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CA Foundation · Business Economics · Determination of National Income

In the income method, an economy reports (in ₹ crore): compensation of employees 5,000; operating surplus 3,000; mixed income of self-employed 1,200; consumption of fixed capital 800; net indirect taxes (indirect taxes less subsidies) 600. What is GDP at market prices?

GDP at market prices is ₹10,600 crore. Factor incomes sum to 9,200 (NDP at factor cost); adding consumption of fixed capital of 800 gives GDP at factor cost of 10,000, and adding net indirect taxes of 600 gives market prices.

  1. A₹10,600 croreCorrect
  2. B₹9,800 crore
  3. C₹10,000 crore
  4. D₹11,400 crore

Explanation

NDP at factor cost = 5,000+3,000+1,200 = 9,200. Add consumption of fixed capital: GDP at factor cost = 10,000. Add net indirect taxes of 600: GDP at market prices = ₹10,600 crore. Omitting depreciation gives 9,800, which is wrong.

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