uct at market price to yet ne ' CHAPTER kw MEASUREMENT OF NATIONAL INCOME cme ”t~<‘i‘is:s~*m Jusing Nattonal incone ind Niot Curren Poe, Pre oreo of naurtrteres 8 Involved “token wiile Estimating Foci tocores | +35 measurement of Fine! Expondtire 434 Procautons a a.pecsneltaton of the Three Methods 3. Tho Idea! Method or Rowa-produetii, ie igure 18.1.e ik ‘Added Method Pryy cle wd Method Prey re Method, ‘The Concept of Value Added ‘ali, wih th a os iat Stage, Suppo. tr A produce raw colton of worth Ra 100 and sli to fir B which frofucn ston yarn Aasuing Abas tober Bo cons of pedvlo, luni has aed eas 109, arm buye rae ttn of Ra, 100 to fem A a Tt llacotton yarn to fin C fr Ra 260. ‘added « Value’of output = Intermediate consumption | 1B Dalween the concepts of gréas value added ded whan, we aubtract intermediate consumpti of outppt, lve added by frm, we will have to subtract eonaumpllem of fixed enpital (oF ‘roa valu added. aa ae em and value lea eu ne of STEPS 0 ‘VALUE AD) see ral measuring national income by ived while 1g national incom’ 142-5 wiShep te Fira of el, productive enterprises are sntified and classified into primary,noe wun 46 aD. WF coat of "Tol “jaive Ad» Valos of output = 1 Ra 630 ~ Re Anwwer the following questions B foe Re, 6. 1y oll the Industral sostore Not Domestic Product at Fs aoa eta ty Bw to fr Ra 80- Valued added by Primary Se jnnry C vata consumption for Ra 125 c Sr vod in each industry? 60)20,415 x. [Not Value Added ‘What ia the valu 3 ded by Secondary ‘What ia the'GNP ? Ihe \ddodl by Tertiary Sc Whatin ot dveetie product at actor cost. Thi gives Y Dibay = NOP, + WN) ; tn nln a nn. The following precautions are mas ee ney ae tobe tate who esi Franenclons ? Ges] Po ate i goods should nt be ineloded in national Income, 5 ; ae ee | ees ° ae lal. p ° 0 8 Cala ta private consumer | _ 0 135 4 i and the government should wal TM meal income, However, production of services “Gwe ad by isin A, Band C respective Re 6, ‘ Grom atonal produt = Rs 136 headed A= a 80 ( = Mates by Ba 1020 = 10) on alae aed by C= Re 48 Hoe dd by A a = 209 id aloe added by B = Ra (80 ~ 60) = Ra 20 4B Paes Raed by © Ru 28 ED Ma 8 vara aan intermediate souumptn Jinants of ezonomie welfare but It i not 40 of BEd sleet aerscensnie, —T—Haaewcmsat a ete 2 tomessmeenvonne wy s30- WeOPERATING SURPLUS GONPENSATION (OF EMPLOYEES STEPS INVOLVED IN INCOME METHOD ‘gs mentioned above aro estimated bo, pewome (or NDP.) tuplayeos + ent + Interest + Profits + Mixed income "e) Incomes. We ayents should nat be Snlude in, tbe ib srwons, unempl 0 paymants, We inay, ‘Old age pension is simply Bxample 3. From ‘added netbod : fent of Owner-ocet occupied hous should be imputad on tho besis of prevailing market price and incl 2B cn nesses ray, | eT creentoreat + Dividend + Retained profits 1,000 + 3,200 » Ra. 42,200 ero Hammple 4, Pind out national income from the following data ent aad royalty ©8 An ein 1988) . met face Income: . : piven blo: id out domeae a cin tbo) read + Operating eurplua an00 1 $200 ribald t Seco Segcy,Sehames by | emanate omit rata SR IFAW wld Viparaialy = 1900 NDB, by output method, and (6) NP by incom a (in crv) ron Oe from abroud 10 income (oF NDP) oe = ro) = F800 + $200 + 2,800 + 7,000 + 11,500 from the following plover’ contributions to Seal Soeurity Schame 10 ND 800 ~ 400 + 10 ~ 60 ~ 0 » Ra, 300 crore. Ans, 870. soot Sonu ns cet Maronsonemtes | _Meeayrepent al Nant sarees ais monvnsor(eas on vin a sation of finsl it ‘of finul expenditure. The final expenditure is classified inthe ton fr oe fixed iveatcentexpenditare) re. Fs ses otcorenty produced vd an ere erving households: * vvna wo have to deduct Ue srament govarnmaent Government fn sarod by the _Jolegawetory Macresconemetreewise, the value of imports 9 to be deducted fo aids of Mseurmant of Nate! neon3. On the bss U4 Of Goouls und aon-fuctor parviows = Imports of yoo | —~To =e = ind om factor vervces Wy aang Cling breuutlans are raqueed to Beton hile on ne by using expenditure method wdhand Go hires on aeeondhand goods should hey hav 0 these goods were par. are not ion, on Sharevand Bond be excluded because they are simply nd bonds (both old and new) Paper: 1 corcoaponding production im, Thera isn + Eabendlture on Teanefor Payments Expenditure on tant payment ‘his oxpenditue alae doesnot lead to sue bo lochided. Baamnte he paling ns oted here that national income hero is estimated at ® rte nerds caen smacet, factor cont, net indirvet taxos have to bs deducted. Bxpen« GOP Example 5, Cl Solu Net Feig oairten Mosaucorant oh UeaNM N62 ase B78 sh atch dave0 0 1Al 1999) ry orm oie the = | THER VALUE ADDED © COMPENSATION In MIE SERVICE SECTOR (or EMPLOYERS "AT FAGTOR CO8T, r product me ination of national ends 300 + 40+ 10 « a 1.400 crore, Ans ; sents avs coolDlrgdusiery Hagteenon mes, picagunrei ch Nee IRER Eo setts @ Economic Pere HESS: 278ng and Manufacturing wp ional income. ‘Th dh product mothod at id data regarding trade aro not available, product m snsport and communleation sectors detailed data relating to factor lo (e Professional, Domestic and Other Services. For professional, domestic and other serves geome meted is wad exclu. Ouiat “method here proves to be quite unsat- {actor}. ——____——— it becomes clear thatthe choice of a sui vet and ine ‘ao here signi , daveloped econcmiea rely mors upon the income ice of method of measuring nat ‘of adequate and reliable na ‘ames, socinl personal Income tax, const Available here, Hence, income method, is gen atthe choice of method of measuring national inco vity, (6) ‘of tho economy, and of data, i, 0 ingpine method suits {deally-to-doveloped cot Tarn L seoms ‘Troatme nt of iho (aretod_| yu [37 Production for +l onauimptlon ot owner Fe Finat goods Should be Tnclodes | Tataded Wat Toeloded | Kérnment dispenser? > 7% Subsidies {______—} Hid. Consumpilon of Fixed |__ capital Tis Lalaure dine Activities Taaladed tr nal Tacloged 19 potional fe. Toetaded in 08—_————-- 30, Old exe peosion [ar Payment of pension at the tne of retirement insladed cnuse Ja apa of wa Tin included. seed Te Tncoded = Tien par NPI Jit howd not be Inelvded | Teahould not be included Wi telat Te incladed. Ta mak ele ea wot Tadd. Hat tactor Income from abcond it fe not focoded, Meaucenaneldiatieas neeAs acer 282 othe anssus vassovenainiescassnvnocsuisllladusleneMeiessanenTe ls aot included, Tis included. Tivis wot nciaded, ‘| Trae aaa rear: [ some Te not included, Tudo, Te not included. Ta not Inaluded. [tee not included. _ [Expenditure Method Tie included, Tis tladed. | ea not Included. il reduce the nati by the amount ef]ding to expanltre method, we take fins tar i ke fina exponitures, uoitre on traafe payment shel rt be oc normedaa yn ed pat ak nt noun ‘neko atared by sera tar. Thay ae m rndecdoveloped economies while developed cousries Formulae 1 At a Glatice added by steontary roe sourlty + Operating B88 ae mnasenwcnins 2st anteresaniiannereavitetsnoatsis SGU YAMANE, a - No ANSWER TYPE QUEST sad awocding to valve added method ? foal peshat by value adi metho? Foreign 2000 ; Dethe 2000, 20011 ho : Income the ete inalved tn the eatimation of vat 9 ive'an oui of estimating national income by expend! 2 Gru grecations have tobe taken while caleulatingdomeatic. {5 What prcautlens arabe taken le 6. Baplan componente of GDP in its expe ‘7 Which meted in your opinion i the rst any four ofthe fllowing item in res tn the atock market, tees for maintenance of tev aod order,hich iv owned by a non-resident. (Det 2004) SHORT ANSWER TYPE QUESTIONS briefly the produetion, income and expenditure flowa that arias in the process of produc iprecnutione required in etimating national income by the income method. ‘any three precautions which are to be taken while eatimating national income by to be taken while etiating nations Income through the expend (ar 2001 988) fa of mouauring national Sncome. ‘sea, wwcern, economy 7 tng. be used to ave double counting 7 ile? (al 20011 dure method of eutput of «fem ak ay cantare dey eae Aart a optus era * a toca laf with producers ara ansumed as purchased it fr treatd ax investment expenditure by the proce 15. Tho diference between expots and import of a country AS Tecan they arg port of domestic proc rots product. Pests they are not a prt of counery/s gross domestic raneter payment, Hence, it will not affect nai Wag earvicen are productiva, Therefore, imputed | Coleulate the a) Purchase by Mem A frm the rst of th i) Sal by Crm B Mf ack of firm B——————— by firm B from firm A Ane. Value added by Firm X = Ra. 36 Iaxed dente "Pitta aectr = Ra, 260 crore (A A° C30 sé] hy etedenta from ret of word 2% 0 err Becedary sect» R19 or steamployed acior score fom abroad 10, nthe baal of the fnfermatin given Cconsuntion of fixed capital ees leas subsidies fon to sciel security achemen rat sname fra ve towing ete: ‘300 300 TA Ra. 8300 Dains 20001 (9 {Ana Re 1,040 rare) 0 By m0 petits —» crit well sehortt ® ncaa of weerpleye me. © bel, exlulate net nana pr Te ian, Ra 84.238 ere) 290 Peexpand sre can be obtained by not help of information given below estimate gross nation Ry ma from sbroad, "BSE Sample Paper 2009) eth ~ a 1,020 crores] tre nated a, in ere) we Mathod = Ra, 1020 eror (b) Expand ‘calealate notional income by Income 3m expenditure (9300 24,000 [Ane Re, 61,700 eroral ) Compensation to emplayees PNG thenusnuieiidasineniniceisarasnranaiduiie seul DIeductenMserenenyes, 1 pe flowing 18, Caleslatonat ployeen Frumption expenditure income fro wbrond "sal security achemes by employtee% 2 2 $s Fc 2 8 S ta) Mine rs Bat is) Nat @xports . a anata oo $e