Calculate National income: Govern

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Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

Calculate National income:

Government final consumption expenditure	3,000
Private final consumption expenditure	4,500
Gross domestic capital formation	1,000
Net exports	600
Net factor income from abroad	100
Net indirect taxes	300
Subsidies	40
Change in stock	80
Consumption of fixed capital	120

Options:

8720

8780

8530

8590

Correct Answer:

8780

Explanation:

The correct answer is option 2: 8780

GDP_MP = Private final consumption expenditure + Government final consumption expenditure + Gross domestic capital formation + Net exports

= 4,500 + 3,000 + 1,000 + 600

= 9,100

NDP_MP= GDP_MP- Depreciation

= 9,100 - 120

= 8,980

NDP_FC= NDP_MP- Net Indirect taxes

= 8,980 - 300

= 8,680

National income (NNP_FC) = NDP_FC + NFIA

= 8,680 + 100

= 8,780