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National Income

1) The document provides 6 examples of calculating national income from various economic data using different methods. 2) Key components included in the calculations are GDP, GNP, consumption of fixed capital, indirect taxes, subsidies, private investment, wages and salaries, rents, profits, interest. 3) National income is calculated using either the income method by adding various sources of incomes or the expenditure method by totaling various components of expenditures.

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Kalp Jain
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85 views2 pages

National Income

1) The document provides 6 examples of calculating national income from various economic data using different methods. 2) Key components included in the calculations are GDP, GNP, consumption of fixed capital, indirect taxes, subsidies, private investment, wages and salaries, rents, profits, interest. 3) National income is calculated using either the income method by adding various sources of incomes or the expenditure method by totaling various components of expenditures.

Uploaded by

Kalp Jain
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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MATHEMATICAL/NUMERICAL PROBLEMS

from GDPMp?
ample .1 How can we obtain NNP
Solution: GDPMr - NIT = GDPpe

GDP+ NFIA =GNPp

GNPpC deprcciation =
NNPp
data:
from the following
2 Calculate the national income
Example
(in crores)
Items 2000
market pricesS
in the economy at
Gross value of output produced 150
Net Factor Income from Abroad
180
Indirect taxes
50
Subsidies
12
Consumption of fixed capital

150 (NFIA) = 2150


Solution: GNPMP = 2000 (Gross value of output) +

GNPFC 2150-(180 - 50) =2020 (Indirect taxes- Subsidies)]


[GNPMP
National Income = 2020 -

12
So,
= T2008 crores

Example3 Consider the following data:


(in crores)
items
1000
GNPMP 50
Subsidy payments
250
Gross domestic private investment
200
Net domestic private investment
85
Indirect business taxes

Determine depreciation (CCA) and national income.

Solution: CCA/depreciation = Gross domestic private investment


-

Net domestic private investment


250 200
=50

We know National Income = NNPpc


So we have to determine NNPFC
NNPMP GNPMP-CCA 1000 50 950 = -

NNPPC =NNPMP- Indirect business taxes + Subsidy

950 85+50
=915

So, National Income = 915 crores

Example 4 Find the national income and the personal income from the following data:
Items
(in crores)
1500
GNP

Consumption of capital 50
Indirect business tax 150
90
Subsidy
Social security contribution 70
Corporate income tax 60

Undistributed corporate profit 100


Transfer payments 80

Solution: National income means NNP at factor cost.


National income = GNP - Consumption of capital - Indirect business tax + Subsidy

So. National income 1500 -50- 150+ 90


=

Or. National income =R1390 crores

Now.
Personal income = National income-(Social security contribution+ Corporate income tax + Undistributed corporate profits)
+Transfer payments
Or, Personal income
=
1390 (70 + 60 + 100) + 80
Or. Personal income = 1390 -

230 + 80
= T1240 crores

Example.5 Calculate the national income from the following data:

Items (in crores)


Wages and salaries 40,000
8500
Rent
Profits 11,500
Interest 10,000
Mixed income of the self-employed 13,000

Net Factor Income from Abroad 3000

Employees contribution to social security 6000


Solution: National income (in income method) = Wages and salaries + Rent + Interest + Profits + Mixed income of the
Net Factor Income from Abroad
contribution to social security +
self-employed + Employees'
40,000 +8500+ 10,000+ 11,500+13,000 + 6000+ 3000
9,20,00
Example .6 Calculate the national income from the following data:
Items (in crores)
Government expenditure 150
Private consumption expenditure 300
Net domestic capital formation 200
Export earnings 80
Import payments 120
Net Factor Income from Abroad -20
Net indirect taxes 70

Solution: National income (in expenditure method) = Private consumption expenditure + Net domestic capital formation +
Government expenditure + Net exports + Net factor earnings from abroad - Net indirect taxes
Or, National income =
[300 + 200+150+(80 - 120) -20 70]
= T520 crores

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