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Question
Write short note on:
Personal disposable income
Solution
Personal disposable income refers to that part of personal income that is actually available to households for consumption or for saving. Similar to the firms, the individuals also pay taxes and other payments (such as fees and fines) to the government. Such payments are deducted from the personal income to arrive at an estimate of the personal disposable income. This is because such payments are not available to the individuals for consumption or saving.
Personal Disposable Income = Personal Income – Direct Personal Taxes – Miscellaneous Receipts of the Government (fees and fines)
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Total Cost and Total Revenue.
Explain the various methods of measuring national income.
In order to avoid double counting, value added approach is used.
Explain in detail ‘saving function’ with schedule and diagram.
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
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(a) Nationals
(b) Economic territory
(c) Residents
(d) Both residents and non-residents
Explain the impact of rise in exchange rate on national income.
Calculate (a) National Income, and (b) Net National Disposable Income:
| (Rs In crores) | |
| (i) Compensation of employees | 2,000 |
| (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 |
| (xi) Net current transfers to aboard | 30 |
Calculate the (a) Net National product as markets price. and (b) Gross National Disposable Income:
| (Rs In crores) | |
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| (ii) Rent | 400 |
| (iii) Profit | 900 |
| (iv) Dividend | 100 |
| (v) Interest | 500 |
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| (viii) Net export | 60 |
| (ix) Net indirect taxes | 300 |
| (x) Depreciation | 150 |
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a. Likely to rise
b. Likely to fall
c. Likely to rise and fall both
d. Not affected
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Purchase of refrigerator by a firm for own use
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| (Rs crores) | ||
| 1 | Rent | 100 |
| 2 | Net current transfers to rest of the world | 30 |
| 3 | Social security contributions by employers | 47 |
| 4 | Mixed income | 600 |
| 5 | Gross domestic capital formation | 140 |
| 6 | Royalty | 20 |
| 7 | Interest | 110 |
| 8 | Compensation of employees | 500 |
| 9 | Net domestic capital formation | 120 |
| 10 | Net factor income from abroad | (-)10 |
| 11 | Net indirect tax | 150 |
| 12 | Profit | 200 |
Giving reason explain how the following should be treated in the estimation of national income:
Payment of interest by an individual to a bank
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 'Net National Product at Market Price' and 'Personal Income'.
| (Rs crore) | ||
| (i) | Transfer payments by government | 7 |
| (ii) | Government final consumption expenditure | 50 |
| (iii) | Net imports | -10 |
| (iv) | Net domestic fixed capital formation | 60 |
| (v) | Private final consumption expenditure | 300 |
| (vi) | Private income | 280 |
| (vii) | Net factor income to abroad | -5 |
| (viii) | Closing stock | 8 |
| (ix) | Opening stock | 8 |
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| (xi) | Corporate tax | 60 |
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| (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 |
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| (Rs in Arab) | ||
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| 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 |
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Fill in the blank using proper alternative given in the bracket:
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(b) decreases
(c) becomes equal
(d) becomes zero
Write Explanatory answer. (Any Two )
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Answer in detail:
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Distinguish between:
Gross National Product and Net National Product
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Expenditure method of measuring national income.
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| Group A | Group B | ||
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| 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 | ||
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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)
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?
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Write the formula for calculating GNP.
What is the difference between NNP and NDP?
Trace the relationship between GNP and NNP.
Write a short note on per capita income.
Differentiate between personal and disposable income.
What is the solution to the problem of double counting in the estimation of national income?
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- Personal income refers to the income of individuals of a country.
- The income at their disposal after paying direct taxes is called disposable income.
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GDPFC = ____________.
NNPFC =
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NNPMP =?
Net National Income at Factor Cost is called?
If for a country net factor income from abroad is negative then:
The market value of all final goods and services produced in an economy over a year is called:
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.
How should the following be treated in estimating National Income of a Country? Give valid reasons.
Expenditure on upgradation of fixed asset by a firm.
