Giving reason, explain how the following should be treated in estimating national income:
Expenditure on fertilizers by a farmer.
Giving reason, explain how the following should be treated in estimating national income:
Purchase of tractor by a farmer
S.No. | Items | (Rs crores) |
(i) | Factor income from abroad | 15 |
(ii) | Private final consumption expenditure | 600 |
(iii) | Consumption of fixed captial | 50 |
(iv) | Government final consumption expenditure | 200 |
(v) | Net current transfers to abroad | (-)5 |
(vi) | Net domestic fixed capital formation | 110 |
(vii) | Net factor income to abroad | 10 |
(viii) | Net imports | (-)20 |
(ix) | Net indirect tax | 70 |
(x) | Change in stocks | (-)10 |
(a)
NDPMP = Private Final Consumption Expenditure + Government Final Consumption Expenditure + Net Domestic Fixed Capital Formation + Change in Stock - Net Imports
= 600 + 200 + 110 + (-10) - (-20)
= Rs 920 Cr.
NNPFC = NDPMP+ NFIA -Net Indirect Taxes
= 920 + (-10) - 70
= Rs 840 Cr.
(b)
Net National Disposable Income
= NDPMP + NFIA - Net Current Transfers to Abroad
= 920 + (-10) - (-5) Cr.
= Rs 915 Cr.
Explain the concept of ‘excess demand’ in macroeconomics. Also explain the role of ‘open market operation’ in correcting it.
Explain the concept of ‘deficient demand’ in macroeconomics. Also explain the role of Bank Rate in correcting it.
Explain the distinction between autonomous and accommodating transactions in balance of payments. Also explain the concept of balance of payments deficit in this context.