings increase.
Total Cost and Total Revenue.
Total Cost and Total Revenue.
Unpaid services are not included in national income.
Explain various types of investment expenditure.
Explain in detail ‘saving function’ with schedule and diagram.
C = 100 + 0.4 Y is the Consumption Function of an economy where C is Consumption Expenditure and Y is National Income. Investment expenditure is 1.100. Calculate
(i) Equilibrium level of National Income.
(ii) Consumption expenditure at equilibrium level of national 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.
Calculate the (a) Net National product as markets price. and (b) Gross National Disposable Income:
| (Rs In crores) | |
| (i) Mixed income of self – employed | 8,000 |
| (ii) Rent | 400 |
| (iii) Profit | 900 |
| (iv) Dividend | 100 |
| (v) Interest | 500 |
| (vi) Mixed income of self- employed | 7,000 |
| (vii) Net factor income to abroad | 50 |
| (viii) Net export | 60 |
| (ix) Net indirect taxes | 300 |
| (x) Depreciation | 150 |
A government of India has recently launched 'Jan-Dhan Yojana' aimed at every household in the country to have at least one bank account. Explain how deposits made under the plan are going to affect the national income of the country.
Calculation National Income and Personal Disposable Income:
| (Rs crores) | ||
| 1 | Personal tax | 80 |
| 2 | Private final consumption expenditure | 600 |
| 3 | Undistributed profits | 30 |
| 4 | Private income | 650 |
| 5 | Government final consumption expenditure | 100 |
| 6 | Corporate tax | 50 |
| 7 | Net domestic fixed capital formation | 70 |
| 8 | Net indirect tax | 60 |
| 9 | Depreciation | 14 |
| 10 | Change in stocks | (-)10 |
| 11 | Net imports | 20 |
| 12 | Net factor income to abroad | 10 |
Giving reason explain how the following should be treated in the estimation of national income:
Payment of interest by a firm to a bank
Giving reason explain how the following should be treated in the estimation of national income:
Payment of interest by a bank to an individual
Calculate the 'National Income' and 'Private Income' :
| (Rs in crores) | ||
| 1 | Rent | 200 |
| 2 | Net factor income to abroad | 10 |
| 3 | National debt interest | 15 |
| 4 | Wages and salaries | 700 |
| 5 | Current transfers from government | 10 |
| 6 | Undistributed profit | 20 |
| 7 | Corporation tax | 30 |
| 8 | Interest | 150 |
| 9 | Social security contributions by employers | 100 |
| 10 | Net domestic product accruing to government | 250 |
| 11 | Net current transfers to rest of the world | 5 |
| 12 | Dividends | 50 |
Giving reasons explain how should the following be treated in the estimation of national income:
Purchase of machinery by a factory for own use
Calculate national income and gross national disposable income from the following:
| (Rs Arab) | ||
| 1 | Net current transfers to abroad | 5 |
| 2 | Government final consumption expenditure | 100 |
| 3 | Net indirect tax | 80 |
| 4 | Private final consumption expenditure | 300 |
| 5 | Consumption of fixed capital | 20 |
| 6 | Gross domestic fixed capital formation | 50 |
| 7 | Net imports | (-)10 |
| 8 | Closing stock | 25 |
| 9 | Opening stock | 25 |
| 10 | Net factor income to abroad | 10 |
How should the following be treated in estimating the national income of a country? You must give a reason for your answer.
Taking care of aged parents
How should the following be treated in estimating the national income of a country? You must give the reason for your answer
Expenditure on providing police services by the government
How should the following be treated while estimating national income? You must give the reason in support of your answer.
Bonus paid to employees
How should the following be treated while estimating national income? You must give the reason in support of your answer.
Addition to stocks during a year
How should the following be treated while estimating national income? You must give the reason in support of your answer.
Purchase of taxi by a taxi driver.
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.
Write explanatory answer:
Explain the output method of measuring national income.
State whether the following statement is true or false.
Investment made by the government is autonomous investment.
Define or explain the following concept.
Induced Consumption expenditure.
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.
State whether the following statements are TRUE or FALSE with reason.
National income is a flow concept.
Give reasons or explain the following statement:
The concept of national income has an important place in economic development.
Answer in brief.
Give different definitions of 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.
Answer the following question:
Explain the income method of measuring 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:
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:
Expenditure method of measuring national income.
Define or explain the following concept:
Final goods
Define or explain the following concept:
National income
Define or explain the following concept:
Depreciation
Give reason or explain the following statement:
Income from second hand sale of goods is excluded from national income.
Give reason or explain the following statement:
National income at factor cost includes subsidy.
Give reason or explain the following statement:
Old age pension is transfer 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.
Services of housewives are included in national income.
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
GDP (FC) = GDP (MP) – __________
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.
Distinguish between the following.
Personal income and Disposable 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 2018-2019.
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)
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.
- What is the percentage increase in the provision for Healthcare? (1 mark)
- Mention the sectors that have been promoted in this budget. (1 mark)
- 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______.
The value of NNP at production point is called______.
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.
Nominal GNP is same as ____________.
Real GNP is same as ______.
GNP at MP = ____________.
NNPMP =
NNPFC =
GDP MP = Rs.1000 and subsidies = Rs.50, then GDP FC will be ______.
The market price of all final goods of a country in a year is known as:
Which one is true?
Net National Income at Factor Cost is called?
If for a country net factor income from abroad is negative then:
Total national income divided by total population is known as:
Which of the following is not a component of domestic income?
If factor cost is greater than marker price, it means that:
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.
What is ‘National Income’?
