Question

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

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

Answer 1

(a) National Income by Income Method

= Compensation of emplyees + Interest + Rent + Profits

= (vi) + (i) + (ii) + (v)

= 1,000 + 150 + 250 + 640 = Rs. 2,040 crores

(b) National Income by Expenditure Method

= Private final consumption expenditure + Government final consumption expenditure + Net domestic capital formation + Net exports

= (iv) + (iii) + (xi) + (ix)

= 1,200 + 600 + 340 + (-40)= Rs. 2,100 crores