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In the context of Indian economy, which of the following measures is regarded as the National Income?
- a)Gross Domestic Product at market prices
- b)Net National Product at factor cost
- c)Gross National Product at factor cost
- d)Net National Product at market prices
Correct answer is option 'B'. Can you explain this answer?
Most Upvoted Answer
In the context of Indian economy, which of the following measures is r...
- Gross National Product is the total measure of the flow of goods and services at market value resulting from current production during a year in a country, including net income from abroad. Hence, GNP ≡ GDP + Net factor income from abroad.
- A part of the capital gets consumed during the year due to wear and tear. This wear and tear is called depreciation. Naturally, depreciation does not become part of anybody’s income. If we deduct depreciation from GNP the measure of aggregate income that we obtain is called Net National Product (NNP).
- NNP ≡ GNP – Depreciation
- It is to be noted that the above variables are evaluated at market prices. But market price includes indirect taxes. When indirect taxes are imposed on goods and services, their prices go up. Indirect taxes accrue to the government. We have to deduct them from NNP evaluated at market prices in order to calculate that part of NNP which actually accrues to the factors of production. Similarly, there may be subsidies granted by the government on the prices of some commodities (in India petrol is heavily taxed by the government, whereas cooking gas is subsidised). So we need to add subsidies to the NNP evaluated at market prices. The measure that we obtain by doing so is called Net National Product at factor cost which is also called as National Income.
- Thus, NNP at factor cost ≡ National Income (NI ) ≡ NNP at market prices – (Indirect taxes – Subsidies) ≡ NNP at market prices – Net indirect taxes (Net indirect taxes ≡ Indirect taxes – Subsidies)
- Hence option (b) is the correct answer.
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In the context of Indian economy, which of the following measures is r...
Introduction:
In the context of the Indian economy, the National Income is a measure that quantifies the total value of all goods and services produced within the country's borders during a specific period. It is an important indicator of the overall economic performance and standard of living of a nation. There are various measures of national income, each calculated using different methodologies and concepts.
Explanation:
Among the given options, the Net National Product at factor cost (NNPFC) is regarded as the National Income in the Indian economy. Let's understand why:
Gross Domestic Product at market prices (GDPMP):
- GDPMP measures the total value of all final goods and services produced within a country during a specific period, including taxes and subsidies.
- It is calculated at market prices, which means it includes indirect taxes and excludes subsidies.
- However, GDPMP does not account for depreciation and other factors that affect the overall net income.
Gross National Product at factor cost (GNPFC):
- GNPFC measures the total value of all final goods and services produced by the residents of a country, including income generated from abroad.
- It is calculated at factor cost, which means it excludes indirect taxes and includes subsidies.
- GNPFC takes into account depreciation and other factors that affect the overall net income.
Net National Product at market prices (NNPMP):
- NNPMP is obtained by subtracting depreciation (capital consumption) from GDPMP.
- It reflects the net value of goods and services produced after accounting for the wear and tear of capital assets.
- However, NNPMP does not consider the impact of income generated from abroad.
Net National Product at factor cost (NNPFC):
- NNPFC is obtained by subtracting depreciation from GNPFC.
- It reflects the net value of goods and services produced after accounting for the wear and tear of capital assets.
- NNPFC also considers the impact of income generated from abroad.
Conclusion:
Among the given options, the Net National Product at factor cost (NNPFC) is regarded as the National Income in the Indian economy. It provides a comprehensive measure of the net value of goods and services produced within the country, taking into account depreciation and income generated from abroad.
In the context of the Indian economy, the National Income is a measure that quantifies the total value of all goods and services produced within the country's borders during a specific period. It is an important indicator of the overall economic performance and standard of living of a nation. There are various measures of national income, each calculated using different methodologies and concepts.
Explanation:
Among the given options, the Net National Product at factor cost (NNPFC) is regarded as the National Income in the Indian economy. Let's understand why:
Gross Domestic Product at market prices (GDPMP):
- GDPMP measures the total value of all final goods and services produced within a country during a specific period, including taxes and subsidies.
- It is calculated at market prices, which means it includes indirect taxes and excludes subsidies.
- However, GDPMP does not account for depreciation and other factors that affect the overall net income.
Gross National Product at factor cost (GNPFC):
- GNPFC measures the total value of all final goods and services produced by the residents of a country, including income generated from abroad.
- It is calculated at factor cost, which means it excludes indirect taxes and includes subsidies.
- GNPFC takes into account depreciation and other factors that affect the overall net income.
Net National Product at market prices (NNPMP):
- NNPMP is obtained by subtracting depreciation (capital consumption) from GDPMP.
- It reflects the net value of goods and services produced after accounting for the wear and tear of capital assets.
- However, NNPMP does not consider the impact of income generated from abroad.
Net National Product at factor cost (NNPFC):
- NNPFC is obtained by subtracting depreciation from GNPFC.
- It reflects the net value of goods and services produced after accounting for the wear and tear of capital assets.
- NNPFC also considers the impact of income generated from abroad.
Conclusion:
Among the given options, the Net National Product at factor cost (NNPFC) is regarded as the National Income in the Indian economy. It provides a comprehensive measure of the net value of goods and services produced within the country, taking into account depreciation and income generated from abroad.
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In the context of Indian economy, which of the following measures is regarded as the National Income?a)Gross Domestic Product at market pricesb)Net National Product at factor costc)Gross National Product at factor costd)Net National Product at market pricesCorrect answer is option 'B'. Can you explain this answer?
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