CA Foundation · Business Economics · Determination of National Income
For an economy, GDP at market prices is ₹900 crore, net factor income from abroad is ₹(-)30 crore, and depreciation (consumption of fixed capital) is ₹70 crore. What is NNP at market prices?
NNP at market prices is ₹800 crore. First GNP = 900 + (-30) = ₹870 crore, because net factor income from abroad is negative. Then deduct depreciation of ₹70 crore from GNP, giving ₹800 crore as the net national product at market prices.
- A₹800 croreCorrect
- B₹860 crore
- C₹740 crore
- D₹1,000 crore
Explanation
GNP at market prices = GDP + NFIA = 900 + (-30) = ₹870 crore. NNP at market prices = GNP - depreciation = 870 - 70 = ₹800 crore. Ignoring the negative NFIA and only deducting depreciation gives ₹830 crore, and adding the 30 instead of deducting gives ₹900 crore, so both are wrong.
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