Mathematics Class on National Income

Previous Review

• In the last class, all the formulas for national income were discussed.
• This class focuses on solving mathematical questions using those formulas.

Value Added Method

• Question 1: Calculate NDP at FC.
  • Formula: GDP at MP = Value of Output - Intermediate Consumption
  • Value of Output: Sales + Change in Stock
  • Intermediate Consumption: 30
  • Example:
    • Sales: 100
    • Change in Stock: -10
    • GDP at MP: 60
    • NDP at FC: 41

Income Method

• Question: Calculate NDP at FC.
  • Components: Profit, Rent and Royalty, Interest, Mixed Income, COE
  • Value: 3600 crore

Expenditure Method

• Example: GNP at FC
  • Add four components for GDP at MP:
    • Government Final Consumption Expenditure
    • Gross Domestic Capital Formation
    • Net Exports
    • Private Final Consumption Expenditure
  • Figures and Values:
    • GDP at MP: 2130
    • GNP at FC: 2060 crore

Homework

• Domestic Income: Calculate Domestic Income.
  • Components: Profit, Rent and Royalty, Interest, Mixed Income, COE
  • Example: 4700 crore

Other Important Notes

• From Net to Gross:
  • Add Depreciation to go from Net Domestic Fixed Capital Formation to Gross.
• Importance of NFIA and NIT: Use to transition from Domestic to National and from Market Price to Factor Cost.

Next Class

• Covering theory and understanding Real Income and Nominal Income in one class.

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This is a brief summary for your study. By practicing all the questions and studying the notes, you can understand it better.