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Vibhav
Subject: Economics
, asked on 21/11/17
Suppose firm A sold raw material to firm B for Rs. 1000 and to firm C for Rs. 600. Firm B sold product partly to private consumers for Rs. 800 and the remaining product was exported Rs.600. Firm C part of its product to the government for Rs. 500 for public consumption and the remaining product worth Rs. 500 was unsold stock left with it. (Assume that A buys raw material) (i) Find the value added by firm A, firm B and firm C (ii) Total consumpution Expenditure (iii) Saving and Investment
Answer
1
Vibhav
Subject: Economics
, asked on 19/11/17
In Q21 Net Value Added at Factor Cost = Income Generated = NDP at FC
Now Sales - Purchase of raw material = GDP at MP (900)
GDP at MP - Depreciation - Net Indirect Taxes = NDP at FC
900 - 200 - (150-50) =600 = NDP at FC
However the answer is 800 crores
So what's the error ????
21. From the data given below, prove that 'Net Value Added at Factor Cost' is equal to 'Income Generated'
Answer
1
Ipsita Chakravarty
Subject: Economics
, asked on 18/11/17
Explain how non monetary exchanges are a limitation in taking gross domestic product as an index of welfare ?
Answer
1
Vibhav
Subject: Economics
, asked on 8/11/17
Let firm A produce goods worth ₹500 and its intermediate cost (IC) be ₹200 and these goods are sold to firm B
Then let Firm B sell these goods to Firm C for ₹500 and Firm C sells these goods for ₹1000 to the final consumer
So as per value added method National income should be (500-200) + (700-500) + (1000-700) = 800
But as per Expenditure Method it should be ₹1000 as the final consumption expenditure is worth ₹1000
So why is difference in finding the answer using different methods????
Answer
1
Shanaya
Subject: Economics
, asked on 7/11/17
Why are chalks,dusters etc purchased by a school an intermediate good?
Answer
1
Shanaya
Subject: Economics
, asked on 7/11/17
how does investment grant and war damages lead to capital formation?
Answer
1
Vibhav
Subject: Economics
, asked on 3/11/17
Let firm A produce goods worth ₹500 and its intermediate cost (IC) be ₹200 and these goods are sold to firm B
Then let Firm B sell these goods to Firm C for ₹500 and Firm C sells these goods for ₹1000 to the final consumer
So as per value added method National income should be (500-200) + (700-500) + (1000-700) = 800
But as per Expenditure Method it should be ₹1000 as the final consumption expenditure is worth ₹1000
So why is difference in finding the answer using different methods????
Answer
1
Vibhav
Subject: Economics
, asked on 3/11/17
Suppose a firm produces and sells goods worth ₹100 to the final consumer
However it had taken a loan from Bank for consumption purposes the interest on which was ₹30
This is a part of intermediate cost
In this case as per value added method National income is ₹70 however as per Expenditure method it is ₹100 as that is final expenditure by consumer households
So why is this difference in National income by using 2 different methods???
Answer
1
Vibhav
Subject: Economics
, asked on 1/11/17
Expenditure by Governemnt on Flood Victims is a transfer payment while Expenditure by Government on providing free medical services is a part of Government Final Consumption Expenditure
Whats the difference in these 2 cases????
In both cases the government is helping out the needy people
In neither case are the citizens performing any productive service for the government
and both these cases would be added in National income via Income Method as income of food supplier who supplies food to flood victims and income of doctor who provides free medical services
Answer
1
Vibhav
Subject: Economics
, asked on 1/11/17
Expenditure by father on marriage of his daughter is considered as transfer payment and not included in National Income
Expenditure on Education of his daughter is not considered as transfer Payment and included in National Income
Whats the difference between these 2 cases????
In both the cases, the daughter isnt performing any productive service for her father and also why arent both the cases a part of Private Final Consumption Expenditure
Both these transactions would be recorded under Income Method as income of school and also as income of food caterer who provides his food in the marriage
Answer
1
Vibhav
Subject: Economics
, asked on 1/11/17
Is it necessary that the intermediate cost of one firm is an income for some other firm in the economy as per circular flow of income???
If this is true, then interest on loans taken for consumption purpose is an intermediate cost so it should be income for Banks/other institutions which provide such loans, But it cant be factor income as the loan is not taken for productive purposes so what type of income is it?????
And should it be included in National Income???
Answer
1
Vibhav
Subject: Economics
, asked on 1/11/17
Loans can be taken for consumption as productive purposes
Please specify what do we mean by 'consumption purposes' and 'productive purposes'
Answer
1
Vibhav
Subject: Economics
, asked on 1/11/17
Please explain 11th point using an example
Also is issue of shares for purchase of Machinery included in the National Income?????
11.
Items not included in national income
Reason
Inter-firm payments like payment of interest or dividend from one firm to another
It has already been included in the profit of the firm which makes the payment of interest/dividend to the other firm.
Answer
2
Vibhav
Subject: Economics
, asked on 31/10/17
Is interest paid by one firm to another a part of Intermediate Cost???? Also is interest paid on loans taken for consumption purposes (please give examples) an intermediate cost???? Also please explain this answer with a relevant answer
Why is interest paid by one firm to another not included in national income under the income method??? ?
1 Answer posted 7 hrs ago
Dear student,
The interest paid by one firm to another is not included in the national income by income method because it was already included as a part of the profits of the firm.
Answer
1
Vibhav
Subject: Economics
, asked on 31/10/17
Suppose a firm produces and sells goods worth ₹100 to the final consumer
However it had taken a loan from Bank for consumption purposes the interest on which was ₹30
This is a part of intermediate cost
In this case as per value added method National income is ₹70 however as per Expenditure method it is ₹100 as that is final expenditure by consumer households
So why is this difference in National income by using 2 different methods???
Answer
1
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What are you looking for?
Now Sales - Purchase of raw material = GDP at MP (900)
GDP at MP - Depreciation - Net Indirect Taxes = NDP at FC
900 - 200 - (150-50) =600 = NDP at FC
However the answer is 800 crores
So what's the error ????
21. From the data given below, prove that 'Net Value Added at Factor Cost' is equal to 'Income Generated'
Then let Firm B sell these goods to Firm C for ₹500 and Firm C sells these goods for ₹1000 to the final consumer
So as per value added method National income should be (500-200) + (700-500) + (1000-700) = 800
But as per Expenditure Method it should be ₹1000 as the final consumption expenditure is worth ₹1000
So why is difference in finding the answer using different methods????
Then let Firm B sell these goods to Firm C for ₹500 and Firm C sells these goods for ₹1000 to the final consumer
So as per value added method National income should be (500-200) + (700-500) + (1000-700) = 800
But as per Expenditure Method it should be ₹1000 as the final consumption expenditure is worth ₹1000
So why is difference in finding the answer using different methods????
However it had taken a loan from Bank for consumption purposes the interest on which was ₹30
This is a part of intermediate cost
In this case as per value added method National income is ₹70 however as per Expenditure method it is ₹100 as that is final expenditure by consumer households
So why is this difference in National income by using 2 different methods???
Whats the difference in these 2 cases????
In both cases the government is helping out the needy people
In neither case are the citizens performing any productive service for the government
and both these cases would be added in National income via Income Method as income of food supplier who supplies food to flood victims and income of doctor who provides free medical services
Expenditure on Education of his daughter is not considered as transfer Payment and included in National Income
Whats the difference between these 2 cases????
In both the cases, the daughter isnt performing any productive service for her father and also why arent both the cases a part of Private Final Consumption Expenditure
Both these transactions would be recorded under Income Method as income of school and also as income of food caterer who provides his food in the marriage
If this is true, then interest on loans taken for consumption purpose is an intermediate cost so it should be income for Banks/other institutions which provide such loans, But it cant be factor income as the loan is not taken for productive purposes so what type of income is it?????
And should it be included in National Income???
Please specify what do we mean by 'consumption purposes' and 'productive purposes'
Also is issue of shares for purchase of Machinery included in the National Income?????
11.
Why is interest paid by one firm to another not included in national income under the income method??? ?
1 Answer posted 7 hrs ago
Dear student,
The interest paid by one firm to another is not included in the national income by income method because it was already included as a part of the profits of the firm.
However it had taken a loan from Bank for consumption purposes the interest on which was ₹30
This is a part of intermediate cost
In this case as per value added method National income is ₹70 however as per Expenditure method it is ₹100 as that is final expenditure by consumer households
So why is this difference in National income by using 2 different methods???