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In some questions, we are given both starting and ending values
We have to calculate Missing Values like Indirect tax, Subsidy, Depreciation, Factor Income etc
Example 5
Calculate Consumption of Fixed Capital
| National Income (NNP FC ) | 4000 |
| GDP MP | 5000 |
| Net Indirect Taxes | 300 |
| NFIA | 200 |
View Answer
Here we need to calculate Consumption of Fixed Capital which is Depreciation
In this case,there are 2 main values GDPMP and NNPFC
We take one value as Starting and Other value as Ending
We calculate Missing figures
First Method
Suppose we start with GDPMP
| GDP MP | 5000 | |
| Add NFIA | 200 | |
| GNP MP | 5200 | |
| Less Net Indirect Taxes | 300 | |
| GNP FC | 4900 | |
| Less Consumption of fixed cap | 900 | (4900 - 4000) |
| NNP FC | 4000 |
Step 1
We calculate GNPMP
GNPMP= GDPMP+ NFIA = 5000 + 200 = 5200
Step 2
We calculate GNPFC
GNPMP - Net Indirect taxes
= 5200 - 300
= 4900
Step 3
We calculate Depreciation
GNPFC -Depreciation = NNPFC
4900 -Dep = 4000
4900 - 4000 = Dep
Dep = 900
Second Method
Suppose we start with NNPFC
| NNP FC | 4000 | |
| Less NFIA | 200 | |
| NDP FC | 3800 | |
| Add Net Indirect Taxes | 300 | |
| NDP MP | 4100 | |
| Add Consumption of fixed cap | 900 | (5000 - 4100) |
| GDP MP | 5000 |
Step 1
We calculate NDPFC
NDPFC = NNPFC - NFIA = 4000 - 200 = 3800
Step 2
We calculate NDPMP
NDPFC + Net Indirect Taxes
= 3800 + 300
= 4100
Step 3
We calculate depreciation
NDPMP + Depreciation = GDPMP
4100 + Dep = 5000
Dep = 5000 - 4100
Dep = 900
Practicals
Question 1
Calculate Indirect Taxes from the following
| NDP FC | 55,915 |
| Subsidies | 1540 |
| Factor income from abroad | 625 |
| Consumption of Fixed Capital | 1625 |
| Factor income to abroad | 865 |
| GNP MP | 58,350 |
View Answer
| GNP MP | 58,350 |
| Less Depreciation | 1625 |
| NNP MP | 56,725 |
| Less Factor income from abroad | 625 |
| Add factor income to abroad | 865 |
| NDP MP | 56,965 |
| Less Net Indirect Tax | 1,050 |
| NDP FC | 55,915 |
| Indirect Tax | 2,590 |
| Less Subsidies | 1540 |
| Net Indirect Taxes | 1,050 |
Step 1
We calculate NNPMP
NNPMP = GNPMP - Dep = 58,350 - 1625 = 56,725
Step 2
We calculate NDPMP
NDPFC - Factor income from abroad + Factor income to abroad
= 56,725 - 625 + 865
= 56,965
Step 3
We calculate Net Indirect tax
NDPMP - Net Indirect Tax = NDPFC
56,965 - Net Indirect Tax = 55,915
56,965 - 55,915 = Net Indirect Tax
Net Indirect tax = 1050
Step 4
Calculate Indirect Tax
Indirect tax - Subsidies = Net Indirect Tax
Indirect tax - 1540 = 1050
Indirect tax = 1050 + 1540
Indirect tax = 2590
Question 2
Calculate Factor income to abroad
| GNP FC | 4820 |
| Subsidies | 80 |
| Factor income from abroad | 400 |
| Depreciation | 480 |
| Indirect Tax | 100 |
| NDP MP | 3700 |
View Answer
| GNP FC | 4280 |
| Less Depreciation | 480 |
| NNP FC | 3800 |
| Add Indirect Tax | 100 |
| Less Subsidies | 80 |
| NNP MP | 3820 |
| Less NFIA | 120 |
| NDP MP | 3700 |
| Factor income from abroad | 400 |
| Less Factor income to abroad | 280 |
| NFIA | 120 |
Step 1
We calculate NNPFC
NNPFC = GNPFC - Dep = 4280 - 480 = 3800
Step 2
We calculate NNPMP
NNPFC + Indirect Tax - Subsidies
= 3800 + 100 - 80
= 3820
Step 3
We calculate NFIA
NNPMP - NFIA = NDPFC
3820 - NFIA = 3700
3820 - 3700 = NFIA
NFIA = 120
Step 4
We calculate Factor income to abroad
NFIA = Factor income from abroad - Factor income to abroad
120 = 400 - Factor income to abroad
Factor income to abroad = 400 - 120
Factor income to abroad = 280
Question 3
Calculate Depreciation
| NDP MP | 80,000 |
| Indirect Tax | 10,600 |
| GNP FC | 75,920 |
| Factor income to abroad | 700 |
| Factor income from abroad | 500 |
| Subsidies | 1770 |
View Answer
| NDP MP | 80,000 | |
| Add Factor income from abroad | 500 | |
| Less Factor income to abroad | 700 | |
| NNP MP | 79,800 | |
| Less Indirect Tax | 10,600 | |
| Add Subsidies | 1770 | |
| NNP FC | 70,970 | |
| Add Depreciation | 4,950 | (75,920 - 70,970) |
| GNP FC | 75,920 |
Step 1
We calculate NNPMP
NNPMP = NDPMP + Factor income from abroad - Factor income to abroad = 80,000 + 500 - 700 = 79,800
Step 2
We calculate NNPFC
NNPMP - Indirect Tax + Subsidies
= 79,800 - 10,600 + 1770
= 70,970
Step 3
We calculate Depreciation
NNPFC + Depreciation = GNPFC
70,970 + Depreciation = 75,920
Depreciation = 75,920 - 70,970
Depreciation = 4950
Question 4
Calculate Subsidies
| GDP FC | 55,000 |
| Indirect Tax | 4400 |
| Factor income to abroad | 600 |
| NNP MP | 55,500 |
| Factor income from abroad | 1300 |
| Depreciation | 2500 |
View Answer
| GDP FC | 55,000 |
| Less Depreciation | 2500 |
| NDP FC | 52,500 |
| Add Factor income from abroad | 1300 |
| Less Factor income to abroad | 600 |
| NNP FC | 53,200 |
| Add Net Indirect Tax | 2,300 |
| NNP MP | 55,500 |
| Indirect Tax | 4400 |
| Less Subsidy | 2100 |
| Net Indirect Tax | 2300 |
Step 1
We calculate NDPFC
NDPFC = GDPFC - Depreciation = 55,000 - 2500 = 52,500
Step 2
We calculate NNPFC
NDPFC + Factor income from abroad - Factor income to abroad
= 52,500 + 1300 - 600
= 53,200
Step 3
We calculate NNPMP
NNPFC + Net Indirect Tax = NNPMP
53,200 + Net Indirect Tax = 55,500
Net Indirect Tax = 55,500 - 53,200
Net Indirect Tax = 2300
Step 4
We calculate Subsidy
Indirect Tax - Subsidy = Net Indirect Tax
4400 - Subsidy = 2300
4400 - 2300 = Subsidy
Subsidy = 2100
Example 6
Calculate Net Indirect Tax
| GNP MP | 7000 |
| NDP FC | 6200 |
| Depreciation | 600 |
| NFIA | -400 |
View Answer
| GNP MP | 7000 |
| Less Depreciation | 600 |
| NNP MP | 6400 |
| Less NFIA | -400 |
| NDP MP | 6800 |
| Less Net Indirect Tax | 600 |
| NDP FC | 6200 |
Step 1
We calculate NNPMP
NNPMP = GNPMP - Depreciation = 7000 - 600 = 6400
Step 2
We calculate NDPMP
NNPMP - NFIA
= 6400 - (-400)
= 6800
Step 3
We calculate Net Indirect Tax
NDPMP - Net Indirect Tax = NDPFC
6800 - Net Indirect Tax = 6200
Net Indirect Tax = 6800 - 6200
Net Indirect Tax = 600
Example 7
Calculate Subsidies
| GNP FC | 27,710 |
| Consumption of fixed capital | 4000 |
| Indirect Tax | 120 |
| Factor income from abroad | 400 |
| NDP MP | 24,000 |
| Factor income to abroad | 600 |
View Answer
| GNP FC | 27,710 |
| Less Depreciation | 4000 |
| NNP FC | 23,710 |
| Less Factor income from abroad | 400 |
| Add factor income to abroad | 600 |
| NDP FC | 23,910 |
| Add Net Indirect Tax | 90 |
| NDP MP | 24,000 |
| Indirect Tax | 120 |
| Less Subsidies | 30 |
| Net Indirect Tax | 90 |
Step 1
We calculate NNPFC
NNPFC = GNPFC - Depreciation = 27,710 - 4000 = 23,710
Step 2
We calculate NDPFC
NNPFC - Factor income from abroad + Factor income to abroad
= 23,710 - 400 + 600
= 23,910
Step 3
We calculate Net Indirect Tax
NDPFC - Net Indirect Tax = NDPMP
23,910 - Net Indirect Tax = 24,000
Net Indirect Tax = 24,000 - 23,910
Net Indirect Tax = 90
Step 4
We calculate Subsidies
Indirect Tax - Subsidies = Net Indirect Tax
120 - Subsidies = 90
120 - 90 = Subsidies
Subsidies = 30
Example 8
Calculate Factor Income to abroad
| GNP MP | 4500 |
| Replacement of fixed capital | 100 |
| Indirect Taxes | 300 |
| Subsidies | 200 |
| Factor income from abroad | 700 |
| NDP FC | 3900 |
View Answer
| GNP MP | 4500 |
| Less Depreciation | 100 |
| NNP MP | 4400 |
| Less Indirect Tax | 300 |
| Add Subsidies | 200 |
| NNP FC | 4300 |
| Less NFIA | 400 |
| NDP FC | 3900 |
| Factor income from abroad | 700 |
| Less Factor income to abroad | 300 |
| NFIA | 400 |
Step 1
We calculate NNPMP
NNPMP = GNPMP - Depreciation = 4500 - 100 - 4400
Step 2
We calculate NNPFC
NNPMP - Indirect Tax + Subsidies
= 4400 - 300 + 200
= 4300
Step 3
We calculate NFIA
NNPFC - NFIA = NDPFC
4300 - NFIA = 3900
NFIA = 4300 - 3900
NFIA = 400
Example 10
Calculate
(a) Depreciation
(b) Subsidies
(c) NDPFC
| GNP FC | 95,000 |
| Indirect Tax | 14,000 |
| NDP MP | 1,00,422 |
| NNP MP | 1,00,000 |
| GNP MP | 1,07,000 |
View Answer
| (a) | |
| GNP MP | 1,07,000 |
| Less Depreciation | 7,000 |
| NNP MP | 1,00,000 |
| (b) | |
| GNP MP | 1,07,000 |
| Less Indirect Tax | 14,000 |
| Add Subsidies | 2,000 |
| GNP FC | 95,000 |
| (c) | |
| NDP MP | 1,00,422 |
| Less Indirect Tax | 14,000 |
| Add Subsidies | 2,000 |
| NDP FC | 88,422 |
