Some Extra Questions (National Income)
1.If the real GDP is ₹ 400 and the Nominal GDP is ₹ 450, calculate the Price Index (base = 100).
Ans:- Price Index = Nominal GDP/Real GDP X 100
Price Index = ₹ 112.5
2.If the Real GDP is ₹ 500 and Price Index (base = 100) is 125, Calculate the Nominal GDP. [All India 2015]
Ans:- Real GDP = ₹ 500, Price Index = 125
Nomical GDP = ?
Nomical GDP = 625
3. If the Nominal GDP is ₹ 600 and Price Index (base = 100) is 120. Calculate the Real GDP.[All India 2015]
Ans:- Nominal GDP = ₹ 600
Price Index = 120
Real GDP = ?
Real GDP= 500
4. If Real GDP is ₹ 200 and Price Index (with base = 100) is 110. Calculate Nominal GDP.[Delhi 2015]
Ans:- 220
5. If the Nominal GDP is ₹ 1200 and the Price Index (with base = 100) is 120, calculate Real GDP.[Delhi 2015]
Ans:- 1000
6. If the Real GDP is ₹ 300 and the Nominal GDP is ₹ 330, calculate Price Index (base = 100).[Delhi 2015]
Ans:- 110
7. If the Nominal Gross Domestic Product = ₹ 4400 and the Price Index (base = 100) = ₹ 110, Calculate the Real Gross Domestic Product.[Foreign 2015]
Ans:- 4000
Numerical Problems with Solutions:
- Calculate private income, personal income, personal disposable income and National disposable income from the following data:
| item | (Rs. in Crores) | |
| (i) | National income | 3000 |
| (ii) | Savings of private corporate sector | 30 |
| (iii) | Corporate tax | 80 |
| (iv) | Current transfer from government | 60 |
| (v) | Income from property and entrepreneurship to government | 150 |
| (vi) | Current transfers from rest of the world | 50 |
| (vii) | Savings of non-departmental government sector | 40 |
| (Viii) | Net indirect taxes | 250 |
| (ix) | Direct taxes paid by household | 100 |
| (x) | Net factor income from abroad | (-) 10 |
Solution: – Private income = (i) – (iv + vii) + (iv + vi)
= 3000 – (150 + 40) + (60 + 50)
= 2920 Crores.
Personal income = 2920 – (ii) – (iii)
= 2920-30-80
= Rs 2810 Crores.
Personal Disposable Income = 2810- (ix)
= 2810-100
= Rs 2710 Crores.
National Disposable Income = (i) + (vi) + (viii)
= 3000 + 50 + 250
=Rs 3300 Crores.
2. Calculate NI by income and expenditure method:
| item | (Rs. in Crores) | |
| (i) | Subsidies | 5 |
| (ii) | Private final consumption expenditure | 100 |
| (iii) | NFIA | (-) 10 |
| (iv) | Indirect Tax | 25 |
| (v) | Rent | 5 |
| (vi) | Government final consumption expenditure | 20 |
| (vii) | Net domestic fixed capital formation | 30 |
| (viii) | Operating surplus | 20 |
| (ix) | Wages | 50 |
| (x) | Net export | (-) 5 |
| (xi) | Addition to stock | (-) 5 |
| (xii) | Social security contribution by employers | 10 |
| (xiii) | Mixed income | 40 |
Solution: – Income method
NI= (ix) + (xii) + (viii) + (xiii) – (iii)
= 50 +10 + 20 + 40 -10
=Rs 110 Crores.
Expenditure method
NI = (ii) + (vi) + (vii) + (xi) + (x) – (iv) + (i) + (iii)
=100 + 20 + 30 + (-) 5 + (-) 5 – 25 + 5 +10
=Rs 110 Crores.
3. Calculate the value added by Firm A and Firm B from the following data: –
| item | (Rs. in Lakhs) | |
| (i) | Purchase by Firm A from the rest of the world | 40 |
| (ii) | Sales by Firm B | 100 |
| (iii) | Purchases by Firm A from Firm B | 60 |
| (iv) | Sales by Firm A | 120 |
| (v) | Exports by Firm A | 40 |
| (vi) | Opening stock of Firm A | 45 |
| (vii) | Closing stock of Firm A | 30 |
| (viii) | Opening stock of Firm B | 40 |
| (ix) | Closing stock of Firm B | 30 |
| (x) | Purchases by Firm B from Firm A | 60 |
Solution: – Value Added by Firm A = (iv) + (vii)–(vi) – (i) – (iii)
= 120 + 30–45 – 40 – 60
= Rs 5 Lakhs.
Value Added by Firm B = (ii) + (ix)–(viii) – (x)
= 100 + 30–40 – 60
= Rs 30 Lakhs.
4. Estimate (i) Personal Income, (ii) Private Income and (iii) Personal Disposable Income with the help of the following data.
| item | (Rs. in Crores) | |
| (i) | National income | 1300 |
| (ii) | Corporate tax | 15 |
| (iii) | Direct personal taxes | 40 |
| (iv) | Savings of private corporate sector | 25 |
| (v) | Income from property and entrepreneurship accruing to Government | |
| Administrative Departments | 35 | |
| (vi) | Current transfer from government administrative departments | 30 |
| (vii) | National Debt Interest | 10 |
| (viii) | Savings of non departmental government enterprises | 5 |
| (ix) | Current transfers from rest of the world | 15 |
Solution: – Private Income = (i) – (v) – (viii) + (vii) + (vi) + (ix)
= 1300 – 35 – 5 +10 + 30 + 15
= Rs. 1315 crores.
Personal Income = Private Income – (ii) – (iv)
= 1315 -15 -25
= Rs 1275 crores.
Personal Disposable Income = Personal Income – (iii)
= 1275 – 40
= Rs 1235 Crores.
5. Estimate (i) Personal Disposable Income, (ii) Private Income and (iii) National Income from the following data:
| item | (Rs. in Crores) | |
| (i) | Personal income | 1225 |
| (ii) | Saving of private corporate sector | 12 |
| (iii) | Corporate tax | 23 |
| (iv) | Current transfer from government administrative departments | 30 |
| (v) | Current transfer from rest of the world | 25 |
| (vi) | Income from property and entrepreneurship accruing to Government | |
| Administrative Departments | 25 | |
| (vii) | Savings of non departmental government enterprises | 20 |
| (viii) | Net indirect tax | 195 |
| (ix) | Direct tax paid by the households | 25 |
Solution: – Personal Disposable Income = Personal income – Direct tax = 1225 – 25 = 1200 Crores Private Income = Personal income + Saving of private corporate sector + Corporate tax = 1225 +12 + 23 = 1260 Crores
National Income = Private Income – (iv) – (v) + (vi) + (vii)
= 1260 – 30 – 25 + 25 + 20
= 1260 Crores
6. Estimate the following with the help of given data:
(i) GDPMP ,
(ii) Net Value Added at factor cost; and (iii) prove that it is equal to the income generated.
| item | (Rs. in Crores) | |
| (i) | Increase in the stock of unsold goods | 1000 |
| (ii) | Sales | 10,000 |
| (iii) | Net indirect tax | 800 |
| (iv) | Purchase of raw materials from other firms | 1650 |
| (v) | Purchase of fuel and power | 850 |
| (vi) | Consumption of fixed capital | 500 |
| (vii) | Rent | 700 |
| (viii) | Wages and salaries | 3500 |
| (ix) | Interest payment | 1000 |
| (x) | Dividend | 1500 |
| (xi) | Corporate gain tax | 300 |
| (xii) | Undistributed profit | 200 |
Solution: – GDP MP = Sales + Increase in the stock – Purchase of raw materials – Purchase of fuel and power.
= 10,000 + 1000 -1650 -850
= 11,000 -2500
= 8500 Crores.
Net Value Added at factor cost = Sales + Increase in the stock – Purchase of raw materials – Purchase of fuel and power – Consumption of fixed capital – Net indirect tax.
= 10,000 + 1000 – 1650 – 850 – 500 – 800
= 11,000 – 3800= 7200 Crores.
Income generated = Rent + Wages and salaries + Interest + Dividend + Corporate gain tax + Undistributed profit.
= 700 + 3500 + 1000 + 1500 + 300 + 200= 7200 Crores.
Hence it is proved that Net Value Added at factor cost = Income Generated
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