Question of 75
Q.Assess the activities and transactions which are excluded while calculating gross national product by giving at least four points.
(OR)
Using an appropriate method calculate from the following data :
(a) Gross domestic product at market price (GDP at MP)
(b) Net national product at factor cost (NNP at FC) :
Items | Rs. in Crore
(i) Gross domestic capital formation | 110
(ii) Net factor income from abroad | (-15)
(iii) Consumption of fixed capital | 55
(iv) Net export | (-17)
(v) Government's final consumption expenditure | 60
(vi) Net indirect taxes | 57
(vii) Private final consumption expenditure | 275
Manipur CohsemCOHSEM Manipur Higher Secondary Board (Commerce) 2025Subjective· 8mImportance★★★★★
0% · 0/75 Questions
You're viewing a preview — the full solution, concept, methods & PYQ mapping are locked.
Start your 14-day free trial to unlock the full solution →A number of activities and transactions, though they may involve money changing hands or generating some benefit, do not represent current production of goods and services and are therefore excluded while calculating Gross National Product; alternatively, applying the expenditure method with the given data yields GDP at market price of Rs. 428 crore and, after adjusting for NFIA, depreciation and net indirect taxes, Net National Product at factor cost of Rs. 301 crore.
Activities/transactions excluded from GNP (at least four points):
- Transfer payments: Payments such as old-age pensions, scholarships, unemployment allowances, and gifts/donations are excluded because they are not made in exchange for any productive good or service rendered during the current year -- they merely transfer existing purchasing power from one person/entity to another, with no corresponding addition to output.
- Sale and purchase of second-hand goods: The sale of a second-hand car or an old house does not represent new production in the current year (it was already counted in the year it was originally produced), so such transactions are excluded; however, any brokerage/commission earned on the sale is included, as it is a payment for a current service.
- Sale and purchase of financial assets: Buying and selling of shares, bonds, debentures, and other securities are purely financial transactions involving a transfer of ownership of existing assets/claims, not the production of any new good or service, and so are excluded (though brokerage on such transactions is included as a service).
- Illegal activities and non-market (unpaid) services: Income generated from illegal activities such as smuggling, gambling or the black market is excluded because such production is not recorded/reported in official accounts; similarly, non-market/unpaid domestic services performed within the household (e.g., services of a housewife, a person servicing their own house) are excluded because they are not exchanged for money and are very difficult to value, even though they represent genuine productive effort. OR -- Calculation using the given data: Items (Rs. in crore): …
Unlock everything free for 14 days
- Full step-by-step solutions
- Concept-first explanations
- Methods, shortcuts & mistakes
- PYQ mapping + timed mock tests
Full access for 14 days. No credit card required.