Mention the situations in which following equations will hold true:
(i) Value of Output is equal to Value Added.
(ii) National income at Current Price $=$ National income at Constant Price
(iii) Gross domestic capital formation $=$ Gross domestic fixed capital formation
(iv) Operating Surplus $=$ Rent $+$ Royalty $+$ Profit

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Solution

i) When intermediate consumption is zero.
(ii) When Price in the base year $=$ Price in the current year.
(iii) When change in stock (or inventory investment) is zero.
(iv) When there is no income in the form of Interest.

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Q. Mention the situation in which following equations will hold true:
(i) National Income

=

Domestic Income
(ii)

G D P_{F C} > G D P_{M P}

(iii)

N N P_{F C} < N D P_{F C}

(iv)

G D P_{F C} = G D P_{M P}

(v) Domestic Income is greater than National Income.

Calculate gross domestic product at factor cost and factor income to abroad:

$\begin{matrix} (1) Compensation of employees & 800 (2) Profits & 200 (3) Dividends & 50 (4) GNP at MP & 1400 (5) Rent & 150 (6) Interest & 100 (7) Gross domestic capital formation & 300 (8) Net fixed capital formation & 200 (9) Change in stock & 50 (10) Factor income from abroad & 60 (11) NIT & 120 \end{matrix}$

Which of the following will be included in national income?

(a) Production of services for self-consumption

(b) Vegetables grown in the kitchen garden

(d) Stock of raw material left last year

Q. The rate of capital formation is the ratio between the gross capital formation and gross domestic product at current prices.

Calculate (a) Gross domestic product at market price and (b) Factor income from abroad from the following data:

$\begin{matrix} (Rs in '000 crores) (i) Profits & 500 (ii) Exports & 40 (iii) Compensation of employees & 1, 500 (iv) Gross national product at factor price & 2, 800 (v) Net current transfer from rest of the world & 90 (vi) Rent & 300 (vii) Interest & 400 (viii) Factor income to abroad & 120 (ix) Net indirect taxes & 250 (x) Net domestic capital formation & 650 (xi) Gross fixed capital formation & 700 (xii) Change in stock & 50 \end{matrix}$

Q. Distinguish between Gross Domestic Product at Market Price and National Income.

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i) When intermediate consumption is zero. (ii) When Price in the base year = Price in the current year. (iii) When change in stock (or inventory investment) is zero. (iv) When there is no income in the form of Interest.

i) When intermediate consumption is zero.
(ii) When Price in the base year $=$ Price in the current year.
(iii) When change in stock (or inventory investment) is zero.
(iv) When there is no income in the form of Interest.