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Economics · 2025 · 3 marks
National Income AccountingCircular Flow of Income and Methods of Calculating National Income3 marksApplyshort answer
CBSE 2025 · Region 4 · Set 3 · Q12
(a) Explain any two precautions pertaining to the Value Added Method of Estimation of National Income in a country.
Explain any two precautions pertaining to the Value Added Method of Estimation of National Income in a country.
On the basis of the following hypothetical data :
(in ₹ crore)
| Year | Nominal GDP | Nominal GDP (adjusted to base year prices) |
| $\displaystyle 2020$ – $\displaystyle 21$ | $\displaystyle 3,000$ | $\displaystyle 5,000$ |
| $\displaystyle 2022$ – $\displaystyle 23$ | $\displaystyle 4,000$ | $\displaystyle 6,000$ |
Calculate the percentage change in Real Gross Domestic Product (GDP) in the year $\displaystyle 2022$ – $\displaystyle 23$ using $\displaystyle 2020$ – $\displaystyle 21$ as the base year.
Marking-scheme solution
Two precautions to be taken while estimating National Income by Value added method are:
Value of intermediate goods should not be included as it leads to the problem of double counting.
Sale and purchase of second-hand goods should not be included as it does not add to the flow of goods and services in the economy in the current year.
Percentage change in Real Gross Domestic Product (GDP) in the year $\displaystyle 2022$-$\displaystyle 23$
= $\displaystyle \frac{\text{Change in Real GDP}}{\text{Real GDP}} \times 100$
= $\displaystyle \frac{6000-5000}{5000} \times 100$
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CBSE Class 12 Economics past-paper question from the 2025 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.