Skip to content

CA Foundation · Business Economics · Determination of National Income

An economy has the following data (₹ crore): NDP at factor cost 2,000; net indirect taxes 250; depreciation 180; net factor income from abroad (-)40. What is GNP at market prices?

GNP at market prices is ₹2,390 crore. Add net indirect taxes of 250 to NDP at factor cost of 2,000 to get 2,250, add depreciation of 180 to get GDP of 2,430, then add the negative net factor income of 40 to reach 2,390.

  1. A2,390Correct
  2. B2,470
  3. C2,310
  4. D2,150

Explanation

NDP at market prices = NDP at factor cost + net indirect taxes = 2,000 + 250 = 2,250. GDP at market prices = 2,250 + depreciation 180 = 2,430. GNP at market prices = GDP + NFIA = 2,430 + (-40) = 2,390. Check backwards: 2,390 + 40 - 180 - 250 = 2,000. Adding NFIA instead of deducting gives 2,470, which is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Determination of National Income shows your real accuracy, how long you take and where you lose marks.

Practise Determination of National IncomeFree diagnostic mock

More Determination of National Income questions