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in Economics by (60.8k points)

Calculate National Income by (i) Income Method and (ii) Expenditure Method from the following data :

(Items) (Rs. in crore)
(i) Govt. Final Consumption Expenditure 2,000
(ii) Net Domestic Capital Formation 600
(iii) Consumption of Fixed Capital 70
(iv) Net Exports 60
(v) Net Indirect Taxes 200
(vi) Private Final Consumption Expenditure 4,000
(vii) Net Factor Income to abroad 60
(viii) Compensation of Employees 3,660
(ix) Profits 1,500
(x) Rent 500
(xi) Interest 800
(xii) Dividend 300

1 Answer

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Best answer

National Income : Income Method

NNPFC = Compensation of Employees + profit +

Rent + Interest - Net Factor lncome to Abroad

NI = 3,660 + 1,500 + 800 - 60 + 500

= 6,460 - 60 

NNPFC = Rs. 6,400 crore.

Expenditure method 

NNPFC = Government Final Consumption Expenditure + Net Domestic Capital Formation + Net Exports + Private Final Consumption  Expenditure - Net Indirect Taxis - Net Factor Income to Alroad 

= 2,000 + 600 + 50 + 4,000 - 200 + (-60)

= 2,000 + 600 + 60 + 4,000 - 200 - 60

= [6,660] - [250]

NNPFC or NI

= Rs.  6,400 crore.

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