UPES

UNIVERSITY OF PETROLEUM AND ENERGY STUDIES ,

DEHRADUN

Academic Year 2023-25

Department: MBA, OPERATIONS

Name of Assignment: Calculate net domestic product at factor cost

by expenditure method and national income by the value-added
method

Full Name: Aniket Kumar Tiwary

Roll No.: Jul-23.2YMBA-OPM10

Subject: Economics Date of Submission: 04-12-2023

Calculate net domestic product at factor cost by expenditure method and
national income by the value-added method by using the following data:

1. Domestic capital formation 250 cr.

2. Net Exports 50cr.
3. Private final consumption expenditure900 cr.
4. Value of output of

1. Primary sector 900

2. Secondary sector 800
3. Tertiary sector 400
4.
5. Value of intermediate consumption by:
1. Primary sector 400
2. Secondary sector 300
3. Tertiary sector 100

1. Consumption of fixed capital 80cr.

2. Indirect taxes 100 cr.
3. Government final consumption expenditure100 cr.
4. Subsides 10 cr.
5. Net factor income from abroad 20cr.

Solution:-

Net Domestic Product at factor cost by expenditure method is calculated as 1030

cr and the national income by the value-added method is 1320 cr.

Explanation:

The Net Domestic Product (NDP) at factor cost is calculated by subtracting

depreciation and indirect taxes, then adding subsidies to Gross Domestic
Product (GDP). In this case, it's calculated as follows:

NDP = GDP - Consumption of fixed capital + subsidies - indirect taxes = Domestic

capital formation + Net Exports + Private final consumption expenditure -
Consumption of fixed capital + subsidies - indirect taxes = 250 cr + 50cr + 900 cr - 80
cr + 10cr - 100cr = 1030cr.

The national income is calculated by adding the value of final goods and services
produced in each sector, subtracting the value of intermediate consumption. It
becomes: National income= (Value of output of primary sector - Value of intermediate
consumption by primary sector) + (Value of output of secondary sector - Value of
intermediate consumption by secondary sector) + (Value of output of tertiary sector -
Value of intermediate consumption by tertiary sector) + Net factor income from
abroad = (900 cr - 400 cr) + (800 cr - 300 cr) + (400 cr - 100 cr) + 20 cr = 1320 cr.