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Question
Giving reason explain how should the following be treated in estimating gross domestic product at market price?
Fees to a mechanic paid by a firm.
Solution
A fee paid to a mechanic by a firm is not included in the estimation of gross domestic product at market price because it is only an intermediate expenditure for the firm.
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RELATED QUESTIONS
Calculate Net Domestic Product at Factor Cost and Private Income:
| Rs crore | ||
| 1 | Gross National Disposable Income | 600 |
| 2 | Net current transfers to abroad | (-)20 |
| 3 | Consumption of fixed capital | 60 |
| 4 | Current transfers from government | 30 |
| 5 | Indirect tax | 100 |
| 6 | Income accruing to government | 80 |
| 7 | Subsidies | 10 |
| 8 | Net factor income to abroad | (-)10 |
| 9 | National debt interest | 40 |
| 10 | Personal tax | 150 |
How will you treat the following while estimating domestic product of a country? Give reasons for your answer:
Profits earned by branches of country's bank in other countries
How will you treat the following while estimating domestic product of a country? Give reasons for your answer:
Purchase of goods by foreign tourists
Calculate (a) national income (b) net national income disposable income:
| (Rs. in crores) | ||
| 1 | Net factor income to abroad | (-) 50 |
| 2 | Net indirect taxes | 800 |
| 3 | Net current transfers from rest of the word | 100 |
| 4 | Net imports | 200 |
| 5 | Private final consumption expenditure | 5000 |
| 6 | Government final consumption expenditure | 3000 |
| 7 | Gross domestic capital formation | 1000 |
| 8 | Consumption of fixed capital | 150 |
| 9 | Change in stock | (-) 50 |
| 10 | Mixed income | 4000 |
| 11 | Scholarship to students | 80 |
If the Nominal GDP is Rs. 1200 and Price Index (with base = 100) is 120, calculate Real GDP.
If the Real GDP is Rs 300 and Nominal GDP is Rs 330, calculate Price Index (base = 100).
Giving reason explain how should the following be treated in estimating gross domestic product at market price?
Expenditure on purchasing a car for use by a firm.
Explain how ‘distribution of gross domestic product’ is a limitation in taking gross domestic product as an index of welfare.
Which of the following statements are correct
Statement 1: The wealth of a country can be increased with the efforts of a healthy workforce.
Statement 2: Investment in the health sector increases the efficiency and productivity of a nation's workforce.
Statement 3: In contrast to an unhealthy person, a healthy person can work better with more efficiency and consequently, can contribute relatively more to the GDP of the country
Suppose the GDP at a market price of a country in a particular year was Rs 1,100 crores. Net: factor Income from Abroad was Rs 100 crores. The value 1. 2. 3. 4. 5. of Indirect taxes − Subsidies was Rs 150 crores and National Income was Rs 850 crores. Calculate the aggregate value of depreciation.
Identify the correctly matched pair from Column A to that of Column B:
| Column A | Column B |
| 1. Inflationary Gap | (a) Selling of government securities |
| 2. Deflationary Gap | (2) Increase in Statutory Liquidity Ratio |
| 3. Effects of Deficient Demand | (c) Rise in production level |
| 4. Plans to Expand Exports | (d) AD > AS (at full Exports employment level) |
Assertion (A): GDP is the correct measure of the improvement of welfare of the people.
Reason (R): Many activities in an economy are not evaluated in monetary terms, they are not included in GDP due to non-availability of data.
______ is the output at base-year prices.
Identify the correct pair as given in Column B by matching them with respective concepts in Column A:
| Column A | Column B | ||
| (1) | Reduction in the value of the domestic currency by the government | (a) | Devaluation |
| (2) | Reduction in the value of the domestic currency through market forces | (b) | Appreciation |
| (3) | Increase in the value of the domestic currency by the government | (c) | Depreciation |
| (4) | Increase in the value of the domestic currency through market forces | (d) | Revaluation |
What does the Factor Cost represent?
Read the below case and answer the question that follows:
|
The country's real gross domestic product (GDP) is likely to expand by 11 percent in the next financial year due to a faster economic recovery and on a low base, says a report. The report by domestic rating agency Brickwork Ratings said economic activities are slowly reaching PRE-COVID levels following the relaxation of the lockdown, except in sectors that remain affected by social distancing norms. "With progress in developing an effective vaccine for COVID-19 and signals of faster-than-expected recovery in the domestic economy, and also supported by a low base, we expect the real GDP to grow at 11 percent in F/Y 22, from the estimated contraction of 7 percent to 7.5 percent in F/Y 21," the agency said. According to the first advance estimates of national income released by the National Statistical Office (NSO), the country's GDP is estimated to contract by a record 7.7 percent during the current financial year. |
Real GDP is when the goods and services are produced by all producing units in the domestic territory of a country during an accounting year and valued at ______ prices or constant prices.
From the following data, calculate the value of operating surplus:
| S.No. | Items | Amount in (₹ crore) |
| (i) | Royalty | 10 |
|
(ii) |
Rent | 70 |
| (iii) | Interest | 25 |
| (iv) | Net domestic product at factor cost |
500 |
| (v) | Profit | 50 |
| (vi) | Dividends | 20 |
On the basis of the data given below for an imaginary economy, estimate the Net Domestic Product at Factor Cost (NDPFC):
| S.NO. | Items | Amount (₹ in crore) |
| (i) | Household Consumption Expenditure | 3,000 |
| (ii) | Government Final Consumption Expenditure | 1,000 |
| (iii) | Net Domestic Fixed Capital Formation | 1,000 |
| (iv) | Change in Stock | 200 |
| (v) | Exports | 500 |
| (vi) | Indirect Taxes | 350 |
| (vii) | Imports | 300 |
| (viii) | Subsidies | 50 |
