NATIONAL INCOME ACCOUNTING 2

How to get edge in National Income Accounting

How to determine National Income by Value Added Method


The first step is to determine Gross Value added at market Price.


GVAmp =Value of Output - Intermediate Consumption 


Value of Output = Sales + Change In stock


Intermediate Consumption = Purchase of Raw material.


So 


GVAmp =Sales + Change in Stock-Intermediate Consumption


Few things to remember -:


Sales = Domestic Sales+ Exports


Purchase of Raw material = Domestic Purchase + Imports


If Sales is given then no need to add exports as sales include Exports.

or the Expanded Farmula may be


GVAmp =Sales + Change in Stock-Intermediate Consumption


GVAmp = ( Domestic Sales + Exports) + Change in Stock-Intermediate Consumption


GVAmp = [( Domestic Sales + Exports) + Change in Stock] -(domestic purchase of raw material + Imports) 
   Purchase of machinery  is not considered as intermediate consumption as it is not for resale.



If GVAmp of all the firms is determined in the economy it becomes GDPmp



NNPfc = GDPmp - Depriciation + NFIFA  - NIT

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