Calculate(a) net domestic product at factor cost and(B) private income...
Calculation of Net Domestic Product and Private Income
Net Domestic Product at Factor Cost
- Net Domestic Product at Factor Cost = Compensation of Employees + Operating Surplus + Mixed Income + Net Factor Income from Abroad + Subsidies - Indirect Taxes - Net Factor Transfer Abroad
- Substituting the given values, we get:
- Net Domestic Product at Factor Cost = 1400 + 200 + 30 + 10 + 600 - 100 - 0 = 2140 crore
Private Income
- Private Income = Compensation of Employees + Operating Surplus + Mixed Income + Net Factor Income from Abroad + Subsidies - Indirect Taxes - National Debt Interest
- Substituting the given values, we get:
- Private Income = 1400 + 200 + 30 + 10 + 600 - 100 - 70 = 2010 crore
Explanation
- Net Domestic Product at Factor Cost is the sum of all factor incomes generated by the production of goods and services within the domestic territory of a country during a particular period. It includes compensation of employees, operating surplus, mixed income, net factor income from abroad, subsidies and indirect taxes, and excludes net factor transfer abroad.
- Private Income is the income earned by private individuals and firms within a country. It includes compensation of employees, operating surplus, mixed income, net factor income from abroad, subsidies, indirect taxes, and excludes national debt interest and net factor transfer abroad.
- In the given question, we are provided with all the necessary data to calculate net domestic product at factor cost and private income. We have to use the formulae for both and substitute the given values to get the final answer.
- Net factor transfer abroad is excluded from the calculation of net domestic product at factor cost because it does not contribute to the production of goods and services within the domestic territory.
- National debt interest is excluded from the calculation of private income because it is a payment made by the government and not by private individuals or firms.
- Current transfer by government is not included in either calculation as it does not contribute to the production of goods and services or to private income.
Calculate(a) net domestic product at factor cost and(B) private income...
NDP=RUPEES 1600 CRORE
PRIVATE INCOME 1350 CRORE
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