Nattonal Income: Cor Chapters | 67 50. What is meant by not direct taxes? S51. Write the component of profit 52. Write the components of compensation of employees, 53. Why is income approach also called share-distributive method? St What ate the conceptual differences of measuring NI? 55, What are the statistical difficulties of measuring NI? 56. Make a list of specific difficulties encountered in the measurement of NI in developing countries. 57. Write any four importance of NI Esk. Distinguish between GDP and GNP. tae £58. Capital gains are excluded from GDP. Why? 69, Differentiate betwoun net export and net factor incom from abroad. > BB kctipinvenamenguctionse 1. Define national income. How ist computed? © 2 Whottypesof dificult are encountered in the measurement of atonal income? {3 Explain the various conceps of atonal income, 5 & Define nominal GOP, el GDP and GOP defatr with sulabe examples. 5. How ie computed by valued method with autable example? 1 6 Whatare the components of expenditure method? i 7. Distinguish between (8) GOPmp and GNPmp (8) NNPmp and NNPfe (=) personal income and disposable income, t iC Explain the process of computing NI by income method. 9. Whatis NI? Explain its uses CConsitier the fllowing data for national income accounts and compute: cor. depreciation (capital consumption allowances). Domestic factor income receipts personal income, b 4. compensation of employees {personal income taxee, & net exports, (Amounts are in millions of rapes) Tdivect business taxes Corporate profits Conporate income taxes Retained earnings Proprietors’ income Rents and interest earned (R + 1) UES ‘Scanned with CamScanner3 [88] INTRODUCTORY MACROECONOMICS Exports eo 20 Imports Net domestic product 2872 Government expenditures on goods and services 616 Transfer payments 460 Social Security contributions 240 Consumption expenditures 210 Gross Investment 440 Disposable pereonal income 2246 \ Ts) 32) Ra SD (Ro ETS (Re O82) Rs BA (9 Fe 30() Rs 2 Consider the following data for national accounts. a. Calculate Gross National Product. ‘b. Calculate Net National Product Calculate Personal Saving Descriptions: Rs in billions Imports 1653 Personal consumption expenditures 7818 Government purchases 297 Personal income 9895 Gross private domestic investment 1998 Exports 1089 Personal tax payments 1494 Capital consumption allowance 3324 ‘Ans: (a) Rs, 11,749 (b) Rs. 10,425 (¢) Re. 583 Calculate national income by expenditure and income method from the following data! Rs in million ‘Subsidies Private final consumption expenditure Net factor income from abroad Indirect tax Rent Government final consumption expenditure Net domestic fixed capital formation Operating surplus Wages and salaries Net exp Addition to stocks Soci secutity.contiibutions by employers "Mixed income * 10 200 -20 50 10 40 60 40 100 x10 a0, 20:4 80. ‘Ans: Rs. 220 Caleulate gross national product at market price by (a) expenditure and (6) income method from the following data: ‘Scanned with CamScanner6 National Incomes Conc. f and Measureinent Chapters | 69 Te in million Consider the following figures of national income aggregates income and expenditure method and compares the result. (e) Compute NI, personal disposable income and personal saving. Undistributed profits Corporat ta > Government final i consumption expenditure Net domestic capil formation 0 Compensation of employees 800 ‘Consumption of fixed capital 2 Net indirect taxes 100] , Net factor income from abroad ‘20 , Net exports 20, Rent 40 Private final consumption expenditure 800 Interest eo Dividends Ed Tans Rs. 120 GNP by and (a) Compute income, Description Ts in million ‘Personal consumption expenditure Net fixed investment Changes in private inventories Exports Imports Government investment Compensation of employees Proprietor’s income Rental income Net interest Corporate profits Depreciation Indirect taxes Corporate dividends Social insurance payments Current transfers 11933 H 1671 : 3 1018 1540 757 9186 946 264 682. 2059 708 739 459 1000 3182 413 Personal taxes ‘Ans (@) Ra, 14504 (0) Re 1997, Re. T3719, Re daa0g JN Pr and GNPxc by final product method from the following datar And Rs, 1363 compute GI ing the comes unit of nadie are produced during the year 2011 and noodle factory sls them © price Rs. 300 per unit Beart ioe on . coduced during the year 2011 and compan pany sells them at pr rice 4,000 units of watch are PF Yee, 2000 per writ. acon 5 ee ‘Scanned with CamScanner\2| INTRODUCTORY MAORORGONOMION AN 20,000 unttn of biscuit are producod during tho yonr itpprlee Re, 800 por tnt, 2011 anv bteewt faetory sue) 9 ty, Governmont providon tublly to all incuntrion valued at fe, 10,00,000 nnd renlies tneng from all Inclutrlon valued at Ra, 100,000, vs Intermediate goods conmumned by all Incustrlon valued at ft ‘onch yonr, ‘Nominal GDP snitttona) | 5193 666 m 988 9999 10050 GDP deflator | (2009 an neo yonr) 28 3.6 93 489 17 102.3 109.8 8. Consider the following data for natlonal accounts ‘Duslmiens Interent payments Proprletor's income Corporate profit taxes Corporate dividends Retalned earnings Net exports Personal taxes Personal consumption expenditure Constimptlon of fed enpltal Indirect business taxes Compensation of employees Rents [Net private domestic Investment Government expenditure ‘ ‘Cateulnte GNPwr and GDPye by both expendi a 1b, Caleulnte NI, PLand PDI \ \ \ 9, Compute (a) GNPur (>) NPs ‘ fn. Total amount of ental consump \ tbe Government grants aubsldles ration ce. _ Industry X Imports goods from i ‘worth Rs, 3,000 milion A, Industry ¥ ells goods to Industry ' 300 rion worth Re. Dereription ‘Anse (a) Ro, 399 (0) fla. 1216, te, 3.001, Chinn worth Re, 2,000 milton ot Z.vworth Rs, 2,000 milion ant to Ind 10,00,000, ‘Anon H, 142,00, 000 and ft, 140,001 Hon GDP ({te in million Tea, in million 20 m2 "6 m 129 4 tn 2 09 ue a7 “ a ms re and Income method suv ancl (NI by valuo aed from the data given below on allowance equals to Re, 10,000 milion. 200 malllon ant realizes taxes worth Ke. 5, ‘Scanned with CamScanner Consider tho following date and doterminen that whethor you aro deflating oF Snflating, tn 0 ri sels to industry Y yy A worth Rs.pt and Mesturemont — Chapterd [72 Natioual Income: Co: Industry B sells goods worth Rs, 4,000 milion to industry A and worth Rs 6,000 million to industry C. £ Industry A sells goods worth Rs. 10,000 million to households and exports worth Rs. 2,000 million to India. Industry C sells goods worth Rs, 8000 to houscholds and exports worth Rs, 1000 to Bhutan. i to. Consider the following data for natlonal Pete accounts and calculated (a) GNPur and ce asSy both income and expendivure methods ©) ‘calculated NI,Pland PDI, Description Rein million 4 $ Dndistributed profits a 4 Personal taxes 52 ‘Corporate profit taxes 38 il Corporate income m2 ‘ Government purchases 144 ‘ Net capital formation 66 Personal saving 32 4 Consumption 490 Transfer payments m4 Rents 28 Capital consumption allowance 54 i Social insurance payments 40 ‘Compensation of employees 442 Indirect taxes 36 Interest 26 5 Proprietor's income a Net exports 6 Corporate dividends 32 i Finn Bs 60, Ra 706, Rs. 670, Re, 574, Be, $22 4 and NNP,¢ from the following data: Cateulate GNP Opening stock i Net indirect taxes zs. 4 Imports ee Exports 75 45 450 ' ‘Closing stock Private final consumption expenditure Net domestic fixed capital formation Covernment final consumption expenditure Gross domestic capital formation. 150 150 180 “nat Re. 690, Rs. 660 FAM ous tne following daia calculate by expenditure method: (a) Gross domestic i : (a) Gross doi duct ket price, () Net national product at factor cost Product at Rein million ‘Net factor income from abroad 5. Subse 3 Private final consumption expenditure 800 oo | 120 Indirect taxes Scanned with CamScannerBn 4 we « 13. Consider the following, b. « a e £ intropucTORY MACROECONOMICS i "| Consumption of fixed capita Cenernment final ‘consumption expenditure Gross capital formation data (Rs in millions) and compute: Gross National Product : National Income Capital consumption allowance Net National Product Personal Income Disposable Personal Income: Rs, in million 400 200 Exports Imports Indirect business taxes Transfer payments Personal income taxes Corporate retained earnings Corporate income taxes Compensation of employees Consumption Proprietors’ income Gross investment Corporate income Rental income Interest Government purchases 14. From the following data, find aose National income, Personal income, Personal disposable income and Personal saving. Rs: in million Corporate dividends 30 Social gecurity contributions a 510 -Pergopal taxes Government and business transfers 631 ‘Scanned with CamScanner ‘Ans: Rs. 1,510, Rs. 1,555 ‘Ans: Rs, 5,200, Rs. 4,600, Rs, 4,900, Rs. 300, Rs. 4,500, Rs. 4,100pt and Measur: Fasonal consumption expenditures Compensation of ‘employees Business interest payments Rental income of persons Corporate profits Proprietors’ income nw (a) Ra. 2538 (b) Rs. 2.760 (¢) Re. 2.289 (6) Re. 250 (0) Gross national product at market prices 5. Calculate (a) Gross national product at factor cost : I b expenditure and income method.(Rs in {@ National income from the following data by million) Exports Imports Private final consumption expenditure Government final consumption expenditure Net indirect taxes Wages and salaries Mixed income of self-employed Operating surplus Undistributed profits Gross capital formation Net capital formation Employers’ contribution to social security schemes | Net factor income and abroad | “Kaw a) Ra A680 () Ra SI (e) ROD 16. Estimate GDP, GNP and national income by expenditure and income method from the following data: (Rs in oullion) Profs » Interest e Indirect taxes « Subsidies 10 | Rent x» | Net factor income from abroad Consumption of fixed capital 7 Private final consumption experutiture hg Government’ final consumption expenditure i. Gross domestic capital formation = | Net exports : Wages and salaries Bes Employers’ contstbution w provident fund s i Ana Ra S20, Ra S30 Re 460) ‘Scanned with CamScanner Chapter 3 mcd a = +e i osLeal INTRODUCTORY MACROBRCONOMICS x \ BRBBBEBPRS fein ana shiorkCases ic el i 1, In the year 2013, the economy produces 2000 loaves of bread that sell for Rs 80 each, In the year 2014, the economy produces 4000 lonves of bread that sell for Rs 90 each, (i) Calculate nominal GOP, real GDP and the GDP deflator for ench year (Use 2013 as the base year.) (ii) By ‘what percentage does each of these three statistics rise from one year to the next? (iii) State the significance of real GDP in economic analysis. 2 Consider the following data on GUP of a hypothetical economy. Year [Nominal GDP (Rein Dillions)_| GDP Deflator (Base Year 2006) 2013 22 133 2014 _| 33333, 144 What was the growth rate of nominal income between 2013 and 20147 (Note: The growtly + rate is the percentage change from one period to the next.) b. What was the growth rate of the GDP deflator between 2013 and 20147 © What was real income in 2013 mensuired in 2006 prices? 4 What was reat income in 2014 meastired in 2006 prices? © What was the growth rate of real income between 2013 and 20147 £. Was the growth rate of nominal income higher or lower than the growth rate of real income? Explain, ' 3. Suppose your own Biscuit Factory that has sales, expenses, and profits, expressed in rupees, as shown below. Total sales 86,00,000 Expenses: Wages and salaries 24,00,000 i Interest on loans 2,00,000 ¥ Rent 8,00,000 : Raw materials 16,00,000 Tools and equipment 30,00,000 ? Profits 6,00,000 } What is the value added to GDP of the productive activities of your firm? ‘Ans: GDPar = 700,000 The cconomy of Nepal cuts down trees in order to make paper and uses all its paper for books. The expenditure and income accounts for each of the three industries are given in the table below. a. Calculate (nominal) GDP using the final goods approach b. Calculate (nominal) GDP using the value-added approach. Calculate (nominal) GDP using the income approach. d. Compare the three answers and draw the conclusions, Expenditure Receipts (Rs in billions) (Rs in billions) Tree industry Wages 160 Dividends 40 Interest 0 200 ‘Scanned with CamScanner6 Consider an economy that pro Natio Paper industry Wages Rurchases of trees Divitends Interest Book industry Wages Purchases of paper Dividends Interest In a hypothetical economy, production of computer hardy is sold to the software industr income accounts for each of th IT industries ware. Half of the hardware 'Y- Consumers purchase all of the soft ! Iucome: Concept and Mousuroment Chapters | 76 200 200 80 20 500 300 500 100 100 1000 =e Ans: GDP = 1,000 of which are used in the is purchased by consumers, and half produce chips, all tware. The expenditure and Ne three industries are given in the table, (Rs in billions) Expenditure Reet Chip industry Wages. 1,800 Dividends 1,200 Interest 0 Mardware industry 3,000 Wages 1,800 Purchases of chips 3,000 Dividends 600 Interest 600 6,000 Software industry Wages 1,800 Purchases of hardware 3,000 Dividends Qo Interest 1.200 6,000 a Calculate (nominal) GDP using the final goods approach, b. Calculate (nominal) GDP using the valu eadded approach, © Calculate (nominal) GDP using the income approach, 4. Compare the three answers and draw the: the base year (a few years ago), duces only three types of fruit: apples, oran, ). the production and price data were as foll 12000 bunches 4000 kg conclusions, ‘Ans: GDP ue = 6000 ges and bananas: In lows: 100 per kg. 40 per bunch 60 per kg Scanned with CamScannerAGROBCONOMICS YS follow: INTRODUCTORY I In the current yenr the production andl price cate are a8 Fruit 150 per kg 16000 bunches 25 per bunch 10000 kg 70 per kg, rent year and in the base year. What is the pe 5000 kg, Oranges. a, Find the nominal GDP in the cu increase since the base yeat? b. Find real GDP in the current year and in the base year. GDP increase from the base year to the current year? c. Find the GDP deflator for the current year and the base year. the price level change from the base year to the current year? Would you say that the percentage increase in nominal GDP in this economy since the base year is due more to increases in prices or increases in the physical volume of output? ‘Ans: (a) Rs, 210,000, 13,20,000; 52.32% (8) Rs. 1740,000 13,20,000; 31.82% (c) Rs, 115.52; 100; 18.52% “Hints: (@) % inerease in Neoe> % inerease in Roos Hence, % increase in Neor is mainly caused by change in price in comparison to physical volume of output srcentage By what percentage does real By what percentage dge# ‘Scanned with CamScanner