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प्रश्न
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.
उत्तर
Double counting refers to a situation where the value of a good is taken into account (counted) more than once. Such a problem occurs because, for every producer, the commodity he sells is the final commodity. Thus, if every time the value of the good is taken into account, then it will lead to the estimation of the value of the product more than once.
For instance, in the example of the production of cloth, for the cotton farmer cotton is the final product and he sells it for Rs 500. Thus, for him, the cost of the final output is Rs 500. Similarly for the weaver, who sells weaved cotton for Rs 700, weaved cotton is the final product, and the cost of the final output is Rs 700. Next, the textile producer converts the weaved cotton into cloth and sells it to the retailer for Rs 900, for him the cloth is the final product, and the cost of the final output is 900. The retailer then sells the cloth for Rs 1100.
The total value of the final output in the process is Rs 3,200 (i.e. Rs 500 + Rs 700 + Rs 900 + Rs 1,100). But, in this manner, the value of cotton is counted four times, the value of thread three times, and that of cloth twice.
In other words, there is an overestimation of the value of the goods produced.
Efforts must be taken to reduce double counting by the following two approaches:
- By considering only the value added by each production unit
- By considering only the final goods and services (i.e. excluding intermediate consumption) in the estimation of the national income.
संबंधित प्रश्न
With the increase in income, both consumption and savings increase.
Explain various types of investment expenditure.
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
Giving reason explain how should the following be treated in the estimation of national income:
Payment of corporate tax by a firm
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 |
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
Fill in the blanks using proper alternatives given in the brackets
Personal Income - Direct Tax = ________________
(b) decreases
(c) becomes equal
(d) becomes zero
State whether the following statements are TRUE or FALSE:
Saving increases with increase in income.
Answer in brief.
Give different definitions of National Income.
State whether the following statements are True or False with reason:
Ten years period is considered for measuring National Income.
Distinguish between:
Gross national product and Gross domestic product.
Define or explain the following concept:
Final goods
Fill in the blank with appropriate alternatives given below
In India, the responsibility for the calculation of national income rests with _________.
Find the odd word
Concepts of national income -
- 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)
NNPFC =
If factor cost is greater than marker price, it means that:
