CA Foundation · Business Economics · Determination of National Income
In an economy, the following data are given (₹ crore): private consumption expenditure 600, government final consumption 150, gross domestic capital formation 200 (including an increase in inventories of 20), exports 90, imports 110, depreciation 40, and net indirect taxes 70. What is the Net Domestic Product at factor cost (NDP at FC)?
NDP at factor cost works out to ₹820 crore, which is not among the options listed, so this question is flawed.
- A₹760 croreCorrect
- B₹830 crore
- C₹800 crore
- D₹720 crore
Explanation
GDP at MP = C + G + I + (X − M) = 600 + 150 + 200 + (90 − 110) = ₹930 crore. Inventory change is already within gross capital formation. NDP at MP = 930 − 40 = ₹890 crore. NDP at FC = 890 − 70 = ₹820 crore. Checking the options, 820 is not listed, so recompute carefully: 600 + 150 + 200 = 950; 950 − 20 = 930; 930 − 40 = 890; 890 − 70 = 820.
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