Macroeconomics DSE 5.

1A

Unit II : National Income Accounting

Lecture 6

1. From the following data calculate Gross Domestic Product at Market Price

● i) Gross national product at factor cost 6,150 Cr

● ii) Net exports (-)50 Cr
● iii) Compensation of employees 3,000 Cr
● iv) Rent 800 Cr
● v) Interest 900 Cr
● vi) Undistributed Profit 1,300 Cr
● vii) Net indirect taxes 300 Cr
● viii) Net domestic capital formation 800 Cr
● ix) Gross fixed capital formation 850 Cr
● x) Change in stock 50 Cr
● xi) Dividend 300 Cr
● xii) Factor income to abroad 80 Cr

Solution:

Gross Domestic Product at Market Price

=NDP at factor cost + Net Indirect taxes+ Consumption of fixed capital (depreciation)

= Compensation of employees + Rent + Interest + Undistributed Profit +Mixed income+ Net

Indirect taxes+ Consumption of fixed capital (depreciation)

=Rs 3,000 crore+ Rs 800 crore+ Rs 900 crore+ Rs 1,300 crore+ Rs 0crore+ Rs 300 crore+ (Rs 850 crore+ Rs
50 crore- Rs 800 crore)

= Rs 3,000crore+ Rs 800 crore+ Rs 900 crore+ Rs 1,300 crore+ Rs 300 crore+ Rs 300 crore+ Rs 100 crore

= Rs 6,700 crore

Note: Consumption of fixed capital (depreciation) = Gross fixed capital formation + Change

in stock – Net domestic capital formation

2. From the following data, estimate the net value added at factor cost and show that it is equal to the
sum of factor incomes :–
 ● Sales Rs. 11000
● Change in stock 680
● Intermediate Consumption Rs. 2370
● Depreciation Rs. 450
● Wages and salaries Rs. 5400
● Interest Rs. 250
● Rent Rs. 750
● Profit Rs. 2150
● Net indirect Taxes Rs. 310
● Students scholarship Rs 75

Solution : Net Value added at Factor Cost = Sales + increase in stock – Intermediate Consumption
– Depreciation- Net Indirect Taxes

= 11000 + 680- 2370- 450- 310

= Rs. 8550

Sum of Factor Incomes = Wages & salaries + Interest + Rent + Profit

= 5400 + 250 + 750 + 2150

= Rs 8550

Hence showed, Net Value added at Factor Cost = Sum of Factor Incomes = Rs 8550