Macroeconomics

1
 Calculation of GDP at factor cost

Factor income Rs in crores

Paid to domestic residents 85
Paid to foreign residents 15
Retained profit 10
Corporate profit tax 5
Depreciation 10

GDP AT FACTOR COST=WAGES OF

SALARIES+INTEREST+GROSS PROFIT+RENT
=85+15+10+5+10=125

2
 Calculation of GDP AT FACTOR COST ,
National Income, PDI
Particulars Rs
GNP at market price 5000
Personal income tax 1000
Corporate tax 800
subsidies 400
Factor income paid abroad 800
Factor income received abroad 900
Undistributed profits 200
Indirect taxes , depreciation 450 and 350

GDP AT FACTOR COST=GNP at factor cost-NFIFA

GNP at FC=GNP at MP-Indirect taxes +subsidies=5000-450+400=4950
3
GDP at FC=4950-(900-800)=4850
 Calculation of GDP AT FACTOR
COST,National income,PDI
Particulars Rs
GNP at market price 5000
Personal income tax 1000
Corporate tax 800
subsidies 400
Factor income paid abroad 800
Factor income received abroad 900
Undistributed profits 200
Indirect taxes , depreciation 450 and 350

National income=NNP at FC=GNP at FC-Depreciation

GNP at FC =GNP at MP-Indirect taxes + subsidies=5000-450+400=4950
4
National income=4950-350=4600
 Calculation of GDP AT FACTOR
COST,National income,PDI
Particulars Rs
GNP at market price 5000
Personal income tax 1000
Corporate tax 800
subsidies 400
Factor income paid abroad 800
Factor income received abroad 900
Undistributed profits 200
Indirect taxes , depreciation 450 and 350

PERSONAL DISPOSABLE INCOME=Personal income-Personal income tax

Personal income=National income-Retained earnings-corporate tax
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Personal income=4600-200-800=3600,PDI=3600-1000=2600
 Calculation of NFIFA
• NET FACTOR INCOME FROM ABROAD
Rs

GDP at FC 80000

Depreciation 4000

GNP at Market price 95000

Indirect taxes 5000

NFIFA=GNP at MP-GDP at MP,GNP at MP=GDP at MP+NFIFA

GDP at MP=GDP at FC + Indirect taxes-subsidies=80000+5000-0=85000
NFIFA=95000-85000=10000

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 Calculation of GDP at FC
Production ac-Dr Rs in crores Production ac-cr Rs in crores
Wages & salaries 200 Sales-households 250
Dividends 40 Fixed investment 20
Retained profits 50 Net change-INV 20
Profit tax 10 Exports 50
Excise tax 20 imports -20
TOTAL 320 320

GDP at factor cost=wages + salaries+Dividends+Retained

profits+profit tax
=200+40+50+10=300

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 Calculation of GNP at Market price
Production ac dr Rs in crore Production ac-cr Rs in crore
wages 250 Sales-household 280
Dividends paid R 40 Fixed INV 30
Dividends paid A 30 Net change INV 50
Retained profits 40 Exports 50
Profit tax 30 Imports -10
Excise tax 10
FOREIGN AC 400 FOREIGN AC 400
Export of goods 50 Imports 10
FIRFA 60 FIPA 30

GDP at Factor cost=250+40+30+40+30=390

GNP at FC=GDP at FC +NIFA,NIFA=FIRFA-FIPA=60-30=30
GNP at Factor cost=390+30=420
GNP at MP=GNP at FC+Indirect taxes-subsidies
GNP at FC =GDP at FC +NIFA,NIFA=FIRFA-FIPA=60-30=30
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GNP at FC=390+30=420,GNP@MP=420+10-0=430
 Calculation of GDP @MP & GNP@MP
Production ac dr Rs in crore Production ac cr
wages 300 Sales to HH
Div.paid-residents 48 Fixed investment
Div.paid-abroad 32 Net change in INV
Retained profits 50 Exports
Profit tax 30 Imports
Excise tax 20
480 480
Exports=60 Imports=20
FIRFA=60 FIPA=32,surplus=
Surplus=68
Total 120 Total 120

GDP at MP=GDP at FC+Indirect taxes-subsidies,,,,,GDP@FC=wages and salaries+Dividends+Retained

profit+profit Tax=300+80+50+30=460,GDP at MP=460+20-0=480
GNP @MP=GDP@MP+NFIFA=480+(60-32)=480+28=508 9
 MACROECONOMICS
YEAR NOMINAL GNP(CORE) GNP DEFLATOR
2001-2002 2500 120
2002-2003 3200 145

Given GNP deflator in 2000-2001 is 100,calculate real GNP of 2001-2002

Real GNP current period =Nominal GNP current period x(GNP Deflator base
period)/GNP Deflator current period.
=2500 x 100/120=2083/-
Calculate the real GNP of 2002-2003 =.
Nominal GNP 2002-2003 x GNP Deflator 2000-2001 /GNP Deflator 2002-2003
=3200x 100/145=2207
Growth rate of Real GNP from 2001-2002 to 2002-2003 is
(2207/2083)-1=5.9%
Inflation rate in 2002-2003 in relation to 2001-2002
=(GDP deflector current period –GDP deflector base period)/GDP deflector base
period x 100=(145-120/120 )x 100=20.83%

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 Macroeconomics-work out session

• From the table given below ,find the following-

• The value of GNP at MP
• The value of NNP at MP
• The value of NDP at MP
• The value of NDP at factor cost

GNP at factor cost 1,14,601

Depreciation 8062

subsidies 2822

Net Factor Income from 330

abroad
Indirect taxes 16745
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 Macroeconomics-work out

• Based on table below , work out the following

• Value of personal income
• Value of National income
• Value of personal disposable income
GNP at factor cost 1,14,601
Depreciation 8062
subsidies 2822
NFIFA 330
Indirect taxes 16745
Personal income taxes 10000
Corporate profit taxes 6539
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Retained profit 30000
 Macroeconomics-work out session
• The national accounts statistics at current prices are as provided in
table,
• You are required to calculate the following-
• The value of personal income taxes
• The value of retained profits
GNP at factor cost 1,14,601
Depreciation 8062
subsidies 2822
NFIFA 330
Indirect taxes 16,745
Personal Disposable 55000
income
National income 80000
Personal income 60000
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 Macroeconomics-work out session

GNP AT MP 4000
CORPORATE TAXES 800
PERSONAL INCOME TAX 600
SUBSIDIES 350
FIRFA 1000
FIPA 800
UNDISTRIBUTED PROFITS 150
INDIRECT TAXES 600
DEPRECIATION 400
Calculate the following-
VALUE OF PERSONAL DISPOSABLE INCOME
VALUE OF GDP AT FACTOR COST
VALUE OF NATIONAL INCOME
VALUE OF GNP at MP

14
 Macroeconomics-work out
• The GNP of an economy at nominal values and price
indices for two years is given below-
YEAR MONEY GNP Price level index
Rs in crore

1990 23,200 49.7

2003 1,30,000 105.9

Calculate the real GNP FOR THE YEARS 1980 and 2003.

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 Macroeconomics-work out

• In an economy , the GDP at factor cost is Rs

70,000,NNP at market price is Rs 71,000,Depreciation is
Rs 2000 and indirect taxes are Rs 1,000-There are no
subsidies .Calculate the value of NFIFA.

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 Macroeconomics-work out
• From the table given below , Calculate the following-NNP at MP-Value of Net exports-
value of indirect taxes-value of corporate profits-value of taxes-transfers-value of
personal income-value of personal disposable income-value of personal savings
GNP in Rs 2400
Gross investment 400
Net investment 150
Consumption 1500
GOV. purchase of G/S 480
National income 1925
Wages and salaries 1460
Proprietors I & Rental INCO 160
Dividends 50
Government budget surplus 15
Interest 60
Transfer payments 260
Personal tax & Non tax payments 300 17