Particulars Rs.
crores
NDP at market prices 5,000
NNP at factor cost 4,200
Personal saving 1,075
Gross domestic investment 800
Corporate profits (profit before tax) 750
Transfer payments by the government 75
Subsidies 100
Net domestic investment 650
Corporate profit tax 350
Personal tax payments 350
Indirect taxes 950
Government budget deficit 300
Dividends 150
Calculate the
following: Net factor Income from Abroad
1. The value of GDP at factor cost
2. Personal Income in the economy is
GDPFC = NDPMP + Depreciation – Indirect Taxes + Subsidies
5000 + (800 – 650) – 950 + 100 = 4,300 MUC
Personal Income (PI) (i.e. income received by the households) = NI –
Corporate profit + Dividends + Transfer payments = 4,200 – 750 + 150 + 75
= 3,675 MUC
2.An economy produces only two commodities – bread and butter. During the year 2003, it doubled its
production to 1500 units of bread and 2500 units of butter, as compared to last year. The commodity
prices in the economy during the two years are given below: (Consider 2002 as the base year) a) What is
Nominal GDP for the year 2002? b) What is GDP deflator for the year 2003?
Nominal GDP for 2002 = (Quantity of bread in 2002 x Price of bread in 2002) + (Quantity of butter in
2002 x Price of butter in 2002) = (750 x 20) + (1250 x 15) = 15,000 + 18,750 = Rs.33,750.
Real GDP for 2003 = (Quantity of bread in 2003 x Price of bread in 2002) + Quantity of butter in 2003 x
Price of butter in 2002) = (1500 x 20) + (2500 x 15) = Rs.67500.
Nominal GDP for 2003 = (Quantity of bread in 2003 x Price of bread in 2003) + (Quantity of butter in
2003 x Price of butter in 2003) = (1500 x 25) + (2500 x 20) = 37,500 + 50,000 = Rs.87,500.
GDP deflator = Nominal GDP x 100
Real GDP
= (87500/67500) x 100 = 1.296 x 100 = 129.6 or 130.
3. Compute the Corporate profits from the following information extracted from National Income
Accounts of an economy: Investment by business sector = 100 Rs. Cr 1mark
Corporate profit tax = 50 Rs. Cr
Dividends paid by the business sector = 15 Rs. Cr
Retained earnings = 20 Rs. Cr
50 +15 + 20 = 85 cr.
1) Based on the following information answer the questions
For the year 2000-01, the national accounts statistics at current prices were as follows:
GNP at Factor Cost 1,14,601
Depreciation 8,062
Subsidies 2,822
Not Factor Income from abroad +330
Indirect Taxes 16,745
Personal Income Taxes 10,000
Corporate Profit Taxes 6,539
Retained Profit 30,000
a) What is the value of Personal Income?
b) What is the value of National Income?
c) What is the value of Personal Disposable Income?
2) The following information is available from National Income Accounts of a country:
Particulars (Million units of
currency)
Sales to households 5,000
Corporate profits 2,000
Corporate profit tax 800
Depreciation 600
Transfer payments 300
Dividends 200
Personal tax payments 200
GNP at factor cost 7,450
What is the savings made by the households during the year?
3) Answer Question based on the following information:
Particulars MUC
NDP at market prices 5,000
NNP at factor cost 4,200
Personal saving 1,075
Gross domestic investment 800
Corporate profits (profit before tax) 750
Transfer payments by the government 75
Subsidies 100
Net domestic investment 650
Corporate profit tax 350
Personal tax payments 350
Indirect taxes 950
Government budget deficit 300
Dividends 150
The following information is extracted from National Income Accounts of an economy:
Investment by business sector = 100 MUC
Corporate profit tax = 50 MUC
Dividends paid by the business sector = 15 MUC
Retained earnings = 20 MUC
What is Corporate profits for the economy
4) Answer Question based on the following information:
Year Nominal GNP GNP deflator
2001-02 5000 250
2002-03 6600 300
a) What is the growth rate of real GNP from year 2001-02 to 2002-03?
b) What is the rate of inflation in the economy for the year 2002-03?
5) Questions are based on the following information:
An economy produces only two commodities – bread and butter. During the year 2003, it doubled
its production to 1500 units of bread and 2500 units of butter, as compared to last year. The
commodity prices in the economy during the two years are given below: (Consider 2002 as the
base year)
Year Price of Bread Price of Butter
(Rs. Per unit) (Rs. Per unit)
2002 20 15
2003 25 20
a) What is Nominal GDP for the year 2002?
b) What is GDP deflator for the year 2003?
