- (1) Gross capital formation (GCF) definition: Standard national accounting (SNA) defines GCF as Gross Fixed Capital Formation + Changes in Inventories + Acquisitions less disposals of valuables. Statement (1) omits 'valuables', making it incomplete and thus incorrect based on the full definition. - (2) Net value added at factor cost (NVAfc): NVAfc represents the income generated by factors of production (labour and capital) within a specific production unit or economy, after accounting for depreciation. It is indeed calculated as the sum of factor payments (compensation of employees + operating surplus/mixed income). This statement is correct. - (3) National Income (NI): National Income (NNPfc) is the sum of factor incomes accruing to the normal residents of a country from economic activities. It explicitly excludes income from non-economic activities. This statement is incorrect. - (4) National Income to Personal Income: Personal Income is derived from National Income by subtracting components of NI that are earned but not received by households (like corporate taxes, retained earnings, social security contributions) and adding incomes received by households but not currently earned (like transfer payments such as pensions, scholarships, unemployment benefits). This statement correctly describes the process.
Consider the following statements: (1) Gross capital formation consists of outlays on additions to the fixed assets of the economy plus gross changes in the level of inventories (2) Net value added at factor cost is the sum total of all the factor payments (3) The National Income is the total amount of income accruing to a country from economic and non-economic activities in a year time (4) In moving from national income to personal income we must subtract the incomes earned but not received and add incomes received but not currently earned Choose the correct answer from the options given below :
Asked in HPPSC HPAS Prelims 2021 · Topic: National Income & Gross Domestic Product (National Income (NI), Personal Income (PI), Disposable Personal Income (DPI))
More Economic Development questions
- Read the following informations carefully and answer the question given below : The sum of the income of Ramu and Shayamu is more than the sum of the income of Chandru and Deepu. The sum of the income of Ramu and Chandru is same as the sum of the income of Shayamu and Deepu. Moreover Ramu earns half as much as the sum of the income of Shayamu and Deepu. Whose income is the highest ?
- In National Income (NI) accounts, Personal Income (PI) is defined as
- Personal Disposable income is equal to
- In order to obtain personal income from National Income, we must - (A) add to National Income, those incomes which are earned but not received. (B) subtract from National Income, those incomes which are received but currently not earned. Choose the correct option - (1) Both (A) and (B) are incorrect (2) Only (B) is correct (3) Only (A) is correct (4) Both (A) and (B) are correct (5) Question not attempted
- Transfer Payments Pensions, subsidies, gifts. Received by households, but not earned from current production. Not part of NI, but part of PI.Therefore, the formula is: PI = NI - (Undistributed Profits + Corporate Taxes + Social Security Contributions) + Transfer Payments.So, from NI to PI: - Undistributed profits, corporate taxes, social security contributions are SUBTRACTED. These are "earned but not received" in terms of direct personal income in the current period for shareholders/employees. Statement (A) says to ADD these. So (A) is false. - Transfer payments are ADDED.
- In macro-economics, disposable income refers to what?
- Read the following statements and choose the correct option : Statement I : Net Domestic Product = Gross Domestic Product + Depreciation Statement II : Per Capita Income = Net Domestic Product/Total Population of the Nation Statement III : Net Domestic Product is the better metrics than Gross Domestic Product for comparing the economies of the world
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