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Economics · 2022 · 5 marks
National Income AccountingCircular Flow of Income and Methods of Calculating National Income5 marksApplylong answer
CBSE 2022 · Region 4 · Set 1 · Q12
(a) From the following data, show that the National Income will be same from both Income Method and Expenditure Method: S. No. Items Amount (in ₹…
From the following data, show that the National Income will be same from both Income Method and Expenditure Method :
| S. No. | Items | Amount (in ₹ crore) |
| (i) | Net Exports | (–) $\displaystyle 60$ |
| (ii) | Net Indirect Taxes | $\displaystyle 150$ |
| (iii) | Operating Surplus | $\displaystyle 740$ |
| (iv) | Compensation of Employees | $\displaystyle 1{,}400$ |
| (v) | Net Factor Income from Abroad | $\displaystyle 40$ |
| (vi) | Mixed Income of Self-Employed | $\displaystyle 1{,}000$ |
| (vii) | Net Domestic Fixed Capital Formation | $\displaystyle 500$ |
| (viii) | Change in Stock | (–) $\displaystyle 100$ |
| (ix) | Depreciation | $\displaystyle 100$ |
| (x) | Private Final Consumption Expenditure | $\displaystyle 2{,}000$ |
| (xi) | Government Final Consumption Expenditure | $\displaystyle 1{,}000$ |
(i)
Calculate the operating surplus from the following data :
| S. No. | Items | Amount (in ₹ crore) |
| (i) | Compensation of Employees | $\displaystyle 300$ |
| (ii) | Indirect Taxes | $\displaystyle 200$ |
| (iii) | Consumption of Fixed Capital | $\displaystyle 100$ |
| (iv) | Subsidies | $\displaystyle 50$ |
| (v) | Gross Domestic Product at Factor Cost (GDP$\displaystyle _{\text{fc}}$) | $\displaystyle 650$ |
(ii)
State and discuss briefly the three main components of Net Factor Income from Abroad.
Marking-scheme solution
(a)
Income Method
$$\text{NNP}_{FC} = (iv) + (iii) + (vi) + (v)$$
$$= 1,400 + 740 + 1,000 + 40$$
$$= ₹\ 3,180 \text{ crores}$$
Expenditure Method
$$\text{NNP}_{FC} = (x) + (xi) + [(vii + viii)] + (i) + (v) - (ii)$$
$$= 2,000 + 1,000 + [500 + (-100)] + (-60) + 40 - 150$$
$$= ₹\ 3,230 \text{ crores}$$
OR
(b)(i)
Operating surplus = (v) – (iii) – (i)
= $\displaystyle 650$ – $\displaystyle 100$ – $\displaystyle 300$
Operating surplus = ₹ $\displaystyle 250$ crore
(ii)
Components of net factor income from abroad are as follows:
Net compensation of employees
Net Income from property and entrepreneurship
Net retained earnings
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CBSE Class 12 Economics past-paper question from the 2022 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.