Question : GNPMP of an imaginary economy is INR 120000 crore and its capital stock worth INR 300000 crore. If capital stock depreciation is @ 20% per annum, indirect taxes amount to INR 30000 crore, and subsidies are 15000 crores. What is the national income?
Option 1: 56000
Option 2: 45000
Option 3: 52000
Option 4: 57000
Correct Answer: 45000
Solution : The correct answer is (b) 45000
To calculate the national income, we need to use the formula:
National Income = GNPMP - Depreciation - Indirect Taxes +Subsidies
Given information:
GNPMP (Gross National Product at Market Prices) = INR 120,000 crore
Capital stock = INR 300,000 crore
Depreciation rate = 20% per annum
Indirect taxes = INR 30,000 crore
Subsidies = INR 15,000 crore
First, we need to calculate the depreciation amount:
Depreciation = Capital stock * Depreciation rate
Depreciation = INR 300,000 crore * 0.20 = INR 60,000 crore
Now, we can substitute the values into the formula:
National Income = INR 120,000 crore - INR 60,000 crore -INR 30,000 crore + INR 15,000 crore
National Income = INR 45,000 crore