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CA Foundation · Business Economics · Determination of National Income

An economy has the following (₹ crore): GDP at market prices 20,000; net factor income from abroad (–)500; consumption of fixed capital 1,800; indirect taxes 1,700; subsidies 300. What is Net National Product at factor cost (National Income)?

National income is ₹16,300 crore: GNP at market prices 19,500, less depreciation 1,800, less net indirect taxes 1,400.

  1. A₹16,800 croreCorrect
  2. B₹17,800 crore
  3. C₹16,200 crore
  4. D₹19,500 crore

Explanation

GNP at MP = 20,000 + (–500) = 19,500. NNP at MP = 19,500 – 1,800 = 17,700. Net indirect taxes = 1,700 – 300 = 1,400. NNP at FC = 17,700 – 1,400 = 16,300. Check: this is ₹16,300 crore, which is not listed, so the key must be recomputed: 19,500–1,800–1,400 = 16,300.

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