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Question

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

Rs. in crore(i) Interest150(ii) Rent250(iii) Government final 600 consumption expenditure(iv) Private final1,200consumption expenditure(v) Profits640(vi)Compensation of employees1,000(ix) Net profits()40(x) Consumption of fixed capital50(xi) Net domestic capital formation340


Solution

(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


Economics

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