ASSESMENT OF NATIONAL INCOME

1.    State whether the following statements are true or false. Give reasons:

(a) Capital formation is a flow.

(b) Value of output is always value added of goods.

(c) Nominal GDP can never be less than Real GDP.

d) GDCF is always greater than gross fixed capital formation.

2.    ‘’ Goods can be final goods as well as intermediate goods at the same time’’. Comment.

3.    Identify the following as Normal Residents of India or not, Give reason.

(a) Indian officials working in the Indian Embassy in USA.

(b) Rent received by an Indian resident from Russian embassy in India.

(c) Indians working in the UNO office, located in America for less than 1 year.

(d) Purchases of goods by foreign tourists

4.    Will the following be included in domestic factor income of India? Give reasons.

a)    Wheat grown by a farmer but used entirely for family consumption.

b)    Earnings of the shareholders from the sale of shares.

c)    Payment of fees to a lawyer engaged by a firm

d)    Prize won in a lottery

5.    Write a short note on a) Consumption of fixed capital b) Problem of double counting.

6.    Calculate GNP at factor cost and Profit from given data.   

1	Net domestic capital formation	500
2	Compensation of employees	1850
3	Consumption of fixed capital	100
4	Govt. purchase of goods and services	1100
5	Personal consumption expenditure	2600
6	Rent	400
7	Dividend	200
8	Interest	500
9	Net imports	100
10	Transfer income from abroad	80
11	Net factor income from abroad	-50
12	Net indirect taxes	250

7.    Calculate gross value added at market price from the following data         

1	Depreciation	15
2	Sales in the domestic market	350
3	Exports	50
4	Decrease in  stock	20
5	Purchase of raw material from domestic market	150
6	Purchase of machinery	100
7	Import of raw material	40

8.    Define an externality. Distinguish between positive and negative externality.

9.    Calculate value added by firm A and Firm B and National income from the following data     

1	Sales by firm A to household	3000
2	Purchase of goods by firm A to firm B	50
3	Purchase of goods by firm B to firm A	70
4	Decrease in  stock by firm A	20
5	Sales by firm B	500
6	Purchase of machinery	300
7	Import of raw material by firm a	40
8	Purchase of machinery by firm A	100
9	Export of goods by firm A	40
10	Net factor income from abroad	20

10. Categories the following into final goods or Intermediate goods with reason.

(a) Purchase of pulses by consumers

(b) Machine purchased by a firm

(c) Wheat used by a flour mill

(d) Fertilizers purchased by a farmer