As per this Method
We calculate total final expenditure of different sectors of economy
We reduce Depreciation and Net Indirect taxes to arrive at NDP at FC
We add Net Factor Income from abroad to get National income
Steps followed
Step 1
Identify Different Sectors of economy and calculate their Final Expenditure
Step 2
Calculate Total Expenditure of all Sectors to arrive at GDP at MP
Step 3
We reduce Depreciation and Net Indirect taxes to arrive at NDP at FC (Domestic Income)
Step 4
We add NFIA to get National Income
Example 27
Calculate GDP at MP
Step 1
We calculate Gross Domestic Capital Formation
* Gross Domestic Capital Formation
=Expenditure on Fixed Assets +Expenditure on Stock
=Gross Fixed Capital formation + Inventory Investment
300 + 400 = 700
Step 2
We calculate Net Exports
Net Exports
=Exports -Imports
600-500 =100
Step 3
We calculate GDP Mp
Question 29
Calculate National Income.
Note
Consumption of Fixed Capital is the other name of Depreciation
Depreciation =Consumption of Fixed Capital = 700
Question 30
Calculate National Income from the following data:
Note
Here, we are given Net Imports instead of Net Exports
Net Imports =30
So Net Export = - 30