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CHAPTER 4 Notes

The document discusses various methods for calculating national income, including the Value Added Method, Income Method, and Expenditure Method. It outlines how to measure national income through the sum of factor incomes, final consumption expenditures, and gross value added, while also providing examples and numerical practices. Additionally, it highlights the importance of avoiding double counting in the measurement process.

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0% found this document useful (0 votes)
92 views15 pages

CHAPTER 4 Notes

The document discusses various methods for calculating national income, including the Value Added Method, Income Method, and Expenditure Method. It outlines how to measure national income through the sum of factor incomes, final consumption expenditures, and gross value added, while also providing examples and numerical practices. Additionally, it highlights the importance of avoiding double counting in the measurement process.

Uploaded by

d82267129
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
Meruons oF Gitta Natzowa. Tveome We laow Hat Nasi E Onal Greome cis a Canportant uasure uaa To. taeatat ov wath Pants oh ony echo. Povoduction Gives vise Dacome bo Drcome, cuhun people do Expendiwa and ” Expenditvn again Qerrabr Tome » Dus cho this ue metwods of Caluusating. National Prona 2- 4) Vala Added Method > Summ ef ott the CProiuch Meta) AdtiHion by" each - aii LEbEP S214 222777 , BD Drcome Metnod-> Sum of ait tae Paotor cincones ca earned Pin any conor 5) Expensitos Metiod > Sam of alt x expat tin On croup» TETTL Lets Diseum each dim dafall .. 4) Vawe Avpeo Merwod 7 * Meosuus National Dreoma tin der 4 Jods. iu 7 ¢ a v tt Addition by each fcdcing unlit Volar adali tion eae tacdl ery dnd to added to get National Pwode ® Otley name 7 Product Metriod Sy Trduobial onigin method Net output Meiod Volut Addd = Value oi Prtermadiats Oukput Consumplion OU tet Volar Addition ; QDPap - So we non ie ot obtain Gross Value Addl ap = ou Vatu Co : podaing wll — Diberndiods Comsumption GPP np ae How, Vale of = Solty + A Stock Output (@) Stock = Casing opening a Sal» 40 Household secloy. Sto) Sale Solin do Goverment sector | Sty, cin Domuatic GB EL Mecaty Somitinus, Solu = ela x Quaubiy ery PIULUU CULL EL Ube ebopeoveeee=== Prteymadian > Purdhan eb tio matinials Covsum pH On Pacom domestic Pires Trurnadia 9 Faports Puvchares Glen den iF us considuud ay TO Ethers woo value of, won Pactor dnpals Also Jiven somelinny as lL CL, Purchan of saws matrwals cis : Single-vse Baoducer ges So, By Valuz added Metnod we get GDPas me New, AHO n 7 i Nat -N.T Naeoret (NWiFae) = GDR, Depmcaion +NBCA-N-ET Y Rewaudions of Volt Added Meduod 0 Dilermediate Goods value de nok Ganclacled + Second hand gow valur fn nok dake, - + Sef Comumplion ef Goody da tupdlucle - Ex: Covsumption of *ebheat by Farmer a Producing chia “cull! be Ladle + + Sug-Coreumplion of Sarviad i» wot dasdludd On ty madut value do wiry hand bo Find. Dmputid “Fant of owner occupied howe da dndadad . Example of, Value Addition 9 eae) t ey Vole 0co-0 2500-000 aos es Addin, =F lo00 ee 2 500 Totel Valun Sdditi® = 1000 + 1500 + S00 VA = 3000 Ut ds eqyal do value C 4 Final! good) _ aly aie ne ob both Tater ag Oe ge is ee eae ae in ee . valus sf) goods Pecobten aud gevuids Uo tounted maxt than once For Ex tye deer volun of Final good = #3009 Cin ebevs) and abo dh te oe 00 oul F000 ub will cue Doublr Courting. Sg oO Oe Min mt) i » Mong, Gad ut te ted. wi) PUTT ILbbLbLbb bitters I Sort Numerical Practice 9, Vee Addl Mettod ramp 4 Sees Net Value Added atyp Pudm Poll owing. a b ‘3 G> Saby e co! Vi) Drtooneddiods wee) (3) Claseg state 25 | owrene ° (ti Opening Stock 15 Tras teks 1S UY) Sidi tore, — 10 vit) Ramp 5 (v> Depreciation 20 Ik) Exports lo Solution By Value Addad Metwod Grip Vale hk. Consumption QB up = Salo + astock - Gy Gow. = 9o + (25-15) ~ GVA up Cc) ele — fatan 8-05] Now, ~———_ mp = AVA np — depredation = 60 ~ 20 = 2 Yo cows jal. gwliy Sales , buause Beporky ance 8 LTC nok Pavchan of, yaw malerials Exomplr-2, Coewloe NVA at pe crx ay Portiulors (EF) ttm = |Solution = ‘ . GVA pup Salis + OStock = TC Durabl. goods GVA up (Octe TPe Sb doom * +998°00 = (Re,c00% 168) +200 000 ~Seoon0 fae = 20,00,000-+ 2.60000 — $00000 i> Single Use 1 €5 00000 2 200,000 eee Tees 5: P= FI 200 000 Giiy Units Sold 20,000 (> Pata of each = 100 GvAw NV Age = QVAyp— Dep* Al-z-7 5 !%09000 ~ Loqooe ~fieepoo ~ 0) 190,000 ~ Logeno — 102.000 (VD Unold eubpat 00,000 INVAe= 2 ie) oom " Wo Rar On Production & 109.000 Dep= Vala h FR opaas Ost ihe | » Tvcome Metso © This metal muasiweey National Dreome ay Sum of Factor dncomes eauud bg a He Normal Kuridents of a coum oa © We bane cmdustand tat Paclor otomts ane Hee Payment made fo Hrs howelold Sectoy for Huiy productive seruieuy seal dure Production phan. « 7 ices Factor Payment Mernop ® oO “> Distributive Shou Meteod Tyres Or Factor Incomes +) Compenation of Enpleyas (CoE) : Th tis payment made legen bo Cnrplowees Sie air ial eee * COE uncludss D> Wages ond Salaries tin cast Cuvolucls al Hi mous bem Pits ikea 1 Satanjen, wages, boul, abe...) D> Payment oi Kind oe ely mony benebity Hike ent Rue oust, Bu wdaical Rell, ete) > Employes’ Gntribudion 6 Sra Seusity. CEx, Contribution tp proutdut Purd by- D Ketvument Ruston 2) Operarzne Surewus * Troluds dincome Paom property. and Ont Premera ip ¢ TH umeudss 25 > Kent & Royally. Cimpubd vu of, summer ocuspied cis ote tae? da en) > Diewt Por Umnding. funds utp busines - C Dow uot cinctude 2Tnt am bg Govt on public dubts 9Seh pa Conrumery on loam sales) umphion puny ose « > Prof (Rusaxd Por dra serwiens of the enbupsunenr) BE 2 rporals Rave ~ toed Br —> Diuidund /Pishrituled SPE NS Rebainad Banuiugs +87 Undisbeibulad pao 3) Maxep Dvcome ° i ty tat dintorme Hrsir own labour, on © Pt abo includes incomu Unintor, Soler pins 4 inept 0 Sepanate Estmaction 7090, casferust, proktt and vumt cD 17. Ponta thabs col peed irae 2) Operarzne Surewos + Drelucts vneome Puom properly. aud Orbe prrtirenra lip © Dt dreluder r5 > Kent & Fo wad er cmp df Core ath cone gourd D> Drowt For ending. finds uo buns C Dew rok include 7Dnt paid by Govt On public debts 7S pala Conpumers on loa sen) lumplion punp ore - > Roft (Rusard fir tea seruins of the enbupstueuy ) Be Corporate Paro te wed for —> Dividend (Vishsibuted 3 es POP Ss Retatnad Bantegs Undisbuttoudad soft 3) Mexep Lnucome por 0 Dt i Het intone Sef Employed pewory ange fale Oam labae, jad ald pid © Pt abo includes incon 4 unincorporalid Outer prises © Separate Estimation wager, Cinfeust, profit and vamp cio 1. Ponte dats known ay Mixed Srcome. OTF dy diuctyy given dn Ouakions a So, By Dacoms Metwod We ger, NDP ee = Compensation Opevati Mixed perating De ie . Q er on t+ g Droome (CoB) CE) Now de caludete National Lreome (WNPee) NNPee = NDPoe + Net Pastor cinconme Babin abroad (NEDA) “Rercaubions af Lrcome Method +. © Pranofer incomis au wot included « * Draws canned On sae d= hy cody Prams ses os sale of Second=hawd goer Dacor Porm cNegal adiutties |1 adivitien lhe! Huh} and meee Gains (Iie lotteries) ds wot Enduded ay then dy no yaluc addition Commission eamid on puvchare and sale of Setond-bancl goods So tenduded © Dicom from sale shan [bowdo/ debentures Meruop Soma Numerical Hractia of Luone Example 4 Cateuats Domestic dream and National Resume ® cing dinfoymalion | in crores ‘om 4 @crwes) iS Pane) a Wages 10,000 PD Undists bata 200 > Rent 5,080 HD Social Sacuyi Yoo © Drout ‘ Yoo Conti. by Ereplayen 4 Dividend 3.000 hk) Conporats Base 400 S Mixed Grom Yoo DY New Rector nine 1 000 Solution’. By Grcome Mettrcd NPPat pe = COG 4 Of 4 Mined discon Domuotie = (4 Basra) = (teptes. se) +[ Bens yoosCanorioor ie] + Yoo os es = 1240 + 9000 + Yoo NDP ee = £13,200 exoves National = NDPpe 4 weca Garcon i: CNNPpe) = 19800 4 Jo00 NNPpe = 20,800 cyorey [. Practica Qusstions Puom the book] 3) Expenpetuere Metop © Wis matrod miapunes National Pacome iin Jou G expenditwu on dhe purehan Prnol goed and serufes - + ae : 7 Congumplion © Pinal Bopendituee deludis PeBee © Ms0 Lenowm ap 7 Treome Disposal metrod SS Cone and umpHow 7) FPrvtstment ClamiFication of Pinal Expenditure :- @) Private Final Comumption Experditune > Dreludis evpenditwu on Rnal goods ava Seudiers individual , hoveelolds anol ine — rf private dnotitudiong (2) Government Final Conaumption Gcpuditurs Colucive, ConsumphOn Bependitune by Gout On Defence and Adminishratioar Gruicts and dius and order « ©) Gross Lrwertment expenditure ov : Caress Domuabie Capital Fovmalion °- LH dneluds a) Gross Demutie Fixed (apitet formation Th we Rurtur dividid into Hour Joxiee ! - i) Bustnens Axed Paveotment Gi) Rusidential Onotrurchon Snveadment Howehold Git) Peabtic Pied Srumbntat by dhs gevem rent « | ng b> Tavenlonay Trvestment- aie” change un tock daing. + QStock = Ciotivg. Stocle - Opening Stock 4) Wet Exports (x=) "oho conckag’® Mth expends ond dope "pn at ar fie : Oe tit, D Lepr Ba ey Silane by suri Ranetge pou by usidats oun © Net Exports = Biports og 0, Fy Expenditua Metiod ue ge GDP up = "privat be. \ Canoes Dermustic Pucduct inal + Pinat + Cros 4 Rt OM ee Sores (Bree) Cay | Om) Bfixed + Sy Now, (Affe . Saicd NNPot pe = GD Pap - Depreciahion-+ NFIA-N-71 Nakenel Drom) S LOELLELLUELELEUUUeU YY y ~~ b) Drvenlong Trobe + Th says be change un stock during te yor eae = Closing Stocle - Opening, Sdocke 4 Net Exports (x- m) * Dt iy diPfevence betwen Coparts and cing oe en : ie ee * Export ane” expenditure bg pardran of domatic paodsicl (produced ting genie) Daporh ae expendibone bg vwatdod ms Fooulgn puoduds * Nok Exports = Byoris ~ Tmporbs iS = Ey Expendi tune Metod ut get GDP up = Privat + Gor + Gras 4 Net Gross 5) Cesmom ae Doves, we (Bree). ce) Grey | Grn) Ch Sonny, | Now, NNPat eo Z GD Pap ~ Depreiadion+ META N-ET (National er) Some cmporlank pein about Tnviohment component Gor vermevical quistions of, Gxpendituar metnod , Paveslment Cxpenditirr cia Somadi wy hh tak cuir» Tare Qu poins whic ou sl Sumerbty 2 a) Grass dn game a» Cuor Dai Get ) Gnross Prvesbment 3 Cron Pre + River : pital Prmatio, Bw (o. tock) ) C08 Breobent = Net Domus Pred Capilak + Depreciation + dStock | Brratio n + Noter- Depruciation Gs aho an Gnvestment dit, oud ts a park of GDP ye whi catclialoge by Bopendiios metuod - Buk uf, Oxoss Pave do Given dem idk in alsa? addi bo ib Puseoubions sagan ding. Expenditurs MeHod > a) Only Pinal Bopoudilwu do inscluchd + Trtermediaty ? easton as be Quoidd. b>) Expenditue en Second aud goods da wot talen. > Expenditure SI and bonds fy wot ? Gollnded Tee Il Gpendinne AY Prawofer Payments arr uot darcluded ©) Expendilwt on cum atiount produch On da Ga , lags ee aie ane Nee rate oe Soma Nuovo Eranpn of Bypditins Hedhod Broom Caleulate NDPappe and GMPat mp Fuom dhe s= Mowing. clade :- Particulars ( over) UC) Didioect Dares Ro © ‘vas Pred Cosh 250 did Nep Baetor coma Puon, 15 ®) Govt. Frat COndumpl 6 So dita (oD Comumption ob Fired Capital (id. Net a 3s Wily Subsidies re (Uiiiy Net domutic Capilal Brmatlon 30 Selon By Exponditwu Method . & lo GDRatmp = PRE + Gecet Net | + Depreciation Nef Capital Pormabon, = 250 + So + Fo +254 63/0 GDPasp = = 345 crore, Now, NDPat pe = GDPap — Depudation — ne WO = 845 ~ 25 ~ (20~J0) [2 Sebi) x 845 QF -lo NDPpp = Blo crores GNPup 2 GDPup + NFA GNuPup = 847 +15 = = 360 core C Practice more quistions Prom de Book) —_———

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