62 A2 National Income Basic Concepts 24 Mar

Qts 1 What is Market price

Market price refers to the actual transacted price and to the actual taxes such as  GST, Customs Duty etc but if excludes government subsidies.


 Qts 2 What is Factor price
The factor cost means the total cost of all factors of production consumed or used in producing goods or services It includes Government Grants and Subsidies but it excludes GST and other indirect tax.


Qts 3 What is Gross Domestic Product (GDP)

 It is the total money value of all final goods and services produced within the geographical boundaries of the country during a given period of time.


Qts 4 What is GDP at Market Price ( GDP MP )

The total value of all the Goods and Services at market price produced during a year within the geographical boundaries of the country.

Qts 5 What is  GDP at Factor Cost ( GDPFC )

GDP can be calculated at factor cost. This measurement more accurately reveals the income paid to factors of production.

GDPFC =GDPMP    - Indirect Taxes + Subsidies
               

Qts 6 What is Nominal GDP and Real GDP

Nominal GDP is evaluated at current market prices. Therefore, nominal GDP will include all of the changes in market prices that have occurred during the current year due to the inflation or deflation.

Real GDP is generally measured by using base year prices of goods and services. It reflects the increase in quantity of goods and services by adjusting for any increase in prices.

Qts 7 What is Gross National Product (GNP)

GNP refers to the money value of total output of production of final goods and services produced by the national residents of a country during a year with in India and outside India .

 GNP = GDP + Net factor Income from abroad.


Qts 8 What is Net National Product (NNP)

It is obtained by subtracting depreciation value (ie capital stock consumption) from GNP

NNP = GNP  - Depreciation


Qts 9 What is Personal Income (PI)

Personal Income is the sum of all the income received by the entire people of the country in one year.

Qts 10 Explain Production Method for Measuring National Income


 Production Method: The National Income is complied by calculating the gross value of final goods and services produced in a country in one year. This represents Gross Domestic Product (GDP), 

GDP = Gross value added + Indirect taxes - Subsidy.


Qts 11 Explain Income method for Measuring National Income

 Income Method: The National Income is calculated by compiling income of factors of production viz., labour, land, capital and entrepreneur.

National Income = Total wages + Total rent + Total interest + Total profit


Qts 12 Explain Consumption Method or Expenditure Method for Measuring National Income

Consumption Method or Expenditure Method: National income can also be calculated by adding up the expenditure incurred for goods and services. The consumption expenditure of consumers (C), consumption expenditure of investors or entrepreneur which is called investment (I), and consumption of government (G) is added.
 

GDP = C + I + G 

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