CBSE Class 12 Economics National Income And Related Aggregates Worksheet Set D

TOPIC - National Income & Related Aggregates

Question: If an individual deposits a sum of money in a bank,then the amount of traditional credit that the banking system can create is
(a) fraction of that sum defined by the cash reserve ratio
(b) a fraction of that sum defined by the statutory liquidity ratio
(c) a multiple of the sum defined by the cash reserve ratio 
(d) None of the above 

Answer: D 

Question: In the AD-AS model, the level of aggregate demand can influence the level of output.
(a) If and only if aggregate supply has a positive relationship with the price level
(b) If and only if the price level is constant
(c) If and only if aggregate supply is not invariant with changes in the price level
(d) If and only if aggregate supply is invariant with changes in the price level 

Answer: A

Question: The main cause(s) of deficit demand is/are 
(a) decrease in money supply
(b) increase in public expenditure
(c) decrease in investment demand
(d) Both (a) and (c) 

Answer: D 

Question: When does a situatioin of deficient demand arise in an economy?
(a) AD > AS
(b) S > I
(c) AD < AS
(d) S < I 

Answer: C

Question: …… refers to selling of government approved securities by RBI to general public and commercial banks in case of excess demand.
(a) Bank rate
(b) CRR
(c) SLR
(d) Open market operation 

Answer: D

Question: By increasing the tax burden on the producers, the government intends to 
(i) correct the situation of inflationary gap
(ii) correct the situation of excess demand Which statement is true?
(a) Both (i) and (ii)
(b) Only (i)
(c) Only (ii)
(d) None of the above 

Answer: A 

Question: In case of an underemployment equilibrium, which of the following alternative is not true? 
(a) Aggregate demand is equal to aggregate supply.
(b) There exist excess production capacity in the economy.
(c) Resources are not fully and efficiently utilised.
(d) Resources are fully and efficiently utilised. 

Answer: D

Question: In order to correct the situation of excess demand
(i) cost of credit is raised
(ii) availability of credit is raised
(iii) availability of credit is reduced
Alternatives
(a) Only (iii)
(b) Only (i)
(c) Both (i) and (iii)
(d) (i), (ii) and (iii) 

Answer: C

Question: To reduce credit availability in the economy, the central bank may ............. .
(a) buy securities in the open market
(b) sell securities in the open market
(c) reduce reserve ratio
(d) reduce repo rate 

Answer: B 

Question: Match the following.  

Codes
A B C D                                A B C D
(a) (i) (ii) (iii) (iv)               (b) (ii) (iii) (iv) (i)
(c) (iii) (ii) (iv) (i)               (d) (ii) (iii) (i) (iv)
                                        
Answer: B

Question: The money multiplier in an economy increases with 
(a) increase in cash reserve ratio
(b) increase in statutory liquidity ratio
(c) increase in banking habits of the population
(d) increase in the population of the country 

Answer: C 

Question: The Cash Reserve Ratio (CRR) refers to
(a) the liquid cash that banks have to maintain with the Reserve Bank of India as a certain percentage of their demand and time deposits.
(b) the cash that banks have to keep in their vaults in order to meet sudden demand from depositors in times of crisis.
(c) the cash that households have to keep in reserve to meet sudden increases in the price of essential goods and services.
(d) the cash that the government keeps in reserve so as to be ready to meet unexpected contingencies. 

Answer: A

Question: The central bank can increase availability of credit by
(a) raising repo rate
(b) raising reverse repo rate
(c) buying government securities
(d) selling government securities

Answer: A

Question: Which of the following is not a tool of monetary policy?
(a) Tax rate
(b) Interest rate
(c) Cash reserve ratio
(d) Open market operations 

Answer: A

Question: Match the following. 

Codes

A B C                     A B C

(a) (i) (ii) (iii)       (b) (iii) (ii) (i)
 (c) (iii) (i) (ii)      (d) (ii) (iii) (i) 

Answer: B 

Question: With which component of monetary policy, central bank tries to attain economic stability in the country?
(a) Supply of money
(b) Interest rate
(c) Availability of money
(d) All of these 

Answer: D 

Question: Which fiscal measure should be adopted for correcting deficient demand?
(a) Government should spend more on public works.
(b) Taxation should be reduced.
(c) Public debt should be reduced.
(d) All of the above 

Answer: A

Question: Inflationary gap shows the measurement of
(a) deficit demand
(b) surplus demand
(c) full employment
(d) None of the above 

Answer: A 

Assertion-Reasoning MCQs

(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is the not the correct explanation of Assertion (A).
(c) Assertion (A) is true, but Reason (R) is false.
(d) Both the statement are false.

Question: Assertion (A) In a situation of deficient demand,there is underemployment equilibrium in an economy.
Reason (R) Owing to deficient AD, equilibrium between desired AD and desired AS is struck at a lower level of GDP, lower than the full employment in an economy. 

Answer: A

Question: Assertion (A) AS increases proportionate to the increase in AD as long as there is excess capacity in the economy.
Reason (R) Excess capacity arises because of the deficiency of demand, so that as demand increases, supply increases proportionately. 

Answer: A 

Question: Assertion (A) Fiscal policy focuses on both the principles of economic growth and stability.
Reason (R) Stability is achieved by correcting the situation of inflationary and deflationary gap,while growth is achieved by way of lower taxation and higher subsidies to the producers. 

Answer: A

Question: Assertion (A) During periods of economic downturn, Central Bank raises cash reserve ratio as a monetary policy tool to stabilise the economy.
Reason (R) This in turn will increase the credit creation power of the commercial banks and thus reduces the level of AD in an economy. 

Answer: D 

Question: Assertion (A) SLR is increased to correct the situation of deflationary gap.
Reason (R) Higher SLR increases credit creation capacity of commercial banks which in turn increases liquidity in the capital market. 

Answer: D 

Question: Assertion (A) During the pandemic, income of the people have fallen and as a result there has been a reduction in aggregate demand.
Reason (R) According the Keynesian economics,government should follow expansionary fiscal policy implying a higher level of government
expenditure and lower level of taxes. 

Answer: A 

Question: Assertion (A) During periods of economic depression,economy is caught in a low level equilibrium trap as investment in the private sector tends to slide to its bottom.
Reason (R) The government can break the deadlock of low demand side factors by pumping investment into an economy and there by raising AD till such time the private investment is revived to achieve higher level of output and employment. 

Answer: A 

Very Short Answer Type Questions

Question. What is macroeconomics?
Answer: wMhaocrleo.e Ecoxnamompilces: dPeraolbs lwemith o efc uonneommpicl oisysmueesn (to irn e tchoen oecmoinco pmroyb. lems) at the level ofan economy as a

Question. Define economic agents.
Answer: Economic agents are the individuals or institutions who take economic decisions.

Question. What is meant by partial equilibrium?
Answer: aPsasrutmialp teioqnu itlhibarti uthme rer eifse nrso cthoa neqgeu iilnib orituhmer mina rokneets (mlikaer klaebt o(usar ym, acrokmetm oor dciatpy itmal amrkaertk) eto).n the

Question. Name the two types of final goods.
Answer: (i) Final consumer goods, and (ii) Final producer goods.

Question. Define intermediate consumption.
Answer: iInntteerrmmeeddiiaattee gocoondssu dmupritniogn a nr eafcecrosu ntoti ngex ypeeanr.d iture by the producers on the purchase of

Question. What is meant by intersectoral flows ?
Answer: dIniffteerrseenctt osreaclt oflros wosf trheefe erc oton othmey .fl ow of goods and services as well as the flow of money among

Question. What is meant by circular flow of income?
Answer: Circular flow of income refers to unbroken circularity of real flows and money flows across different sectors of the economy.

Question. Define monetary flow.
Answer: Monetary flow (or money flow) refers to the flow of factor incomes, viz., rent, interest, profit and sweargveicse sfr. oTmhe thhoeu pserhodoludcsi nspge snedc ttohre itro i nthcoem heosu osne hthoeld g oseocdtos ra nads smerovniceetsa pryr ordeuwcaerdd sb yfo thr et hperiord fauccitnogr sector. Accordingly, money flows back to the producing sector as household expenditure.

Question . What is meant by normal residents of a country?
Answer: cNeonrtmrea ol fr eesciodneonmts ica rine ttehroesset lrieess iidne nthtsa tw choou notrrdyi.n arily reside in the country concerned and whose

Question . What is meant by domestic territory of a country?
Answer: aDcotimvietisetisc o tfe trhreit ocoryu notfr ya gceonuenratrtye s rietsf edros mtoe seticco innocmomice .t erritory of a country in which economic

Question . What is factor income?
Answer: wFaacgteosr, iinncteormeset iasn tdh ep irnocfiotm foer rtehcee isveerdv ibceys o rwennderesr eodf tihne t hfaec ptorrosd oufc ptiroond purcoticoenss i. n the form of rent,

Question: Keynesian theory tell us that inflationary gap emerges only when full employment is reached.
But, in India we often find high rate of inflation along with high rate of unemployment. How can you explain this paradox?
Answer: Keynesian theory is related to the problem of developed economies. In these economies, unemployment occurs because of the lack of Aggregate Demand (AD). Lack of AD leads to a cut in planned output. Accordingly, lay-off occurs and excess capacity emerges. In such situations, increase in expenditure (implying increase in AD) would lead to increase in planned output,without any increase in the price level.
The inflationary gap would emerge only when AD continues to rise even when excess capacity is totally exhausted and full employment is reached.
In developing countries like India , unemployment occurs not because of the lack of AD, but because of the lack of production capacity or the lack of capital. Unlike developed countries, there is no excess capacity in less developed countries like India. Accordingly, price level starts rising following increase in AD, even when there is unemployment in the economy.

Question: Explain the concept of inflationary gap. Explain the role of repo rate in reducing this gap. 
Answer: Inflationary gap is the excess of aggregate demand over and above its level required to maintain full employment equilibrium in the economy. It causes excess demand in the economy. Owing to excess demand, price levels tend to rise without any rise in the level of income or employment in the economy.
Repo rate is the rate at which the central bank lends money to the commercial banks. To correct the situation of inflationary gap, repo rate is increased. As a follow-up action, the commercial banks raise the market rate of interest (the rate at which the commercial banks lend money to the consumers and the investors) which reduces demand for credit.
Consequently, consumption expenditure and investment expenditure are reduced implying a reduction in aggregate demand, as required to correct inflationary gap.

Question: Explain the concept of deflationay gap and the role of ‘open market operations’ in reducing this gap.
Answer: Deflationay gap is the shortfall in aggregate demand from the level required to maintain full employment equilibrium in the economy. It causes deficient demand in the economy . Owing to deficient demand, planned level of output is reduced. Along with reduction in the level of output, level of income and employment also tend to reduce. The economy is driven into a state of low level equilibrium trap.
Open market operations is the policy that focuses on increasing and decreasing the stock of liquidity (or cash balances) with the people as well as with the commercial banks, through sale and purchase of securities by the central bank. During the situation of deflationary gap, when cash balances need to be increased (to stimulate the level of aggregate demand), the central banks starts buying securities. Purchase of securities injects purchasing power into the money market.
Cash balances of the commercial banks start picking up.
This enhances their capacity to create credit. Flow of credit increases, leading to increase in AD and deflationary gap is corrected.

Question: What is ‘deficient demand’? Explain the role of ‘bank rate’ in removing it. 
Answer: Deficient demand refers to a situation when Aggregate Demand (AD) is short of Aggregate Supply (AS) corresponding to full employment in an economy.
Bank rate is the rate at which the central bank lends money to the commercial banks. To correct the situation of deficient demand, bank rate is decreased. As a follow-up action, the commercial banks lower the market rate of interest (the rate at which the commercial banks lend money to the consumers and the investors). This increases demand for credit.
Consequently, consumption expenditure and investment expenditure are increased, implying an expansion in aggregate demand, as required to correct deficient demand. 

Question: What is ‘deficient demand’'? Explain the role of ‘margin requirements’ in removing this gap.
Answer: Deficient demand refers to a situation when Aggregate Demand (AD) is short of Aggregate Supply (AS) corresponding to full employment in an economy.
Margin requirements refer to minimum down payment that the borrowers have to make as a percentage of their total borrowing from the commercial banks. To correct the situation of deficient demand, m argin requirement is reduced. Lower margin requirement acts as an incentive to borrow. This induces borrowers to raise more credit implying a rise in aggregate demand, as desired to correct deficient demand.

Question: What is ‘excess demand’? Explain the role of ‘reverse repo rate’ in removing it.
Answer: Excess demand refers to the situation when aggregate demand is in excess of aggregate supply corresponding to full employment.
Reverse repo rate is the rate of interest at which commercial banks can park their surplus funds with the central bank, for short period of time. To correct the situation of excess demand, reverse repo rate is increased.
As a follow-up action, the commercial banks will be encouraged to increase their deposits with the central bank. This, in return, will reduce their ability to lend money. Consequently, consumption expenditure and investment expenditure will be reduced, implying a reduction in aggregate demand, as required to correct excess demand.

Question: Read the following statements carefully. Write true or false with an appropriate reason.
(i) Central bank buys government securities in the open market to correct the situation of inflationary gap.
(ii) SLR is increased to correct the situation of deflationary gap.
Answer: (i) False, Central bank sells government securities in the open market to correct the situation of inflationary gap.
It is by selling the securities that the banks soaks liquidity from the market which is expected to correct the inflationary gap.
(ii) False, SLR is decreased to correct the situation of deflationary gap. Lower SLR increases credit creation capacity of the commercial banks because a cut in the SLR raises cash balances with the commercial banks.
Accordingly, availabiltiy of credit increases in the capital market. This increases aggregate demand and deflationary gap is corrected. 

Question: Giving valid reasons, state whether the following statements are true or false.
(i) An excess of aggregate demand over full employment level of aggregate supply represents a situation of inflationary gap.
(ii) If the ratio of Marginal Propensity to Consume (MPC) and Marginal Propensity to Save (MPS) is 4 : 1, then the value of investment multiplier will be 4. 
Answer: (i) The given statement is true, an excess of aggregate demand over full employment level of aggregate supply represents the situation of inflationary gap because when economy is working at full employment level, there is no chance of increase in production and aggregate demand still increases then producers have to increase the general price level to control the situation.
(ii) The given statement is false.
Ratio of MPC and MPS is 4:1
MPC 4/5=0.8; MPS = = 1/5 = 0.2 ⇒ K = 1/MPS
K = 1 / 0.2 = 5
Thus, the value of multiplier is 5 not 4. 

Question: Explain all the changes that takes place in an economy when aggregate demand and aggregate supply are not equal.
Answer: (i) If aggregate demand is greater than aggregate supply i.e., AD > AS, flow of goods and services in the economy tends to be less than their demand. The existing stocks of the producers would be sold out and the producers would suffer the loss of unfulfilled demand.
To rebuild the desired stocks and avoid the loss of unfulfilled demand, the producers would plan greater production. AS would increase to become equal to AD. This is how AS converges with AD.
(ii) If aggregate demend is less than aggregate supply, i.e.,AD < AS, flow of goods and services in the economy tends to exceed their demand. As a result, some of the goods would remain unsold.
To clear unwanted stocks, the procedures would plan a cut in production. Consequently, AS would reduce to become equal to AD. This is how AS adapts itself to AD.

Question: If government spending leads to multiple times increase in GDP, why should fiscal deficit be curbed?
Answer: Government spending leads to multiple times increase in GDP only when there is excess capacity in the economy or when planned output is low owing to lack of Aggregate Demand (AD).
But, in situations when excess capacity does not exist (or when AD is not deficient), government spending would only contribute to inflationary spiral in the economy. In such situations (when inflation needs to be curbed), the government must curb fiscal deficit.

Question: Covid-19 has significantly impacted the income level of the households and thus have reduced the level of household and investment expenditure and thereby the level of AD.
Examine the economic implications of increase in government investment expenditure when the economy is in a state of depression.
Answer: During depression, the economy faces a deficient demand situation. To correct this situation,the government takes various fiscal measures. Increase in government investment expenditure is the principal instrument to correct the deficiency in demand.
Increase in government investment expenditure acts as a pump priming when the inducement to invest is low,owing to deficiency of demand.
It breaks the vicious circle of ‘low demand-low inducement to invest-low production-low income-low demand’. The economy is pulled out of the state of depression.
The GDP growth accelerates in response to increase in AD, trigged by increase in government investment expenditure

Question: Explain the role of taxation in reducing excess demand. 
Answer: Excess demand refers to the situation when Aggregate Demand (AD) is in excess of Aggregate Supply (AS) corresponding to full employment in the economy.

In a situation of excess demand, government raises the rates of all taxes.
This reduces the purchasing power of the people and reduces both consumption and investment expenditures.
A fall in consumption and investment expenditures reduces the level of aggregate demand and helps to check the problem of excess demand.9

Question: Explain three measures by which excess demand in an economy can be corrected.
Answer: The problem of excess demand can be corrected through the following measures
(i) Public expenditure on public works, public welfare and public investment should be reduced. Reduction in expenditure will lead to a fall in aggregate demand.
(ii) The direct and indirect taxes should be increased. It will lead to decrease in disposable income and thereby, decrease in demand.
(iii) The repo rate should be increased. It will induce an increase in the market rate of interest. Consequently,demand for the funds for the purpose of consumption expenditure and investment expenditure will reduce.
Implying a fall in aggregate demand.

Question: How can the problems of excess and deficient demand be combated?
Answer: Monetary and fiscal instruments are the key to combat the problems of excess and deficient demand. Fiscal instruments revolve around revenue and expenditure policy of the government. Monetary instruments relate to the regulation of money supply in the economy.
To combat excess demand, the government needs to curb its expenditures and raise its revenue. On the monetary front, it needs to pursue a ‘Dear Money Policy’, making availability of credit tougher than before and shrinking the credit creation capacity of the commercial banks.
To combat deficient demands, on the other hand,expenditure needs to be stimulated while revenue needs to be curbed. On the monetary front, cheap money policy needs to be pursued, facilitating easy availability of credit and enhancing credit creation capacity of the commercial banks.

Question: Read the following statements carefully. Write true or false with a reason.
(i) Excess demand raises the market value of output.
(ii) Prices and output increase in a situation of inflationary gap in an economy.
Answer: (i) True, excess demand raises the market value of the output. Because in a situation of excess demand, output level remaining constant, higher demand (higher than the supply) leads to a rise in general price level,
implying a situation when market value of the output increases in the economy.
(ii) False, inflationary gap is the excess of AD over and above its level required to maintain full employment equilibrium in the economy. Inflationary gap generates extra pressure on the existing flow of goods and services at the level of full employment. Accordingly,prices tend to rise but output will not increase. Output remains constant corresponding to full employment level in the economy  

Question: State which of the following statements are true or false? Give valid reasons. 
(i) According to Keynesian theory of employment,a state of under-employment can never exist in an economy.
(ii) In a two-sector economy, if income is zero,average propensity to consume will also zero.
Answer: (i) The given statement is false, according to Keynesian theory of employment, a state of under-employment can exist. This may occur at that level of income where equilibrium between AD and AS happens at less than full employment level.
(ii) The given statement is false, because when income is zero, autonomous consumption may exist in economy for survival, thus APC [C/Y] will never be zero. 

Long Answer Type Questions

Question: Explain the concept of inflationary gap. Also explain the role of legal reserves in reducing it.
Or Define and represent inflationary gap on a diagram.
Explain the role of the varying reserves requirement in removing the gap. 
Answer: Inflationary gap occurs when AD>AS corresponding to full employment level. This inflationary gap, i.e, excess of Aggregate Demand causes inflation in the economy and price levels tend to rise. IMAGE 1 LONG
In this figure,
                     AD_FE = AD at full employment level
                     AD_AE = AD above full employment level
The point E is the equilibrium point where AD= AS.But
there is excess demand (current) at AD_AE, where Aggregate
Demand FP is more than the Aggregate Supply in the economy. This difference of actual Aggregate Demand and Supply, i.e. EF is the inflationary gap.
Inflationary Gap = Excess Demand = AD _AE-AD _FE  = EF
Role of Legal Reserves to Correct the Problem of Inflationary Gap
Legal reserves like Cash Reserve Ratio and Statutory Liquidity Ratio are the tools to correct the problem of inflationary gap
(i) Cash Reserve Ratio (CRR) Each and every commercial bank has to keep a certain proportion of its demand and time deposits in the form of cash and other liquid assets with the Central Bank. This ratio is termed as Cash Reserve Ratio. To correct the problem of inflationary gap, the Central Bank increases the CRR.
It reduces the supply of money and credit creation capabilities of commercial banks. Due to lesser supply of money, the Aggregate Demand comes down and the economy attains equilibrium situation.
(ii) Statutory Liquidity Ratio (SLR) It refers to a fixed percentage of the total assets of a bank in the form of cash or other liquid assets that is required to be maintained by the bank. During the situation of inflationary gap, SLR is increased. This reduces the credit creation capacity of commercial banks and reduces the flow of money in the economy.
As a result of that, the Aggregate Demand comes down and ultimately, the economy attains equilibrium.

Question: What is fiscal policy? What fiscal measures would you recommend to correct deficient demand?
Answer: Fiscal policy refers to the revenue and expenditure policy (or budgetary policy) of the government to correct the situations of excess or deficient demand.
Following fiscal measures are recommended to correct deficient demand
(i) The government should step up its expenditure on 
(a) public works programmes
(b) education and public welfare
(c) subsidies to the producers
(d) defence and law and order
(ii) The government should reduce tax burden on the households and the producers, so that they are left with greater cash balances.
(iii) The government should raise more funds from the RBI so that there is a greater flow of liquidity in the economy. Higher liquidity implies higher level of AD.
(iv) The government should plan a cut in public borrowings, so that people are left with greater liquidity (or cash balances). Greater cash balances implies higher AD.
Briefly, deficient demand is corrected when the government steps up its own expenditure and ensures,that cash balances with the people are high.

Question: In the given figure, what does the gap ‘KT’ represent? State and discuss any two fiscal measures to correct the situation.  

Answer: ‘KT’ represents inflationary gap which means aggregate demand is more than aggregate supply corresponding to full employment level. Two fiscal measures to correct the situation of inflationary gap are  
(i) Revenue Policy To correct the situation of inflationary gap, government raises the rate of all taxes. This reduces the purchasing power by reducing disposable income (i.e., after tax income) of the people which in turn will reduce the aggregate demand in the economy.
(ii) Expenditure Policy To correct the situation of inflationary gap, government should reduce its public expenditure. This reduces the purchasing power by reducing total income of the people which in turn will reduce the aggregate demand in the economy.

Question: Explain the role of government expenditure in correcting the situation of 
(i) deficient demand in the economy
(ii) inflationary gap in an economy
Answer: (i) In a situation of deficient demand, aggregate demand (measured in terms of aggregate expenditure) is less than the aggregate supply corresponding to the full employment level in the economy.
Accordingly, aggregate demand needs to be raised. But because of poor market sentiments (a characteristic feature of the deficient demand), private expenditure remains low. It is in such a situation that the government expenditure (which is not driven by profit motive) can play a significant role. It will act as an injection of demand into the system and is expected to induce private expenditure. Accordingly, the situation of deficient demand will be corrected.
(ii) Inflationary gap refers to a situation of excess demand,when aggregate demand is greater than aggregate supply corresponding to full employment level in the economy.
During this situation, general price level tends to rise,causing a rise in the rate of interest and consequently,a fall in investment and a fall in the growth rate of GDP.
Correction of inflation gap calls for a cut in expenditure. But owing to rising prices, wage rate tends to rise (along with other factor cost) which stokes the rate of inflation. In such a situation, a cut in government’s non-development expenditure like on defence, law and order and subsides will cause an overall cut in aggregate demand. So that excess aggregate demand is corrected and inflationary gap is eliminated.

1. Calculate NI & GNPmp                                      (Rs. in 100 billion)

(i) NDPmp                                                                   114

(ii) Net Indirect Taxes                                                    12

(iii) Consumption of fixed capital                                     13

(iv) Net Factor Income from abroad (NFIFA)                    (-) 2

2. Calculate NNPmp & GNPFC                              (Rs. in 100 billion)

(i) NDPFC                                                                  96

(ii) Net Indirect Taxes                                                  10

(iii) Consumption of fixed capital                                   12

(iv) Net Factor Income from abroad                              (-) 1

3. Calculate NDPFC & NNPFC                               (Rs. in 100 crores)

(i) GNPmp                                                                200

(ii) NFIFA                                                                 (-) 4

(iii) Consumption of fixed capital                                  10

(iv) Indirect Taxes                                                       20

(v) Subsidies                                                              4

4. Calculate GDPmp & GNPmp                              (Rs. in 100 crores)

(i) NDPFC                                                               300

(ii) NFIFA                                                                  5

(iii) Indirect Taxes                                                     20

(iv) Consumption of fixed capital                                 30

(v) Subsidies                                                            10

5. Calculate NDPFC & NI                                     (Rs. in 100 crores)

(i) GNPmp                                                               400

(ii) NFIFA                                                                10

(iii) Consumption of fixed capital                                30

(iv) Indirect Taxes                                                     40

(v) Subsidies                                                           10

6. Calculate GNPFC & NDPmp                             (Rs. in 100 crores)

(i) Factor income received from abroad                        20

(ii) Consumption of fixed capital                                  30

(iii) Subsidies                                                           10

(iv) Indirect Taxes                                                      40

(v) Factor income paid to abroad                                30

 (vi) NDPFC                                                              260