Aggregates related to national income - NDP

Correct answer: A. ₹6,450 crore

Explanation: First convert GNP₍FC₎ into GDP₍FC₎ by subtracting NFIA: 7,200 − 300 = ₹6,900 crore. Next obtain NDP₍FC₎ by subtracting depreciation: 6,900 − 900 = ₹6,000 crore. Finally convert factor cost to market price by adding NIT: 6,000 + 450 = ₹6,450 crore. Thus option A is correct. Equivalently, NDPₘₚ = GNP₍FC₎ − NFIA − depreciation + NIT.

Correct answer: B. 4620 crore rupees

Explanation: Two adjustments are needed. First, net indirect taxes are 300 − 80 = 220 crore rupees, so NDP at market price is 4200 + 220 = 4420 crore rupees. Second, GDP is obtained by adding depreciation to NDP: 4420 + 200 = 4620 crore rupees. Hence B is correct; A stops before the gross adjustment.

Correct answer: B. 5500 crore rupees

Explanation: Convert in stages. NNP at market price = 6000 − 350 = 5650 crore rupees. Since NNP = NDP + net factor income from abroad, NDP at market price = 5650 − (−100) = 5750 crore rupees. Finally, subtract net indirect taxes: 5750 − 250 = 5500 crore rupees. The negative foreign income must be subtracted algebraically.

Correct answer: B. 6610 crore rupees

Explanation: Apply the aggregate identities in sequence. NNP at market price = 7200 − 420 = 6780 crore rupees. Since NNP = NDP + NFIA, NDP at market price = 6780 − (−130) = 6910 crore rupees; the negative NFIA makes the subtraction an addition. Finally, NDP at factor cost = 6910 − 300 = 6610 crore rupees. Therefore option B is correct.

Correct answer: A. It may be slower than GDP growth

Explanation: NDP is obtained by subtracting depreciation from GDP: NDP = GDP − depreciation. If depreciation rises faster than GDP, the deduction becomes relatively larger and can reduce the growth of NDP compared with GDP. Exact NDP growth cannot be calculated from percentages alone without the initial levels, so “may be slower” is the justified conclusion, not 14 percent or zero.

Correct answer: A. 8460 crore rupees

Explanation: Begin by removing depreciation: NNP at market price = 9600 − 540 = 9060 crore rupees. Positive NFIA means NNP exceeds NDP by 180 crore, so NDP at market price = 9060 − 180 = 8880 crore rupees. Remove net indirect taxes to reach factor cost: 8880 − 420 = 8460 crore rupees. Therefore option A is correct; option D is only NNP at market price.

Correct answer: B. 7840 crore rupees

Explanation: Use NNP at factor cost to obtain NDP at factor cost: NNPFC = NDPFC + NFIA, so NDPFC = 7350 − (−140) = 7490 crore rupees. Net indirect taxes = 520 − 170 = 350 crore rupees. Convert to market price by adding them: NDPMP = 7490 + 350 = 7840 crore rupees. Option B is correct; the negative NFIA must be handled algebraically, not treated as a positive deduction.

Correct answer: A. 500 crore rupees

Explanation: Both values must first be expressed as NDP. NDP at market price = GDP at market price − depreciation = 8250 − 310 = 7940 crore rupees. Since NDP at market price = NDP at factor cost + net indirect taxes, net indirect taxes = 7940 − 7440 = 500 crore rupees. Option A is correct. The tempting 810 crore difference mixes gross and net aggregates and therefore still includes depreciation.

Correct answer: A. 150 crore rupees

Explanation: The difference between NDP at market price and factor cost equals net indirect taxes. Thus, net indirect taxes = 6820 − 6510 = 310 crore rupees. Net indirect taxes are indirect taxes minus subsidies, so 310 = 460 − subsidies. Rearranging gives subsidies = 460 − 310 = 150 crore rupees. Therefore option A is correct; option B is the net tax itself, not the subsidy.

Correct answer: B. 500 crore rupees

Explanation: First convert GNP to NNP: 11000 − 600 = 10400 crore rupees. Because NNP = NDP + NFIA, NDP at market price = 10400 − 200 = 10200 crore rupees. Net indirect taxes equal NDP at market price minus NDP at factor cost: 10200 − 9700 = 500 crore rupees. Hence option B is correct. The smaller values result from omitting one conversion step.

Correct answer: B. 280 crore rupees

Explanation: First convert NDP at market price to factor cost: NDP at factor cost = 6550 − 430 = 6120 crore rupees. GDP at factor cost equals NDP at factor cost plus depreciation. Therefore, depreciation = 6400 − 6120 = 280 crore rupees. Option B is correct. Option C merely repeats net indirect taxes, while option D incorrectly compares aggregates without adjusting their price basis.

Correct answer: A. 6264 crore rupees

Explanation: The governing relationships are NDP = GDP − depreciation and factor-cost valuation = market-price valuation − net indirect taxes. Depreciation is 8% of 7200, so it equals 576 crore rupees. Therefore, NDP at factor cost = 7200 − 576 − 360 = 6264 crore rupees. Option B subtracts only depreciation, while the other alternatives use an incorrect deduction or calculation.

Correct answer: B. 490 crore rupees

Explanation: Use GDP at market price − depreciation = NDP at market price, and NDP at market price − net indirect taxes = NDP at factor cost. Depreciation is 5% of 6200 = 310 crore rupees. Thus NDP at market price is 6200 − 310 = 5890 crore rupees, and net indirect taxes are 5890 − 5400 = 490 crore rupees. Hence option B is correct.

Correct answer: B. 4300 crore rupees

Explanation: First aggregate the sectors: total GVA at market price = 1200 + 1700 + 2100 = 5000 crore rupees. To convert gross to net, subtract depreciation: 5000 − 400 = 4600 crore rupees. To convert market price to factor cost, subtract net indirect taxes: 4600 − 300 = 4300 crore rupees. Hence NDP at factor cost is 4300 crore rupees, so option B is correct.

Correct answer: A. It will always be 15 percent

Explanation: Net investment equals gross investment minus depreciation: N = G − D. After a 15% rise in both, the new value is N′ = 1.15G − 1.15D = 1.15(G − D) = 1.15N. Therefore, provided the initial net investment is not zero, net investment also rises by exactly 15%. Option A is correct; the initial amounts do not change this proportional result.

Correct answer: A. Initial amounts of GDP and depreciation

Explanation: NDP is calculated as GDP minus depreciation. If initial GDP is G and initial depreciation is D, then initial NDP is G − D, while the new NDP is 1.10G − 1.25D. The percentage change therefore requires the original values of both G and D; the two growth rates alone cannot determine it. Hence option A is correct.

Correct answer: A. NDP rises by 500 crore rupees and NFIA falls by 80 crore rupees

Explanation: Domestic product is based on production within the domestic territory, regardless of who owns the producing firm. Thus, the foreign company’s 500 crore rupees of net value added is included in India’s NDP. Profit remitted to foreign owners is a factor payment from India to abroad, so it reduces NFIA by 80 crore rupees. Therefore, option A is correct.

Correct answer: B. 450 crore rupees

Explanation: NDP measures net production generated within the domestic territory. The foreign company’s 450 crore rupees of net output produced in India is therefore included. The Indian company’s 300 crore rupees produced abroad belongs to the host country’s domestic product, not India’s NDP. Ownership or nationality of the company does not determine domestic product, so option B is correct.

Correct answer: C. 6990 crore rupees

Explanation: Net factor income from abroad is NFIA = factor income received from abroad − factor income paid abroad = 420 − 510 = −90 crore rupees. The relation is NNP = NDP + NFIA. Therefore, NDP = NNP − NFIA = 6900 − (−90) = 6990 crore rupees. The negative NFIA increases NDP relative to NNP, making option C correct.

Correct answer: B. 1050 crore rupees

Explanation: The governing concept is the income method of calculating NDP at factor cost. It equals compensation of employees + rent + interest + profit + mixed income. Therefore, profit = 5600 − (3100 + 300 + 250 + 900) = 5600 − 4550 = 1050 crore rupees. Option B is correct. The other options result from an incorrect subtraction or omission of one factor-income component.

Correct answer: C. 4500 crore rupees

Explanation: NDP at factor cost is obtained by adding all factor incomes generated domestically. Thus, NDPFC = 2400 + 350 + 280 + 870 + 600 = 4500 crore rupees. Transfer receipts and capital gains are not included because they do not represent payment for current factor services. Therefore, option C is the correct answer.

Correct answer: D. 580 crore rupees

Explanation: For a non-market government service, gross value of output is conventionally measured by the sum of production costs. Here it equals compensation of employees plus intermediate consumption plus depreciation: 420 + 130 + 30 = 580 crore rupees. The gross measure includes depreciation, so option D is correct; 550 would omit it.

Correct answer: A. It will fall by about 1.89 percent

Explanation: Real per-capita NDP equals real NDP divided by population. After the changes, it becomes 1.04 times the original NDP divided by 1.06 times the original population. The proportional change is (1.04 ÷ 1.06 − 1) × 100 = approximately −1.89 percent. Therefore, real per-capita NDP falls, and simple subtraction gives only an approximation.

Correct answer: A. 4.85 percent

Explanation: Real per-capita NDP is obtained by dividing real NDP by population. Its growth factor is therefore 1.08 ÷ 1.03. The percentage change is (1.08 ÷ 1.03 − 1) × 100 = approximately 4.85 percent. The often-used subtraction of 8% − 3% = 5% is only a rough approximation, so option A is the more accurate answer.

Correct answer: A. Current output rises but net investment remains negative

Explanation: NDP measures current net production, whereas productive capacity depends importantly on the capital stock. Current output can rise temporarily even when net investment is negative. Negative net investment means depreciation exceeds gross investment, so the capital stock and future production capacity decline. Hence option A is correct. Options B and D increase the capital stock, and C raises productivity, so they do not describe declining capacity.