Thus in order to calculate India’s national output from the expenditure side, we have to add in all expenditures by foreigners on Indian goods (exports).
Usually five major classes of income are included in national income. We may now discuss in detail how national output or income is measured by using each of the three methods (approaches).
case we can readily grasp the national income concepts for a complex economy. 10, profits Rs. 120.2. In a modern economy total production is divided into three main categories, viz. 2176.5 – (Rs. So in our discussion of national income we confine ourselves to current expenditures. stream Now our final question: What conclusion can we draw about the adequacy of a country’s national accounting system as a measure of economic welfare? National income figures are used for various purposes. In other words, net investment is gross investment minus depreciation.
The statistics published annually in India in the White Paper on National Income by C.S.O.
stream Any discrepancy among the three measures is largely due to statistical error (also known as rounding off error). Such comparisons are useful for various purposes.
In macroeconomics we use a broader term, viz., the household.
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2 2.1 Robinson Crusoe's National Income In Daniel Defoe's classic adventure novel, Robinson Crusoe is shipwrecked alone on a tropical island.
Thus, the government’s total production of goods and services is taken to be equal to the total of the government’s current expenditure.
In macroeconomics investment is divided into three parts: fixed capital (like plant, equipment and machinery), circulating capital (including stocks of finished goods, any raw materials) and residential housing.
In common parlance, national income means the total value of goods and services produced annually in a country. /ProcSet [/PDF /Text /ImageB] Thirdly, we have to deduct all undistributed business profits (or retained earnings of the corporate sector). A shortage of raw materials may lead to sudden disruption of production. 10 + profits of Rs. Suppose wheat sells for Rs. The current expenditure of the government is included in society’s output.
The total amount of goods and services available for Indian purchase is Rs. In India one year means from 1st April to 31st March of the next year. 100; depreciation, Rs. For example, if GDP increases by 25 per cent in money terms, the rise in real terms may be much smaller due to the effect of rising prices. producers and consumers.
Hence we must look at the trends in income distribution when using national income figures to assess living standards.
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(a) Find GNP and NNP for a private sector model from the following data: consumption, Rs. /Width 2097 The money value of all factor incomes is net national income. 1000 – Rs. This is perhaps the major component of a country’s national income.
Now in a four-sector economy the identity of measured national saving and investment, S and In. Firstly, many things contribute to social welfare but are not included in national income.
It is the foundation of all other expenditure measures. 10. If, on the other hand, we have the market value of total output and want to get factor earnings, we must deduct net indirect taxes. Since the last two measures give us estimate of overall labour productivity they are a test of economic efficiency rather than well-being. <<
Similarly, to pay for such imports it has to export certain things which it can produce efficiently (i.e., at low cost).
While the market value of each kg of wheat produce remains at Rs.
The reason is that interest is paid on such debt by imposing tax on others and not from the profit generated from the power plant.
The distinction between personal income and disposable income is that the former does not attempt to estimate personal income-tax (which is basically a direct tax).
Due to subsidies, or negative taxes, factor income exceed the market value of goods sold.
Although economists are not unanimous about what constitutes economic growth, the most common measure is national income.
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