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Economics · 2026 · 3 marks
National Income AccountingCircular Flow of Income and Methods of Calculating National Income3 marksApplyshort answer
CBSE 2026 · Region 4 · Set 2 · Q12
On the basis of the given data, estimate the value of Net Domestic Product at Factor Cost ($\displaystyle \mathrm{NDP_{FC}}$) :S. No. Items Amount (in ₹ crore) (i) Private final consumption expenditure $\displaystyle 800$ (ii) Government final consumption expenditure $\displaystyle 700$ (iii) Net imports $\displaystyle 200$ (iv) Gross public investment $\displaystyle 100$ (v) Inventory investment $\displaystyle 50$ (vi) Gross residential construction investment $\displaystyle 300$ (vii) Net indirect taxes $\displaystyle 70$ (viii) Gross business fixed investment $\displaystyle 130$ (ix) Consumption of fixed capital $\displaystyle 20$ (x) Interest $\displaystyle 150$ (xi) Net factor income paid to abroad $\displaystyle 100$
Explain any two precautions to be kept in mind while estimating National Income by the Expenditure method.
On the basis of the given data, estimate the value of Net Domestic Product at Factor Cost ($\displaystyle \mathrm{NDP_{FC}}$) :
| S. No. | Items | Amount (in ₹ crore) |
| (i) | Private final consumption expenditure | $\displaystyle 800$ |
| (ii) | Government final consumption expenditure | $\displaystyle 700$ |
| (iii) | Net imports | $\displaystyle 200$ |
| (iv) | Gross public investment | $\displaystyle 100$ |
| (v) | Inventory investment | $\displaystyle 50$ |
| (vi) | Gross residential construction investment | $\displaystyle 300$ |
| (vii) | Net indirect taxes | $\displaystyle 70$ |
| (viii) | Gross business fixed investment | $\displaystyle 130$ |
| (ix) | Consumption of fixed capital | $\displaystyle 20$ |
| (x) | Interest | $\displaystyle 150$ |
| (xi) | Net factor income paid to abroad | $\displaystyle 100$ |
Explain any two precautions to be kept in mind while estimating National Income by the Expenditure method.
Marking-scheme solution
Gross Domestic Product at Market Price ($\displaystyle \mathrm{GDP_{MP}}$)
= (i) + (ii) + {(iv) + (v) + (vi) + (viii)} – (iii)
= $\displaystyle 800$ + $\displaystyle 700$ + {$\displaystyle 100$ + $\displaystyle 50$ + $\displaystyle 300$ + $\displaystyle 130$} - $\displaystyle 200$
= ₹$\displaystyle 1880$ crore
Net Domestic Product at Factor Cost ($\displaystyle \mathrm{NDP_{FC}}$) = $\displaystyle \mathrm{GDP_{MP}}$ – (vii) – (ix)
= $\displaystyle 1880$ – $\displaystyle 70$ – $\displaystyle 20$
= ₹ $\displaystyle 1790$ crore
Two precautions to be adopted while estimating National Income by Expenditure Method are:
Expenditure on intermediate goods should not be included as it may lead to the problem of double counting.
Expenditure on purchase of financial assets should not be included in the estimation of National Income, as such transactions are mere paper claims and do not add to the current flow of goods and services.
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CBSE Class 12 Economics past-paper question from the 2026board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.