Chapter 2 National Income - Part 3 Value Added Method

Economics Class 12
Macroeconomics

What is Net Value Added at Factor Cost?

We know that

GDP at Market Price is equal to Total Value Added by All Sectors/Companies

From this Net Indirect Taxes is Reduced

So we get Gross Value Added at Factor Cost

From this, Depreciation is Reduced to arrive at Net Value Added at Factor Cost

 GDP MP (Gross Value Added at Market Price) xx Less  Net Indirect Taxes (Tax-Subsidy) xx Gross Value Added At Factor Cost xx Less Depreciation xx Net Value Added at Factor Cost xx

Example 6

Calculate Net Value Added at Factor Cost

 Particulars Amt in lakhs Subsidy 40 Sales 800 Depreciation 30 Exports 100 Closing Stock 20 Opening Stock 50 Intermediate Purchase 500 Purchase of machinery for own use 200 Import of raw material 60

Question 3

Calculate Net Value Added at Factor Cost

 Particulars Amt in crores Purchase of machinery for production use 100 Sales 200 Intermediate Cost 90 Indirect Taxes 12 Change in Stock 10 GST 6 Stock of Raw material 5

Question 8

Calculate Net Value Added at Factor Cost

 Particulars Amt Consumption of Fixed Capital 600 GST 400 Output Sold 2000 Price per unit of output 10 Net change in stock -50 Intermediate cost 10000 Subsidy 500

NCERT Questions

No questions in this part

Transcript

What is Net Value Added at Factor Cost? We know that GDP at Market Price is equal to Total Value Added by All Sectors/Companies From this Net Indirect Taxes is Reduced So we get Gross Value Added at Factor Cost From this, Depreciation is Reduced to arrive at Net Value Added at Factor Cost GDPMP (Gross Value Added at Market Price) xx Less Net Indirect Taxes (Tax-Subsidy) xx Gross Value Added At Factor Cost xx Less Depreciation xx Net Value Added at Factor Cost xx Example 6 Calculate Net Value Added at Factor Cost Particulars Amt in lakhs Subsidy 40 Sales 800 Depreciation 30 Exports 100 Closing Stock 20 Opening Stock 50 Intermediate Purchase 500 Purchase of machinery for own use 200 Import of raw material 60 -a- -ea- Question 1 Calculate Net Value Added at Factor Cost Particulars Amt in crores Purchase of machinery for production use 100 Sales 200 Intermediate Cost 90 Indirect Taxes 12 Change in Stock 10 GST 6 Stock of Raw material 5 -a- -ea- Question 2 Calculate Net Value Added at Factor Cost Particulars Amt Consumption of Fixed Capital 600 GST 400 Output Sold 2000 Price per unit of output 10 Net change in stock -50 Intermediate cost 10000 Subsidy 500 -a- -ea- NCERT Questions No questions in this part