Page 27 - DECO201_MACRO_ECONOMICS_ENGLISH

Macro Economics

Notes (c) Net factor income from abroad
(d) Depreciation
6. If disposable income is 15000 and personal taxes is 1400, then the personal income
would be
(a) 16400
(b) 13600
(c) 15000
(d) 20000
7. Suppose, in 2010-2011, GNP is 20000, Net income received from abroad is 4000 and net
income paid abroad is 5000. Find out GDP for 2010-2011.
(a) 19000
(b) 21000

(c) 12000
(d) 29000
8. …………………=NNP – Net Factor Income from Abroad – Net Indirect Taxes.
MP
(a) GNP
MP
(b) NNP
FC
(c) NDP
FC
(d) NDP
MP
2.3 Methods of Measuring National Income in India
(Simple Treatment)

There are three methods to calculate national income:
Product Method

Income Method
Expenditure Method
Let's discuss these methods one by one in following subsections.

2.3.1 Product Method

In this method two approaches-final product approach and value added approach are adopted.
Final Product Approach

It is expressed in terms of GDP. According to final product approach, sum total of market value
of all final goods and services produced by all productive units in the domestic economy in an
accounting year is estimated by multiplying the gross product with market prices.
Being gross it includes depreciation, being at market price, it includes net indirect taxes and
being domestic, it includes production by all production units within domestic territory of a
country. It includes value of only final goods and services.

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