Aggregates related to national income - NNP

Correct answer: A. Official NNP may not provide a complete picture of the economy

Explanation: Black income refers to income that is concealed from official authorities and therefore may be absent from national-income statistics. If such income is excluded, measured NNP can be lower than the economy’s actual income. Hence, policymakers should treat official NNP as an incomplete estimate, consider under-reporting, and avoid drawing welfare or policy conclusions without supporting evidence.

Correct answer: C. 1070 crore rupees

Explanation: Use the relationship NNP = NDP + NFIA. Here, NDP is 1100 crore rupees and NFIA is negative 30 crore rupees. Therefore, NNP = 1100 + (−30) = 1070 crore rupees. A negative NFIA means that payments to foreign factors exceed factor income received from abroad, so the national measure is lower than the domestic measure. Thus option C is correct.

Correct answer: D. 1000 crore rupees

Explanation: The relationship is NNP = NDP + NFIA. Rearranging it gives NDP = NNP − NFIA. Substituting the values, NDP = 960 − (−40) = 960 + 40 = 1000 crore rupees. Since NFIA is negative, subtracting it increases the domestic product relative to the national product. Therefore, option D, 1000 crore rupees, is correct.

Correct answer: B. 2690 crore rupees

Explanation: First convert gross domestic product to net domestic product: NDP at factor cost = 2800 − 170 = 2630 crore rupees. Then convert the domestic measure to the national measure by adding net factor income from abroad: NNP at factor cost = 2630 + 60 = 2690 crore rupees. Option D omits the foreign income adjustment, while the others apply an incorrect operation. Hence option B is correct.

Correct answer: A. 4770 crore rupees

Explanation: Two separate adjustments are required. First convert GNP to NNP by deducting depreciation: NNP at market price = 5200 − 320 = 4880 crore rupees. Then convert the national measure to the domestic measure by deducting positive NFIA: NDP at market price = 4880 − 110 = 4770 crore rupees. Therefore option A is correct; C stops after the first step, while B and D use incorrect signs or totals.

Correct answer: C. ₹800 crore

Explanation: National income is defined as NNP at factor cost. To obtain NNP at market price, add net indirect taxes: ₹720 crore + ₹80 crore = ₹800 crore. Therefore, option C is correct. Subtracting the tax would move in the opposite direction, while ₹720 crore leaves the measure at factor cost and ₹880 crore adds the tax twice or miscalculates it.

Correct answer: B. ₹1,290 crore

Explanation: When moving from market price to factor cost, subtract net indirect taxes. Therefore, NNP at FC = NNP at MP − NIT = ₹1,400 crore − ₹110 crore = ₹1,290 crore. Option D incorrectly adds the taxes, option C ignores them, and option A subtracts an amount that is not given. Hence option B is correct.

Correct answer: C. ₹1,975 crore

Explanation: The governing conversion for NNP is NNP at Market Price = NNP at Factor Cost + Net Indirect Taxes. Therefore, NNP at market price = ₹1,850 crore + ₹125 crore = ₹1,975 crore, making option C correct. ₹1,850 crore is the starting factor-cost figure, while ₹1,725 crore subtracts the tax and ₹2,100 crore adds too much. Depreciation is irrelevant because both values are already NNP.

Correct answer: B. NNP at factor cost

Explanation: In national income accounting, national income is defined as Net National Product at Factor Cost, or NNP at factor cost. “National” includes factor income accruing to residents, “net” deducts depreciation, and “factor cost” measures payments earned by factors of production. GDP and GNP are gross aggregates, while NDP is domestic rather than national. Hence, option B is correct.

Correct answer: B. ₹13,650 crore

Explanation: National income is NNP at factor cost. First calculate net indirect taxes: indirect taxes minus subsidies = ₹1,000 crore − ₹250 crore = ₹750 crore. Convert NNP at market price to factor cost by subtracting this amount: ₹14,400 crore − ₹750 crore = ₹13,650 crore. Hence option B is correct; C omits the adjustment and the other values use an incorrect tax treatment.

Correct answer: B. ₹11,300 crore

Explanation: National income equals NNP at factor cost. The conversion is NNP at market price = NNP at factor cost + net indirect taxes. Since net indirect taxes are negative ₹300 crore, NNP at market price = ₹11,600 crore + (−₹300 crore) = ₹11,300 crore. Thus option B is correct. The negative tax figure lowers market price below factor cost; simply retaining or adding ₹300 would be wrong.