Match List-I with List-II
| List-I | List-II | ||
| (A) | GNPmp | (I) | GNPmp - Depreciation |
| (B) | NNPmp | (II) | Net National Product at market prices + Other current transfers from the rest of the world |
| (C) | National Disposable Income | (III) | GDPmp + Net factor income from abroad |
| (D) | GDP deflator | (IV) | Nominal GDP / Real GDP |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → (A) - (III), (B) - (I), (C) - (II), (D) - (IV)
National income accounting starts from GDP at market prices and reaches the other aggregates one step at a time, each step adding or taking away one item:
Domestic to national: GDP counts what is produced within the country. Adding net factor income from abroad, the factor income earned by Indians abroad less that earned by foreigners in India, gives the national aggregate.
Gross to net: part of the machines and buildings wears out during the year, and deducting this depreciation gives the net aggregate.
Adding transfers: gifts, aid and remittances received from abroad, the other current transfers, add to what the nation has at its disposal.
A different kind of item is a price index, which compares the same output valued at current prices and at constant prices.
(A) GNPmp — this matches (III) GDPmp + Net factor income from abroad. This is the step from domestic to national.
(B) NNPmp — this matches (I) GNPmp - Depreciation. This is the step from gross to net.
(C) National Disposable Income — this matches (II) Net National Product at market prices + Other current transfers from the rest of the world. It is the total the nation can use for consumption or saving in the year.
(D) GDP deflator — this matches (IV) Nominal GDP / Real GDP. Nominal GDP is valued at current prices and real GDP at constant prices, so their ratio shows how much prices have changed: a nominal GDP of Rs 1,650 and a real GDP of Rs 1,100 give a deflator of 1.5, a 50 per cent rise in prices.