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  • Value Added Method Practice

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    sridharvchinni_21769
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    The document contains examples of calculating value added and gross domestic product for different firms and sectors of an economy. It also provides examples of calculating national income. In the first example, it calculates value added as sales minus purchases plus the change in closing stock for two firms A and B. The second example demonstrates calculating gross value added and GDP at the factor cost for the overall economy by summing value added and subtracting indirect taxes. The third example provides the formula for calculating national income as GDP at market price minus depreciation, indirect taxes, and net factor payments from abroad plus subsidies.

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    practice of few problems related to the National Income

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    The document contains examples of calculating value added and gross domestic product for different firms and sectors of an economy. It also provides examples of calculating national income. In the first example, it calculates value added as sales minus purchases plus the change in closing stock for two firms A and B. The second example demonstrates calculating gross value added and GDP at the factor cost for the overall economy by summing value added and subtracting indirect taxes. The third example provides the formula for calculating national income as GDP at market price minus depreciation, indirect taxes, and net factor payments from abroad plus subsidies.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    Download as docx, pdf, or txt
    2K views2 pages

    Value Added Method Practice

    Uploaded by

    sridharvchinni_21769
    The document contains examples of calculating value added and gross domestic product for different firms and sectors of an economy. It also provides examples of calculating national income. In the first example, it calculates value added as sales minus purchases plus the change in closing stock for two firms A and B. The second example demonstrates calculating gross value added and GDP at the factor cost for the overall economy by summing value added and subtracting indirect taxes. The third example provides the formula for calculating national income as GDP at market price minus depreciation, indirect taxes, and net factor payments from abroad plus subsidies.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 2

    1.

    Solution:

    (a) Value Added by firm A

    = Sales by firm A - Purchases from firm B + Change In stock (Closing stock -


    Opening stock)
    =100 lakh - 40 lakh + ( 20 lakh - 25 lakh)
    =100 lakh - 40 lakh - 5 lakh
    =55 lakh

    Value Added by firm B


    =Sales by firm B - Purchases from firm A + Change in stock(Closing stock -
    Opening stock)
    =200 lakh - 60 lakh + ( 35 lakh - 45 lakh)
    =200 lakh - 60 lakh - 10 lakh = 130 lakh

    Ans: Value Added by firm A = 55 lakh.


    Value Added by firm B = 130 lakh.

    (b) Gross Value Added or Gross Domestic Product at Factor Cost

    = Value added by firm A + Value added by firm B - Indirect taxes


    =55 lakh + 130 lakh - 30 lakh
    =185 lakh – 30 lakh
    =155 lakh
    Ans. Gross domestic product at factor cost = 155 lakh

    [Note: Value added by firm A and firm B here implies gross value added at market
    price.]

    2. Solution:

    (a) Gross Value Added at Market Price

    = Value of output of different sectors - Value of intermediate inputs purchased


    by different sectors
    =800 lakh+200lakh+300 lakh- 400 lakh -100 lakh – 50lakh
    = 750lakh

    Ans. Gross value added at market price = 750 lakh

    (b) National Income = NNP fc

    = Gross domestic product at market price - Consumption of fixed capital -


    Indirect taxes + Subsidies + Factor income received by the residents from rest
    of the world - Factor income paid to non-residents

    = 750 lakh - 80 lakh - 50 lakh + 20 lakh + 10 lakh - 20 lakh


    = 630 lakh
    Ans. National income = 630 lakh.

    3Q. Answer
    NVAfc = Sales + Change in stock (C–0) – IC + subsidy –Depreciation 1
    NVAfc = 140+(–10) – 90 + 5 –20
    = 25 Lakhs 1½

    4Q. Answer
    NDPmp = GNPmp – deprecation –NFIA
    = 87703–5296+20=82427
    NDPfc = NDPmp –NIT
    = 82427 – 3996
    = 78431

    5Q. Answer

    6Q. Answer
    (i) GVA fc = sales + change in stock - purchase of intermediate producut -
    excise duty + subsidy
    = (i) +(iii) - (ii) - (v) - (iv) + (vi)
    = 800 +35 + 40 -350 - 10 + 30 = 435 (3)

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