Chapter 1 Qus Only

CA Inter Economics CA Mayank Kothari
Practical Questions
1. Calculate net value added at market price of a firm:
Items ` In Crores
Sale 700
Change in stock 40
Depreciation 80
Net in direct taxes 100
Purchase of machinery 250
Purchase of intermediate product. 400
Solution:
Value of Output = Sale + change in stock
= 700 + 40
= 740
NV at MP = Value of output - purchase of intermediate product - depreciation
= 740 - 400 - 80
= 260
2. Calculate net value added at market price of a firm:
Items (` In Thousand)
Sale 800
Change in stock -30
Depreciation 70
Net in direct taxes 80
Purchase of intermediate product 450
Chapter 1.1 National Income Accounting
Solution:
Value of Output = Sale + change in stock
= 800 + (30)
= 770
Gross Value added at MP = Value of Output - Purchase of intermediate product
= 770 - 450
= 320
NV at MP = Gross Value added at MP - depreciation
= 320 - 70
= 250
3. From the following data calculate Gross Domestic Product at Market Price.
• Gross national product at factor cost 6,150
• Net exports (50)
• Compensation of employees 3,000
• Rent 800
• Interest 900
• Undistributed Profit 1,300
• Net indirect taxes 300
• Net domestic capital formation 800
• Gross fixed capital formation 850
• Change in stock 50
• Dividend 300
• Factor income to abroad 80
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)
= 3,000 + 800 + 900 + 1,300 + 0 + 300 + (850 + 50 - 800)
= 3,000 + 800 + 900 + 1,300 + 0 + 300 + 100
= 6,400
Note: Consumption of fixed capital (depreciation) = Gross fixed capital formation+ Change
in stock – Net domestic capital formation
4. From the following data, estimate the net value added at factor cost and show that
it is equal
• Sales ` 11000
• Change in stock ` 680
• Intermediate Consumption ` 2370
• Depreciation ` 450
• Wages and salaries ` 5400
• Interest ` 250
• Rent ` 750
• Profit ` 2150
• Net indirect Taxes ` 310
• Students scholarship ` 75
Solution:
Net Value added at Factor Cost
= Sales + increase in stock - Intermediate Consumption - Depreciation - Net Indirect Taxes
= 11000 + 680 - 2370 - 450 - 310
= ` 8550
Sum of Factor Incomes = Wages & salaries + Interest + Rent + Profit
= 5400 + 250 + 750 + 2150
= ` 8550
Hence showed, Net Value added at Factor Cost = Sum of Factor Incomes = ` 8550
5. From the following data calculate GNP at factor cost by Income Method &
Expenditure Method
Items (` In Crore)
Net Domestic capital formation 500
Compensation of employees 1850
Consumption of fixed capital (Depreciation) 100
Govt. Final consumption Expenditure 1100
Private Final consumption Expenditure 2600
Rent 400
Dividend 200
Interest 500
Net Exports (100)
Undistributed Profits 900
Net Factor Income From Abroad = (income from abroad - (50)
income to abroad)
Net Indirect Taxes = (indirect Tax - Subsidy) 250
Solution:
Income Method
GNP at FC = Compensation of employees + Rent + Interest + Undistributed Profits +
Dividend + Net Factor Income from Abroad + Consumption of fixed capital
= 1850 + 400 + 500 + 900 + 200) + (-) 50 + 100
= ` 3900 Crore
Note:
• GNPFC = NNPFC + Consumption of fixed capital
• NNPFC = Compensation of employees + Rent + Interest + Undistributed Profits +
Dividend + Net Factor Income from Abroad
• Compensation of employees is income from work which includes wages and salaries
in kind and cash, and contribution to social securities
Expenditure Method
GNPFC = GNPMP - Net Indirect Taxes
Private Final consumption Expenditure + (Net Domestic capital formation +
consumption of fixed capital) + Govt. Final consumption Expenditure + Net Exports
+ Net Factor Income from Abroad - Net Indirect Taxes
= 1100 +2600 + (500 +100) + (-) 100 + (-) 50 - 250
= ` 3900 Crore
Note:
• GNPMP = Private Final consumption Expenditure + Gross Domestic capital formation +
Govt. Final consumption Expenditure + Net Export + Net Factor Income from Abroad
o Gross Domestic capital formation = Net Domestic capital formation +
Consumption of fixed capital)
o Export - Import = Net Export
o Net Factor Income from Abroad = Factor Income from Abroad - Factor Income
Paid to Abroad
• GNPFC = GNPMP - Indirect tax + Subsidy
= GNPMP - (Indirect tax - subsidy)
= GNPMP - Net Indirect tax
6. From the following data calculate (a) Gross Domestic Product at Factor Cost and (b)
Gross Domestic Product at Market price.
Items ` In Crore
Gross national product at factor cost 6,1500
Net exports (50)
Rent 800
Interest 900
Profit 1,300
Net indirect taxes 300
Net domestic capital formation 800
Gross domestic capital formation 900
Factor income to abroad 80
Solution:
GDP at factor cost = NDP at factor cost + Depreciation
= Compensation of employees + Rent + Interest+ Profit + Mixed income
+ (Gross domestic capital formation - Net domestic capital formation)
= 3,000 + 800 + 900 + 1,300 + (900 - 800)
= ` 6100 Crores
Gross Domestic Product at Market Price = GDP at factor cost + Net Indirect taxes
= 6100 + 300
= ` 6,400 crore
7. From the following data calculate (a) National Income and (b) Personal Disposable
Income
(Fig in Crores)
• Profit 500
• Rent 200
• Private income 2000
• Mixed income of self-employed 800
• Compensation of employee 1000
• Consumption of fixed capital 100
• Net factor income from abroad (50)
• Net retained earnings of private employees’ 150
• Interest 250
• Net exports 200
• Co-operation 100
• Net indirect tax 160
• Direct taxes paid by houses hold’s 120
• Employer’s contribution to social security scheme 60
Solution:
NNP FC (N. I) = Compensation of employer’s + Interest + Mixed income of self-employed
+ Profit + Rent
= 1000 + 250 + 800 + 500 + 200
= 2750 Cr
NNP FC = NDPFC + Net factor income from abroad
= 2750 + (50)
= 2700 Cr
Personal Disposable Income = Private Income - Net retained earnings of private employees’
- Co-operation - Direct taxes paid by houses hold’s
= 2000 - 150 - 100 - 120
= 1630 Cr
8. Calculate Value Added at factor cost from the following:

(Fig. in Crores)
• Purchase of raw materials 30
• Depreciation 12
• Sales 200
• Excise tax 20
• Opening stock 15
• Intermediate consumption 48
• Closing stock 10
Solution:
Value of output = Sales + ∆ in stock
= 200 + (10 - 15)
= 200 - 5
= 195 Cr
Value added at MP = Value of output - Intermediate consumption
= 195 - 48
= 147 Cr
V.A at FC = V.A at MP - Net indirect tax
= 147 - 20
= 127 Cr
9. Calculate (a) Net National Product at MP and (b) Gross National Disposable Income
Items ` In Crore
Private final Consumption expenditure 200
Change in stocks (15)
Net current transfers from abroad (10)
Govt. final consumption expenditure 50
Consumption of fixed capital 15
Net domestic capital formation 30
Net factor income from abroad 5
Net imports 10
Solution:
NDPMP = Private final Consumption expenditure + Govt. final consumption expenditure +
Net domestic capital formation + Net current transfers from abroad
= 200 + 50 + 30 + (10)
= 270 Cr
NNPMP = NDPMP + NFIFA
= 270 + 5
= 275
GNDI = NNP PC + NFIFA + Net indirect taxes + Net current transfers from abroad
Depreciation (comp of fixed capital) NNPMP - net in tax
GNDI = 275 + 20 + 5 + (-10) + 15 - 20
= 285 Cr
10. Calculate Gross Domestic Product at Market Price by (a) Production Method and (b)
Income Method:
Items ` In Crore
Intermediate consumption by
• Primary sector 500
• Secondary sector 400
• Tertiary sector 400
Value of output by
• Primary sector 1000
• Secondary sector 900
• Tertiary sector 700
Rent 10
Mixed income 550

Operating surplus 300
Net factor income from abroad (20)
Interest 5
Solution:
GDPMP by production method = Value of output by all sector - Intermediate consumption
by all sector
= (1000 + 900 + 700) - (500 + 400 + 400)
= 2600 - 1300
= 1300 Cr
Value added at MP (GDPMP) is 1300 crore.
GDPMP by Income method
NDPFC = Compensation of employees + Operating Surplus + Mixed Income
= 400 + 300 +550
= 1250 Cr
GDPMP = NDPFC + Consumption of fixed capital + Net Indirect taxes
= 1250 + 40 + 10
= 1300 Cr
11. Calculate Net National Disposable Income from the following data.
Items (` In Crore)
Gross domestic product at MP 1000
Net factor income from abroad (-20)
Net current transfers from abroad 50
Solution:
NNDI = GDPMP - Consumption of fixed capital + Net FIFA + Net current transfer from abroad
= 1000 - 100 + (-20) + 50
= 880 + 50
= 930 Cr
12. Calculate Gross National Disposable Income from the following.
Items (` In Crore)
National Income 2000
Net current transfers from rest of the world 200
Net factor income from abroad (-50)
Solution:
GNDI = National Income + Net current transfers from rest of the world + Consumption of
fixed capital Net indirect taxes
= 2000 + 200 + 100 + 25
= 2325 Cr
13. Calculate National Income and Gross National Disposable Income from the Following
Data.
Net indirect tax 05

Net domestic fixed capital formation 100
Net exports (20)
Govt final consumption expenditure 200
Net current transfer from abroad 15
Private final consumption expenditure 600
Change in stock 10
Net factor from abroad 05
Gross domestic fixed capital formation 125
Solution:
NNPFC (N.I) = Gov. Final consumption expenditure + Private final consumption expenditure
+ Net domestic fixed capital formation + Change in Stock + Net Export
= 200 + 600 + 100 + 10 + (-20)
= 910 - 20
= 890
NNPFC = NDPFC + Net factor income from abroad - Net indirect tax
= 890 + 5 - 5
= 890
Depreciation = Gross domestic fixed capital formation - Net domestic fixed capital
formation
= 125 - 100
= 25 Crores
GNDI = NNPFC + Net Indirect Tax + Net Current transfers from abroad + depreciation
= 890 + 5 + 15 + 25
= 935 Crores
14. Calculate GNP at Factor Cost by Income Method and Expenditure Method.
Sr Items ` In Crore
1. Private final consumption expenditure 1000
2. Net domestic capital formation 200
3. Profit 400
4. Compensation of employers 800
5. Rent 250
6. Gov. Final consumption expenditure 500
7. Consumption of fixed capital 60
8. Interest 150
9. Net current transfer from row (80)
10. Net factor income from abroad (10)
11. Net exports (20)
12. Net indirect taxes 80
Solution: GNPFC by Income method

GNPFC = 4 + 3 + 5 + 8 + 10 + 7
= 800 + 400 + 250 + 150 + (-10) + 60
GNPFC = 1650 Crores
GNPFC by Expenditure Method GNPFC = 1 + 2 + 6 + 10 + 11 - 12 + 7

= 1000 + 200 + 500 + (-10) + (-20) - 80 + 60
= 1700 - 110 + 60
GNPFC = 1650 Crores
15. Calculate Private Income and Personal Disposable Income from the following data:
Sr Items ` In Crore
1. National income 5050
2. Income from property and entrepreneurship to Gov. 500
administrative department
3. Saving of non-department public enterprises 100
4. Corporation tax 80
5. Current transfer from Govt administrative depart 200
6. Net factor income from abroad (-50)
7. Direct Personal tax 150
8. Indirect taxes 220
9. Current transfer from Raw 80
10. Saving of private corporate sector 500
Solution:
Private Income = 1 - 2 - 3 + 5 + 9
= 5050 - 500 - 100 + 200 + 80
= 4730 Crores
Personal Domestic Income = Private Income - 4 - 10 -7
= 4730 - 80 - 500 - 150
= 4000 Crores
16. Calculate Net National Disposable Income and Personal Income from the following
data:
Sr Items ` In Crore
2. Compensation of employers 400
3. Personal taxes 100
4. Operating surplus 200
5. Corporation profit tax 80
6. Mixed income of self-employed 500
7. National debt interest 70
8. Saving of non-departmental enterprises 40
9. Current transfer from Govt 60
10. Income from property and entrepreneurship to Govt 30
administrative Department
11. Net current transfer from RAW 20
12. Net factor income from abroad (50)
Solution:
NDPFC = (2) + (4) + (6)
= 400 + 200 + 500
= 1100 Crores
NNDI = NDPFC + (1) + (11) + (12)
= 1100 + 90 + 20 + (-50)
= 1210 - 50
= 1160 Crores
Private Income = NDPFC - (8) - (10) + (7) + (9) + (11) + (12)

= 1160 - 40 - 30 + 70 + 60 + 20 + (-50)
= 1190 Crores
Personal Income = Private Income – Corporation Profit Tax – Savings of Private Corporate
Sectors
= 1190 - 80 - 20
= 1090 crores
17. From the following data, calculate:

a. Gross national Disposable Income
b. Private Income
c. Personal Disposable Income
Sr. Items ` In Crore
1. Net national product at factor cost 700
3. Subsidies 10
5. Income from property and entrepreneurship
Accruing to government administrative departments 50
6. Current transfers from rest of the world 45
7. Profits 100
8. Direct tax paid by households 50
9. Savings of private corporate sector 60
11. Current transfer from Govt administrative departments 70
12. A factor income abroad 20
13. Factor income to abroad 30

14. Corporation Tax 35
Solution:
GNDI = Net national product at factor cost + Indirect taxes – Subsidies + Current transfers
from rest of the world + Consumption of fixed capital
= 700 + 60 - 10 + 45 + 40
= 805 - 10 + 40
= 835 Crores
Private Income = Net national product at factor cost - Income from property and
entrepreneurship - Saving of non - departmental enterprises + Current
transfers from rest of the world + Current transfer from Govt
administrative departments
= 700 - 50 - 25 + 45 + 70
= 740 Crores
PDI = Private Income - Corporation Tax - Savings of private corporate sector - Direct tax
paid by households
= 740 - 35 - 60 - 50
= 595 Crores
18. Calculate Net National Disposable Income from the Following Data:
Items (` In Crore)
Gross national product at factor cost 800
Net current transfer from rest of the world 50
Net factor income from abroad (10)
Solution:
Net National Disposable Income = Gross national product at factor cost + Net current
Transfer from rest of the world + Net indirect taxes -
Consumption of fixed capital
= 800 + 50 + 70 - 60
= 860 Crores
19. Calculate Gross National Disposable Income from the Following Data:
(Fig. in Crores)
Net Domestic Product at factor cost 3000
Indirect Tax 300
Net current transfer from abroad 250
Current transfer from govt. 100
Net factor income to abroad (150)
Subsidies 100
Solution:
GNPMP = NDPFC + Depreciation + NIT + NFIA
= 3000 + 200 + (300 - 100) + (-150)
= 3000 + 400 - 150
= 3250
GNDI = GNPMP + Net Current transfer from abroad
= 3250 +250
= 3500
20. Calculate from the Following Data:

a) Private Income
b) Personal Income
c) Personal Disposable Income
Sr Items ` In Crore
1. Factor income from NDP accruing to private sector 300
2. Income from entrepreneurship and property 0
3. Accruing to govt administrative departmental 70
4. Savings of non-departmental enterprises 60
5. Factor income from abroad 20
7. Current transfer from rest of the world 15
8. Corporation taxes 25
9. Factor income to abroad 30
10. Current transfer from Govt governmental admin depart 40
11. Direct taxes paid by house hold 20
12. National Dept. interest (05)
Solution:
Private Income = Factor income from NDP accruing to private sector + Factor income from
abroad + Current transfer from rest of the world - Factor income to
abroad + Current transfer from Govt governmental admin depart +
National Dept. interest
= 300 + 20 + 15 -30 + 40 + (-05)
= 340 Crores
Personal Income = Private income – Corporation taxes – Saving of private corporate sector
= 340 - 25 - 80
= 235 Crores
Personal Domestic Income = Personal Income - Direct taxes paid by house hold
= 235 - 20
= 215 crores
21. Find out National Disposable Income from the following data:
Items (` In Crore)
Current transfers from government administrated departments 215
Saving of non-departmental enterprises 7
Net national product at factor cost 325
Net factor income from abroad 12
Net current transfers from rest of the world 12
Indirect taxes 35
Subsidies 10
Solution:
National Disposable Income = Net national product at factor cost + Net current transfers
from rest of the world + Net indirect taxes (Indirect tax -
Subsidies)
= 325 + 12 + (35 - 10)
= 325 + 12 + 25
= 362 Crore
22. From the following data calculate National Income:

Items (` In Crore)
Private income 1,200
National debt interest 40
Current transfers from the government administrative departments 40
Other current transfers from rest of the world 12
Income from property and entrepreneurship accruing to 16
government departments
Savings of government departmental enterprises 8
Solution:
National Income = Private income – National debt interest – Current transfers from the
government administrative departments – Other current transfers
from rest of the world + Income from property and entrepreneurship
accruing to government departments + Savings of government
departmental enterprises
= 1,200 – 40 – 40 – 12 + 16 + 8
= 1,132 Crore
23. From the following data estimate (a) Net Indirect Taxes, and (b) Net Domestic
Product at Factor Cost:
Items (` In Crore)
Net national product at market price 1,400
Net factor income from abroad (-)20
Gross national product at factor cost 1,300
National debt interest 18
Solution:
Net Indirect Taxes = Net national product at market price – Net national product at factor
cost (Gross national product at factor cost – Consumption of fixed
capital)
= 1,400 crore – (1,300 crore – 100 Crore)
= 1,400 crore – 1,300 crore + 100 Crore
= 200 Crore
Net Domestic Product at Factor Cost = Gross national product at factor cost – Consumption
of fixed capital – Net factor income from abroad
= 1,300 crore – 100 crore – (-)20 Crore
= 1,300 Crore – 100 Crore + 20 Crore
= 1,220 Crore
24. Calculate from the following data

a) Private Income,
b) Personal Disposable Income,
c) Net National Disposable Income
Sr Items ` In Crore
1. National income 3,000
2. Savings of private corporate sector 30
3. Corporation tax 80
4. Current transfers from government administrative departments 60
5. Income from property and entrepreneurship accruing to
government administrative departments 150
6. Current transfers from rest of the world 50
7. Savings of non-departmental governments enterprises 40

9. Direct taxes paid by households 100
10. Net factor income from abroad (–)10
Solution:
Private Income = National income + Current transfers from government administrative
departments + Current transfers from rest of the world – Income from
property and entrepreneurship accruing to government administrative
departments – Saving of non-departmental governments enterprises
= 3,000 Crore + 60 Crore + 50 Crore – 150 Crore – 40 Crore
= 2,920 Crore
Personal Disposable Income = Private income – Savings of private corporate sector -
Corporation tax – Direct taxes paid by households
= 2,920 Crore – 30 Crore – 80 Crore – 100 Crore
= 2,710 Crore
Net National Disposable Income = National income + Net indirect taxes + Current transfers
from the rest of the world
= 3,000 Crore + 250 Crore + 50 Crore
= 3,300 Crore
25. From the following about firm ‘Y’, calculate Net Value Added at Market Price by it:
Items (` In Crore)
Sales 300
Depreciation 20
Purchase of intermediate products 150
Change in stock (10)
Solution:
Net Value Added at Market Price by Firm Y
= Sales + Change in stock – Purchase of intermediate products – Depreciation
= 300 + (-) 10 - 150 - 20
= 120 Cr
26. Calculate GDPMP and NDPMP with the help of expenditure method from the data give
below:
Sr Items ` In Crore
1. Personal disposable income 8,600
2. Personal savings 1,500
3. Fixed capital formation 3,000
4. Net exports (–)300
5. Net factor income from abroad (–)500
7. Government final consumption expenditure 2,200
8. Change in stock 800
Solution:
GDPMP = Personal disposable income – Personal savings + Net exports + Fixed capital
formation + Change in stock + Government final consumption expenditure
= 8,600 Crore - 1,500 Crore + (-) 300 Crore + 3,000 Crore + 800 Crore + 2,200 Crore
= 12,800 Crore
NDPMP = GDPMP - Consumption of fixed capital
= 12,800 Crore - 450 Crore
= 12,350 Crore
27. Find out Factor Income from Net Domestic Product accruing to the Private Sector
from the following data:
Sr Items ` In Crore
1. Operating Surplus 30
2. Income from property and entrepreneurship accruing to 5
government administrative departments
4. Compensation of employees 100
5. Mixed income of the self-employed 180
Solution:
Factor Income from Net Domestic Product accruing to Private Sector
= Compensation of employees + operating surplus + mixed income of the self-employed
- Income from property and entrepreneurship accruing to government administrative
Departments - Saving of non-departmental enterprises
= 100 Crore + 30 Crore + 180 Crore – 5 Crore – 5 Crore
= 300 Crore
28. From the following data relating to a firm,

(a) Estimate the Net Value Added at Market Price
(b) Show that Net Value Added at Factor Cost is equal to the sum of factor incomes.
Sr Items ` In Crore
1. Salaries and wages 120
2. Interest payments 90
3. Dividends 30
4. Undistributed profits 20
5. Rent payments 15
6. Increase in stocks 40
7. Imports of raw material 20
9. Depreciation of fixed capital 15
10. Domestic sales 360
11. Exports 40
12. Domestic purchase of raw materials and other inputs 120
Solution:
a) Net Value Added at Market Price
= (Domestic sales + Exports + Increase in stocks) – (Domestic purchase of raw
materials and other inputs + Imports of raw material) – Depreciation of fixed
capital
= (360 + 40 + 40) - (120 + 20) - 15
= 285
b)
(i) Net Value Added at Factor Cost
= Net value added at market price – Indirect taxes
= 285 –10
= 275
(ii) Sum of Factor Incomes
= Salaries and Wages + Interest Payments + Dividends + Undistributed Profits +
Rent Payments
= 120 + 90 + 30 + 20 + 15
= 275

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CA Inter Economics CA Mayank Kothari

2. Calculate net value added at market price of a firm:

8. Calculate Value Added at factor cost from the following:

Mixed income 550

Net indirect tax 05

Solution: GNPFC by Income method

GNPFC by Expenditure Method GNPFC = 1 + 2 + 6 + 10 + 11 - 12 + 7

Private Income = NDPFC - (8) - (10) + (7) + (9) + (11) + (12)

17. From the following data, calculate:

13. Factor income to abroad 30

20. Calculate from the Following Data:

22. From the following data calculate National Income:

24. Calculate from the following data

7. Savings of non-departmental governments enterprises 40

28. From the following data relating to a firm,

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