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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
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 $\displaystyle 1,000$
(b)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.
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 | $\displaystyle 1,000$ |
(b)
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
Income Method
$$\text{NNP}_{FC} = (iv) + (iii) + (vi) + (v)$$
$$= 1,400 + 740 + 1,000 + 40$$
$$= ₹\ 3,180 \text{ crores}$$
Expenditure Method
$$\text{NNP}_{FC} = (x) + (xi) + [(vii + viii)] + (i) + (v) - (ii)$$
$$= 2,000 + 1,000 + [500 + (-100)] + (-60) + 40 - 150$$
$$= ₹\ 3,230 \text{ crores}$$
(b)
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 2022board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.