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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.
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संबंधित प्रश्न
National income
Distinguish between Gross National Product and Net National Product.
Unpaid services are not included in national income.
Explain various types of investment expenditure.
Find national income and private income:
(Rs crore)
(i) Wages and salaries 1,000
(ii) Net current transfer to abroad 20
(iii) Net factor income paid to abroad 10
(iv) Profit 400
(v) National debt interest 120
(vi) Social security contributions by employers 100
(vii) Current transfers from government 60
(viii) National income accruing to government 150
(ix) Rent 200
(x) Interest 300
(xi) Royalty 50
Calculate National Income from the following data:
| S.No. | Particulars | Rs.in crores |
| (i) | Private final consumption expenditure | 900 |
| (ii) | Profit | 100 |
| (iii) | Government final consumption expenditure | 400 |
| (iv) | Net indirect taxes | 100 |
| (v) | Gross domestic capital formation | 250 |
| (vi) | Change in stock | 50 |
| (vii) | Net factor income from abroad | (-)40 |
| (viii) | Consumption of fixed capital | 20 |
| (ix) | Net imports | 30 |
Find national income from the following:
Autonomous consumption = Rs100
Marginal propensity to consume = 0.80
Investment = Rs 50
Giving reason explain how should the following be treated in estimating national income:
i. Expenditure on fertilizers by a farmer.
ii. Purchase of tractor by a farmer.
National income is the sum of factor incomes accruing to : (Choose the correct alternative)
(a) Nationals
(b) Economic territory
(c) Residents
(d) Both residents and non-residents
Unforseen obsolescence of fixed capital assets during production is: (Choose the correct alternative)
a. Consumption of fixed capital
b. Capital loss
c. Income loss
d. None of the above
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 precautions that should be taken while estimating national income by expenditure method.
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.
Giving reason explain how should the following be treated in the estimation of national income:
Expenditure by a firm on payment of fees to a chartered accountant
Giving reason explain how should the following be treated in the estimation of national income:
Payment of corporate tax by a firm
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 reasons explain how should the following be treated in the estimation of national income:
Purchase of uniforms for nurses by a hospital
Calculate investment expenditure from the following data about an economy which is in equilibrium:
National income = 1500
Autonomous consumption expenditure = 300
Investment expenditure = 300
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 |
Calculate 'National Income' and 'Net National Disposable Income' from the following
| (Rs in Arab) | ||
| 1 | Net change in stock | 50 |
| 2 | Government final consumption expenditure | 100 |
| 3 | Net current transfers to abroad | 30 |
| 4 | Gross domestic fixed capital formation | 200 |
| 5 | Private final consumption expenditure | 500 |
| 6 | Net imports | 40 |
| 7 | Depreciation | 70 |
| 8 | Net factor income to abroad | (-)10 |
| 9 | Net indirect tax | 120 |
| 10 | Net capital transfers to abroad | 25 |
Calculate 'Marginal Propensity to Consume' from the following data about an economy which is in equilibrium:
National income = 800
Autonomous consumption expenditure = 100
Investment expenditure = 100
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.
Investment made by the government is _____________ investment.(unplanned/gross/autonomous/induced)
Give reasons or explain the following
The propensity to save depends upon the level of income.
Distinguish between the following :
Output method and Income method of measuring national income.
Fill in the blank using proper alternative given in the bracket:
National income is ........ concept.
State whether the following statement is True or False
Total Revenue = Total quantity x Price.
Define or explain the following concept.
Disposable income.
Give reason or Explain the following statement :
Paid services are included in national income.
Fill in the blanks using proper alternatives given in the brackets
Personal Income - Direct Tax = ________________
(b) decreases
(c) becomes equal
(d) becomes zero
Explain the circular flow of national income.
Answer in brief.
Give different definitions of National Income.
Distinguish between Illegal income and Transfer 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.
State with reason whether you agree or disagree with the following statement:
Many precautions are to be taken while estimating national income by income method.
Distinguish between:
Gross national product and Gross domestic product.
Distinguish between:
Net national product and Net 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:
Personal disposable income
Define or explain the following concept:
National income
Define or explain the following concept:
Personal income
Define or explain the following concept:
Depreciation
Give reason or explain the following statement:
National income at factor cost includes subsidy.
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.
Financial year in India is leap year.
Distinguish between the following.
Personal income and Disposable income
Answer the following question.
Define the problem of double counting in the computation of national income. State any two approaches to correct the problem of double counting.
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)
- Explain the concept of product (real flow) with the help of above diagram. (2m)
- Explain the concept of Money flow with the help of above diagram. (2m)
Which is the largest figure?
Per capita income is obtained by dividing the National income by the ______.
NNP stands for______.
When net factor income from abroad is deducted from NNP, the net value is______.
The value of NNP at production point is called______.
Write the formula for calculating GNP.
Differentiate between personal and disposable income.
Explain briefly NNP at factor cost.
Explain the meaning of non-market activities.
Nominal GNP is same as ____________.
Real GNP is same as ______.
Consider the following statements and identify the right ones.
- Personal income refers to the income of individuals of a country.
- The income at their disposal after paying direct taxes is called disposable income.
NNPMP =
GDPFC = ____________.
NNPFC =
Which one is true?
GNPMP =?
If for a country net factor income from abroad is negative then:
Total national income divided by total population is known as:
Give economic term:
The volume of commodities and services turned out during a given period counted without duplication.
How should the following be treated in estimating National Income of a Country? Give valid reasons.
Profit earned by Foreign Banks in India.
What is ‘National Income’?
