National Income Accounting Flashcards
Define Stock
Quantity measured at time ‘t’
Define Flow
Quantity measured over time ‘t’ (or) per unit time ‘t’
Factor Income is named as ____ for the following:
1. Land
2. Labor
3. Capital
4. Entrepreneurship
- Land - Rent
- Labor - Wages (or) Salaries
- Capital - Interest
- Entrepreneurship - Profits
Circular Flow of Income:
- Real Flow - ______
- Money Flow - ________
- Real Flow
HHs —–> Firms [Factors of Production: Labor]
Firms ——-> HHs [Goods and Services] - Money Flow
HHs ——-> Firms [Expenditure]
Firms ——-> HHs [Wages (or) Salaries]
Resident in Economy
Minimum of 1 year outside the territory carrying consumption, production, and investment in that said country
Exception(s): Students, Govt. Officials
Will the goods resold money be added to NI?
Will the goods brought with the resold money be added to NI?
Will the commission taken in selling the used vehicle by a mediator be added to NI?
[1] No - As there is no new production
[2] Yes - The money is used to value the goods produced newly and used as the final products
[3] Yes - Mediation is considered as service
Define:
MP (Market Price)
BP (Base Price)
FC (Factor Cost)
MP = Cost of Production (COP) + Net Production Taxes + Net Product Taxes
BP = COP + Net Production Taxes
FC = Cost of Production
Relation between Factor Cost and Market Price
Other forms of production and product taxes
MP = FC + Indirect Taxes - Subsidies
GDP at MP
GDP (MP) = C + I + G + NX
GDP (at FC)
GDP (FC) = GDP(MP) - Indirect Taxes + Subsidies
NDP (at MP)
NDP (MP) = GDP (MP) - Depreciation
NDP (at FC)
NDP (FC) = NDP (MP) - Net Production Taxes - Net Product Taxes
GNP (at MP)
GNP (MP) = GDP (MP) + NFIA
GNP (at FC)
GNP (FC) = GNP (MP) - Net Production Taxes - Net Product Taxes
NNP (at MP)
NNP (MP) = GNP (MP) - Depreciation
NNP (at FC)
National Income
NNP (FC) = NNP (MP) - Net Production Taxes - Net Product Taxes
(or) From the above equations
NNP (FC) = NDP (FC) + NFIA
Define Product Taxes
Per unit basis tax when produced/sold
(Eg) GST, VAT, Excise Duty on Alcohol
Define Production Taxes
Tax upon good rather volume
(Eg) Property Tax
What were the changes to New GDP Series?
- Change of Base year from 2004 - 05 to 2011 - 12
- Change of measure from GDP (FC) to GDP (MP)
- Change of measure from GVA (FC) to GVA(BP)
Define MER [Money Exchange Rate]
MER determined through the demand and supply of dollars in India
Define PPPER [Purchasing Power Parity Exchange Rate]
PPPER = (Expenditure on X in India (INR)) : (Expenditure on X in USA (USD))
Relation between MER and PPPER
GDP MER < GDP PPPER
- India is 5th largest economy according to MER
- India is 3rd largest economy according to PPPER
