Expenditure Method

Q.

From the following data, calculate Net Value Added at factor cost :

$\begin{array}{ccc}\text{S. No.}& \text{Items}& \text{(Rs. in crores)}\\ \left(i\right)& \text{Sales}& 1,200\\ \left(ii\right)& \text{Decrease in stock}& (-)80\\ \left(iii\right)& \text{Production for self consumption}& 100\\ \left(iv\right)& \text{Single use producer goods}& 300\\ \left(v\right)& \text{Exports}& 150\\ \left(vi\right)& \text{Electricity charges}& 50\\ \left(vii\right)& \text{Excise duty}& 70\\ \left(viii\right)& \text{Subsidy}& 40\end{array}$

Q.

From the following data, calculate " National Income" by (a) income method and (b) expenditure method:

$\begin{array}{cc}& \text{Rs. in crore}\\ \text{(i) Interest}& 150\\ \text{(ii) Rent}& 250\\ \text{(iii) Government final}& 600\\ \text{consumption expenditure}& \\ \text{(iv) Private final}& 1,200\\ \text{consumption expenditure}& \\ \text{(v) Profits}& 640\\ \text{(vi)Compensation of employees}& 1,000\\ \text{(ix) Net profits}& (-)40\\ \text{(x) Consumption of fixed capital}& 50\\ \text{(xi) Net domestic capital formation}& 340\end{array}$

Q.

Calculate National Income and Personal Disposable Income

$\begin{array}{ccc}& & \text{(Rs in Crores)}\\ \text{(i)}& \text{Personal tax}& 80\\ \text{(ii)}& \text{Private final consumption expenditure}& 600\\ \text{(iii)}& \text{Undistributed profits}& 30\\ \text{(iv)}& \text{Private income}& 650\\ \text{(v)}& \text{Government final consumption expenditure}& 100\\ \text{(vi)}& \text{Corporate tax}& 50\\ \text{(vii)}& \text{Net domestic fixed capital formation}& 70\\ \text{(viii)}& \text{Net indirect tax}& 60\\ \text{(ix)}& \text{Depreciation}& 14\\ \text{(x)}& \text{Change in stocks}& (-)10\\ \text{(xi)}& \text{Net imports}& 20\\ \text{(xii)}& \text{Net factor income to abroad}& 10\end{array}$

Q.

Consumption of all goods and services in the economy during the period of an accounting year is known as :

1. Aggregate supply

2. Aggregate consumption

3. None of these

4. Aggregate demand

Q.

(a) From the following data compute net value added at factor cost:

$\begin{array}{cccccccc}\text{Items}& \text{Domestic sales}& \text{Subsidies}& \text{Purchase of raw material}& \text{Exports}& \text{Depreciation}& \text{Import of}& \text{Net}\\ & & & \text{in domestic market}& & & & \text{indirect taxes}\\ \text{In Crores}& 2500& 40& 500& 200& 100& 600& 60\end{array}$

(b) Intermediate goods and corporate tax are included in national income indirectly. How ?

OR

Calculate $GN{P}_{mp}$

(a) By Income Method

(b) Expenditure Method

$\begin{array}{ccc}\left(a\right)& \text{Rent}& 40\\ \left(b\right)& \text{Private Final Consumption Expenditure}& 800\\ \left(c\right)& \text{Net Exports}& 20\\ \left(d\right)& \text{Interest}& 60\\ \left(e\right)& \text{Profit}& 120\\ \left(f\right)& \text{Government Final Consumption Expenditure}& 200\\ \left(g\right)& \text{Net Domestic Capital Formation}& 100\\ \left(h\right)& \text{Compensation of Employees}& 800\\ \left(i\right)& \text{Depreciation}& 20\\ \left(j\right)& \text{Net Indirect Taxes}& 100\\ \left(k\right)& \text{Net Factors Income From Abroad}& (-)20\end{array}$

Q.

Calculate National Income.

$\begin{array}{cc}& \text{(Rs.in crore)}\\ \text{(i) Net current transfer}& 30\\ \text{from rest of the world}& \\ \text{(ii) Private final}& 400\\ \text{consumption expenditure}& \\ \text{(iii) Net domestic capital formation}& 100\\ \text{(iv) Change in stock}& 50\\ \text{(v) Depreciation}& 20\\ \text{(vi) Government final}& 200\\ \text{consumption expenditure}& \\ \text{(vii) Net exports}& 40\end{array}$

Q.

Which of the following is not an element of final consumption expenditure?

1. Household expenditure on food

2. Government final consumption expenditure

3. Household expenditure on education

4. Expenditure on raw material

Q. How does central bank control credit creation by commercial banks through open market operations? Explain.

Q. The net values added (NVA) method of measuring national income is also known as ______.

1. net output method
2. production method
3. industry of origin method
4. all of the above

Q.

From the data below, calculate the GDP at market price. $\begin{array}{cc}\text{Items}& \left(\text{in lakh}\right)\\ \text{Gross Investment}& 90\\ \text{Exports}& 40\\ \text{Imports}& 30\\ \text{Private Consumption Expenditure}& 350\\ \text{Government Purchase of Goods}& 60\\ \text{Government Purchase of Services}& 40\\ \text{Inventory Investment}& 50\end{array}$

1. 660 lakh

2. 700 lakh

3. 600 lakh

4. 750 lakh

Q. Distinguish between:

Output method of measuring national income and Income method of measuring national income.

Q. Why does the consumption curve not start from the origin?

Q. If the price of Orange juice increases, the demand for apple juice will ___________.

1. Increase
2. Decreases
3. Remain the same
4. Become negative

Q. The demand for consumption goods is direct with respect to price.

1. True
2. False

Q. In a country, consumption amount is Rs. 7, 200 crore which is 60 per cent of its total disposable income. What is the amount of disposable income?

1. Rs 43, 200 crore
2. Rs 1, 200 crore
3. Rs 12, 000 crore
4. Rs 4, 320 crore

Q. What is the India's GDP growth forecast for $2018$, as per latest Moody's Investors Service report "Global Macro Outlook: $2018-19$"?

1. $7.5\%$
2. $7.3\%$
3. $7.2\%$
4. $7.4\%$

Q. Explain the concepts of saving function.

Q. State whether the following statements are true or false.
1. Consumption expenditure is the only component of aggregate demand.
2. The difference between a country's exports and imports is termed as net earnings from foreign transactions.
3. Autonomous consumption is income elastic.
4. The equality between aggregate demand and aggregate supply determines the equilibrium level of employment.
5. At breakeven point Consumption (C) is equal to income (Y).

Q. Answer the following questions.
What are the efforts of population on consumption expenditure?

Q.

A) What do you mean by Great Leap Forward ?

B) What is the condition of liberty indicators in India as compared to China and Pakistan?

C) What are the areas where Pakistan has an edge over India?

D) What was the major reason for the low population growth in China?

Q. State whether the following statements are True of False:
Consumption expenditure is the only component of aggregate demand.

1. True
2. False

Q. Marginal rate of substitution indicate _______.

1. rate of exchange of two goods by the consumer
2. none of the above
3. rate of production of two goods
4. rate of marginal cost of two goods

Q. Break-even point is achieved when:

1. Consumption = Saving
2. National Income > Consumption
3. Consumption = Investment
4. National Income = Consumption

Q. The point of intersection between aggregate demand curve and aggregate supply curve is called _________________.

1. aggregate demand
2. market demand
3. effective demand
4. demand

Q. Given the consumer's indifference map and the money income, the equilibrium position of the consumer will be on the indifference curve, which is ____________.

1. highest in the indifference map
2. highest but cut the price line
3. lowest in the indifference map
4. highest but tangent to the price line

Q. As compared to the targeted growth rate of $10$% p.a in industrial production, The actual growth rate was ___ % p.a during the eleventh plan period.

1. $9.4$
2. $6.5$
3. $7.4$
4. $17.5$

Q. Period in which supply cannot be increased is called ___________.

1. market period
2. short run
3. long run
4. none of these

Q.

Net imports refers to:

1. Imports - Exports

2. Exports - Imports

3. Exports + Imports

4. None of the above

Q. Explain the steps taken in derivation of the Consumption Curve from the Saving Curve. Use diagram.

Q. National expenditure includes _______.

1. investment expenditure
2. consumption expenditure
3. government expenditure
4. all of the above