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Economics · 2025 · 6 marks
National Income AccountingCircular Flow of Income and Methods of Calculating National Income6 marksApplylong answer
CBSE 2025 · Region 4 · Set 1 · Q16
(i)Suppose there are only three firms in an imaginary economy, viz. X, Y and Z. During a year, the following transactions took place in the economy :(I)Firm X sold goods worth ₹ $\displaystyle 20,000$ to Firm Y and ₹ $\displaystyle 12,000$ to Firm Z.(II)Firm Y sold goods worth ₹ $\displaystyle 11,000$ to Firm X and ₹ $\displaystyle 35,000$ to Firm Z.(III)Firm Z sold goods worth ₹ $\displaystyle 57,000$ to households for final consumption.On the basis of the given transactions, calculate the value of Gross Domestic Product at Market Price ($\displaystyle \text{GDP}_{MP}$) in the economy.(ii)Elaborate the likely impact of construction of two new Express Highways on the Gross Domestic Product (GDP) and Welfare in an economy.(i)On the basis of the following data, estimate the value of National Income ($\displaystyle \text{NNP}_{FC}$) :S.No. Items Amount (in ₹ crore) (i) Household Consumption Expenditure $\displaystyle 800$ (ii) Gross Business Fixed Capital Formation $\displaystyle 150$ (iii) Gross Residential Construction Investment $\displaystyle 120$ (iv) Government Final Consumption Expenditure $\displaystyle 270$ (v) Excess of Imports over Exports $\displaystyle 20$ (vi) Inventory Investments $\displaystyle 50$ (vii) Gross Public Investments $\displaystyle 130$ (viii) Net Indirect Taxes $\displaystyle 20$ (ix) Net Factor Income from Abroad (–) $\displaystyle 25$ (x) Consumption of Fixed Capital $\displaystyle 40$
(ii)“All producer goods are essentially capital goods.”Defend or refute the given statement, with the help of a suitable example.
(i)
Suppose there are only three firms in an imaginary economy, viz. X, Y and Z. During a year, the following transactions took place in the economy :
(I)
Firm X sold goods worth ₹ $\displaystyle 20,000$ to Firm Y and ₹ $\displaystyle 12,000$ to Firm Z.
(II)
Firm Y sold goods worth ₹ $\displaystyle 11,000$ to Firm X and ₹ $\displaystyle 35,000$ to Firm Z.
(III)
Firm Z sold goods worth ₹ $\displaystyle 57,000$ to households for final consumption.
On the basis of the given transactions, calculate the value of Gross Domestic Product at Market Price ($\displaystyle \text{GDP}_{MP}$) in the economy.
(ii)
Elaborate the likely impact of construction of two new Express Highways on the Gross Domestic Product (GDP) and Welfare in an economy.
(i)
On the basis of the following data, estimate the value of National Income ($\displaystyle \text{NNP}_{FC}$) :
| S.No. | Items | Amount (in ₹ crore) |
| (i) | Household Consumption Expenditure | $\displaystyle 800$ |
| (ii) | Gross Business Fixed Capital Formation | $\displaystyle 150$ |
| (iii) | Gross Residential Construction Investment | $\displaystyle 120$ |
| (iv) | Government Final Consumption Expenditure | $\displaystyle 270$ |
| (v) | Excess of Imports over Exports | $\displaystyle 20$ |
| (vi) | Inventory Investments | $\displaystyle 50$ |
| (vii) | Gross Public Investments | $\displaystyle 130$ |
| (viii) | Net Indirect Taxes | $\displaystyle 20$ |
| (ix) | Net Factor Income from Abroad | (–) $\displaystyle 25$ |
| (x) | Consumption of Fixed Capital | $\displaystyle 40$ |
(ii)
“All producer goods are essentially capital goods.”
Defend or refute the given statement, with the help of a suitable example.
Marking-scheme solution
(i)
| Firms | Value of Output (in ₹)<br>(i) | Intermediate Consumption (in ₹)<br>(ii) | Value Added (in ₹)<br>{(i) – (ii)} |
| X | $\displaystyle 20,000$ + $\displaystyle 12,000$ | $\displaystyle 11,000$ | $\displaystyle 21,000$ |
| Y | $\displaystyle 11,000$ + $\displaystyle 35,000$ | $\displaystyle 20,000$ | $\displaystyle 26,000$ |
| Z | $\displaystyle 57,000$ | $\displaystyle 12,000$ + $\displaystyle 35,000$ | $\displaystyle 10,000$ |
| $\displaystyle 1,35,000$ | $\displaystyle 78,000$ | $\displaystyle 57,000$ |
Gross Domestic Product at Market Price ($\displaystyle \text{GDP}_{MP}$) = ₹ $\displaystyle 57,000$
(ii)
The construction of two new Express Highways may impact the Gross Domestic Product (GDP) positively as improved infrastructure generally attracts higher investments in an economy and may lead to an increase in employment opportunities. It may also reduce travel time and average transportation costs. Consequently, increasing the well-being of citizens.
(i)
National Income ($\displaystyle \text{NNP}_{FC}$) = (i) + (iv) + (ii) + (iii) + (vii) + (vi) - (v) - (x) + (ix) - (viii)
= $\displaystyle 800$ + $\displaystyle 270$ + $\displaystyle 150$ + $\displaystyle 120$ + $\displaystyle 130$ + $\displaystyle 50$ – $\displaystyle 20$ – $\displaystyle 40$ + (-$\displaystyle 25$) -$\displaystyle 20$
= ₹ $\displaystyle 1,415$ crore
(ii)
The given statement is refuted. Producer goods can be categorized as single-use producer goods (intermediate goods) and durable producer goods (capital goods). These goods are used for further production of goods and services. Intermediate goods are completely used up in the production process during the same year. Whereas, capital goods are used for more than one year. Thus, all producer goods are not essentially capital goods.
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CBSE Class 12 Economics past-paper question from the 2025board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.