Chapter 2 National Income - Part 4 Income Method

Economics Class 12
Macroeconomics

## Comparison-Value Added method vs Income Method of Measurement of National Income

Example 24

From the following information, estimate:

(i) Value of output;

(ii) Net value added at factor cost;

(iii) Prove that income generated is equal to net value added at factor cost.

 Particulars ₹ in Crores (i) Increase in unsold stock 600 (ii) Sales 10,625 (iii) Purchase of raw materials 2,625 (iv) Indirect Taxes 1,200 (v) Subsidies 400 (vi) Operating surplus 3,740 (vii) Mixed incomes 100 (viii) Wages and Salaries 3,460 (ix) Depreciation 500

In this question, we have to Calculate National Income using both

Value Added Method and Income Method

Income Method

 Calculation of National Income Different Factor Incomes Operating Surplus 3740 Compensation to Employees 3460 Mixed Income 100 Total (Domestic Income NDP FC ) 7300 Add NFIA 0 NNP FC (National  income) 7300

#### Question 21

From the data given below, prove that "Net Value Added at Factor Cost' is equal to 'Income Generated.

 Particulars Rs  in crores (i) Opening stock 200 (ii) Closing stock 400 (iii) Purchase of raw materials 300 (iv) Sales 1,200 (v) Corporate tax 100 (vi) Undistributed profits 50 (vii) Dividends 50 (viii) Rent 150 (ix) Interest 100 (x) Depreciation 200 (xi) Indirect taxes 150 (xii) Subsidies 50 (xiii) Wages and salaries 350