The pollution harms people. (d) ‘Product’ in GDPMP  signifies that only final goods and services have to be included and intermediate goods should not be included to avoid the double counting. These are systematically designed by adding all the chapters as per the syllabus of class 12th CBSE Economics. (ii) Activities resulting in benefits to others are positive externalities and increase welfare; and those resulting in harm to others are called negative externalities, and thus decrease welfare. List the Aggregates Related to National Income and explain each Aggregates of National Income … Case IV: If sales tax and excise duty are given, then by adding both, we get indirect taxes. The difference between these two is Net Indirect Taxes (NIT) which is included in MP and excluded from FC. (iv) Therefore, economic welfare depends not only on the volume of consumption but also on the type or goods and services consumed. GNPFC = NNPFC + Depreciation OR, (vii) Net National Product at MP : It is the sum total of factor incomes earned by the normal residents of a country during an accounting year including net indirect taxes. Download revision notes for National Income and Related Aggregate class 12 Notes and score high in exams. It has neither any end and nor any beginning point. GNPMP refers to market value of all the final goods and services produced by the normal residents of a country during an accounting year. Important Note: Step 1: To identify enterprises which employ primary factors (Land, Labour, Capital, enterprise). Eg. Net National Disposable Income (NNDI): It is defined as net national product at Market price  plus net current transfer from rest of the world. Gross Business Fixed Investment = Net Business fixed Investment + Depreciation economy. Limitations of using GDP as an index of welfare of a country: There are many Since, rent is a payment for services rendered, even though rendered to the owner itself, it must be counted as a factor payment. on foreign goods (i.e., imports) and foreign spending on domestic goods (i.e., exports). It includes depreciation. ADVERTISEMENTS: National Income and Related Aggregates! Free Online Test Series for CBSE Students, Case Study based Questions Class 10 Mathematics. NDPMP =GDPMP – Depreciation It covers questions asked in previous year examinations. (a) Many goods and services contributing economic welfare are not included in GDP or Non-Monetary exchanges: Example, Thus, the difference between exports and imports of a country is called Net Exports. MP = FC + NIT (Indirect Taxes – Subsidies) (ii) Undistributed Profit (Saving of private corporate sector or Retained £arnings): GNPMP = GDPMP + Net factor income from abroad It must be noted that GNPMP can be less than GDPMP when NFIA is negative. 4. 4. Example, Income from abroad =100 Income paid to abroad =120 (iv) It means that if GDP rises, the increase in welfare may not be in the same proportion. (d) Include free services provided by the owners of the production units: Owners work in their own unit but do not charge salary. may comparatively contribute less and may not directly affect the standard of living of the people. It is the market value of final goods and services produced within the domestic territory of the country during a year exclusive of depreciation. River Yamuna, now a drain, is a living example. The sum total of economic and non-economic welfare is called social welfare. Non-Residents within Domestic territory. base year’s price is called National Income at Constant Prices. Where, Indirect Taxes are the taxes which are levied by the government on production and sale of commodity. Land, Labour, Capital and Entrepreneurship are the four factors of production and rent, wages, interest and profits are the respective […] (a) Environmental degradation; and They do not generally hire factor services from the market rather use their own resources like land, labour, funds, etc. Corporate tax =100 Profit =1100 Candidates who are ambitious to qualify the Class 12 with good score can check this article for Notes, Question & Practice Paper. It is a claim to ownership of assets. It is also known as deferred wage. (e) Contribution of some products may be negative: (ii) Gross Domestic Product at FC : It is the value of all final goods and services produced within domestic territory of a country which does not include net indirect tax. 8. NDPFC = GDPMP – Depreciation – Indirect tax + Subsidy. It includes factor income and transfer income. These are the National Income and Related Aggregate class 12 Notes prepared by team of expert teachers. National Income and Related Aggregates – CBSE Notes for Class 12 Macro Economics Introduction: This is a numerical based chapter to calculate national income by different methods (Income, expenditure and value added method, their steps and precautions). With the help of the link provided below. (b) Transfer of used goods: The revision notes covers all important formulas and concepts given in the chapter. Note: If in the examination problem household final consumption expenditure is not given, it can be calculated as under Income Method. Download CBSE Class 12 Economics HOTs National Income and Related Aggregates in pdf, Economics High Order Thinking Skills questions and answers, CBSE Class 12 Economics HOTs Economics National Income and Related Aggregates. reasons behind this. Hence, this is not included in GNP. (ii) Milk may provide both immediate and ultimate satisfaction to consumers. (d) All products may not contribute equally to economic welfare: Net Investment :Net addition made to the real stock of capital during a period of time. Example, Income paid to abroad =100 Revision is an important phase while preparing for any examination and preparing revision notes while learning is a good practice as this can be useful in the revision stage. Net Income from Property and entrepreneurship, 3. There Are Three Components of Domestic Factor Income Which Are As Follows: For this put Indirect tax = 0. Step 2: To classify various types of factor income like: NFIA = Factor Income Received from Abroad. 1.The difference between value of output and value added is: (a) Depreciation (b) Intermediate consumption (a) If national income is calculated on the basis of base year price index, then it is known as National income at constant price. 2. Conclusion thus GDP and welfare directly related with each other but this relation is incomplete because of the following reasons. (a) By taking the value of only final goods. 5. But more goods and services may not necessarily indicate that the people were better off during the year. Depreciation :means fall in value of fixed capital goods due to normal wear and tear and expected obsolescence. Dec 25, 2020 - Chapter Notes - National Income and Related Aggregates, Class 12, Economics | EduRev Notes is made by best teachers of Commerce. Subsidy = 80 GDP and positive externalities both increase welfare. (i) Gross Domestic Product at Market Price : It is the money value of all the final goods and services produced within the domestic territory of a country during an accounting year. (b) Change In Stock (Closing Stock – Opening Stock) Or Inventory Investment: It is the net change in inventories of final goods, finished goods, semi-finished goods and raw material. means that income to abroad is less than income from abroad, which makes, Change in Stock or Inventory Investment, b. (a) Avoid transfers: National income includes only factor payments, i.e., payment for the services rendered to the production units by the owners of factors. National Income and Related Aggregates class 12 Notes Economics. class 12 ppt on national income and related aggregates created by amitesh yadav Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Net National Product at Factor Cost (NNPFC ). (v) Sports, recreation or holiday facilities for employees and their families. (i) There are many goods and services which are left out of estimation of national income on account of practical estimation difficulties e.g., services of housewives and other members, own account production, etc. Value Added by Tertiary Sectors(=VO-IC), (Change in stock = Closing Stock – Opening Stock), a. CBSE Economics Value Based Questions for Class 12th Chapter 5 National Income and Related Aggregates Free PDF. On the other hand, liquor may provide some immediate satisfaction, but because of its harmful effects on health it may lead to decline in welfare. Gross Domestic Product at Market Price (GDPMP ): GDPMP  is defined as the gross market value of the final goods and services produced within the domestic territory of a country during an accounting year by all production units. GDP and Welfare : In general GDP and Welfare are directly related with each other. Net Domestic Product at Market Price (NDPMP ). Although they do not charge, yet the services have been performed. Free PDF download of Important Questions with Answers for CBSE Class 12 Economics Chapter – National Income and Related Aggregates prepared by expert Economics teachers from latest edition of CBSE(NCERT) books only by CoolGyan to score more marks in CBSE … It is influenced by change in both physical output and price level. It is also called capital formation. Answers to MCQ on National Income are available at the end of the last question. Corporate tax =100 Profit = 1000 Case II: Income from abroad is given, then NFIA = Income from abroad. (a) “Production creates income, income creates expenditure”. Net National Disposable Income (Net NDI)  + Net current Transfers from rest of the world. Case II: IT is given, then NIT = IT (For this put subsidy 0) (ii) Gross Residential Construction Investment: This is the amount spent on construction of flats and residential houses. Revision notes in exam days is one of the best tips recommended by teachers during exam days. GDPMP = Net domestic product at FC (NDPFC) + Depreciation + Net Indirect tax. (i) GDP includes all final products whether it is milk or liquor. Revision of National Income and Related Aggregates | Unacademy Rent is a factor income. (iii) Private Transfer Payments: If you continue browsing the site, you agree to the use of cookies on this website. Class 12th books have many questions. Indirect Tax = 20 Net Indirect Tax = (-) 100 Numeribals Illustration on Basic Concept. (a) ‘Gross’ in GDPMP signifies that depreciation is included, i.e., no provision has been made for depreciation. Suppose, the income of the poor declines by one rupee and that of the rich increases by one rupee. Circular flow of income; Methods of calculating National Income - … We at BYJU’S provide Sandeep Garg Economics Class 12 Solutions to give comprehensive insight about the subject to the students. (v) Net National Product at FC (National Income) : It is the sum total of factor incomes (compensation of employees + rent + interest + profit) earned by normal residents of a country in an accounting year or NNPFC = NDPFC + Factor income earned by normal residents from abroad – factor payments made to abroad. ... CBSE Class 12 Economics Revision Notes. Gross Investment :Total addition made to physical stock of capital during a period of time. 2. (v) Utility of a rupee of income to the poor is more than to the rich. Exp., investment and exports. In this NFPA is positive, which means that income to abroad is greater than income from abroad, which makes, Personal Income :It refers to income received by house hold from all sources. As the result of, it becomes difficult to classify their income distinctly among rent, wages, interest and profit. Free PDF Download - Best collection of CBSE topper Notes, Important Questions, Sample papers and NCERT Solutions for CBSE Class 12 Economics National Income and Related Aggregates. (i) Gross Business Fixed Investment: It is the amount that the business units spend on purchase of newly produced capital goods like plant and equipments. (d) Illegal Activities: Activities like gambling, black-marketing etc., should be excluded because all unlawful activities are beyond the scope of NY and also because there is statistical problem of their estimation. 2. • In financial markets potential savers and investors buy and sell financial assets such as shares and bonds. MCQ on National Income, which are covered in this chapter, relate to the topic, National Income. earned by employees from their employers, whether in cash or in kind or through any These goods and services generate no income because it is produce by a general government without any profit motive. CBSE Class 12 Economics National Income Accounting Notes. 3. Class 12 Economics notes on chapter 5 accounting for partnership firm’s fundamentals are also available for download in CBSE Guide website. Expenditure Method. Such goods and services cannot be added together in terms of quantity (as we cannot add 5,000 tonnes of wheat + 10,000 mobile phones + 7,000 machines and so on). In this NFPA is negative, which Ans. 2. Income from the sale of old cars, old house, bonds, debentures, etc. (b) Operating Surplus: It is the sum of income from property and income from entrepreneurship. For example, uniforms or other forms of special clothing to be used for work only. 2. Economic Territory :Economic (or domestic) Territory is the geographical territory administrated by a Government within which persons, goods, and capital circulate freely. You can get the class 12 NCERT Economics notes. Aggregates 2. They do not maintain proper accounts. Example, IT = 100 capital formation:- Change in the stock of capital is also called capital formation. Click Here to get the Class 12 Economics Notes. National Income at Constant Prices :It is also called as real national income. 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