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Question
How will you treat the following while estimating domestic product of a country? Give reasons for your answer:
Gifts are given by an employer to his employees on Independence Day
Solution
Gifts given by an employer to his employees on Independence Day are included in the domestic income because the gifts given by the employer are compensation in kind.
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RELATED QUESTIONS
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.
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| (Rs crores) | ||
| 1 | Private final consumption expenditure | 400 |
| 2 | Opening stock | 10 |
| 3 | Consumption of fixed capital | 25 |
| 4 | Imports | 15 |
| 5 | Government final consumption expenditure | 90 |
| 6 | Net current transfers to rest of the world | 5 |
| 7 | Gross domestic fixed capital formation | 80 |
| 8 | Closing stock | 20 |
| 9 | Exports | 10 |
| 10 | Net factor income to abroad | (-)5 |
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| (Rs Arab) | ||
| 1 | National debt interest | 60 |
| 2 | Wages and salaries | 600 |
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| 4 | Rent | 200 |
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| 7 | A net domestic product at factor cost accruing to government | 140 |
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|
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. |
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| (i) | Royalty | 5 |
|
(ii) |
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