# Aggregates And Dimension Of National Earnings

Illustration 116

Given below is the facts and figures of a nation’s fiscal system, ascertain the following.

1. GNP at Factor Cost
2. NNP at Factor Cost
3. Net Domestic Product at Factor Cost
4. Net Domestic Product at market prices

 Data Value in Million \$ GNP at Market Prices 200,005 Net Factor Income from Foreign nation - 1002 Capital Consumption Stipend 15,065 Net Indirect Taxes 19,865

Solution

Given that GNP at Market Price                    \$200,005

(i) GNP at Factor Cost is                                GNP at Market Prices – Indirect Taxes

=          \$200,005 – 19,865

=          \$180,140

(ii) NNP at Factor Cost                                   GNP at Factor Cost – Depreciation

=          \$180,140 – 15,065

=          \$165,075

(iii) NDP at Factor Cost                                  NNP at Factor Cost – Net Factor Earning
From foreign nation

=          \$165,075 – (- 1002)

=          \$166,077

(iv) NDP at Market Prices                              NDP at Factor Cost + Indirect Taxes

=          \$166,077 + 19,865

=          \$185,942

Illustration 117

Based on the facts and figures associating to a nation’s economy ascertain the following.

1. GNP at Market Prices
2. Private Earnings
3. Personal Earnings
4. Personal Disposable Income

 Data Value in Million \$ Net Domestic Factor 182,669 Earnings from Domestic Product accumulating to the Government Sector 3,245 Net Factor Income from Foreign nation -1,002 Indirect Taxes 20,250 Subsidies 3,200 Interest on National Debt 2,010 Transfers from Government Administrative Department 4,025 Other Current Transfer from other parts of the Globe 2,775 Corporation Tax 2,222 Undistributed Corporate Profits 875 Direct Taxes paid by the house holds 3,980 Consumption of Fixed Capital 9,285

Solution:

(i) GNP at Market Prices        =          Net Domestic Product at Factor Cost + Net
Factor Income from foreign nation + Capital
Consumption Stipend or Consumption Fixed
Capital + Indirect Taxes – Subsidies

=          \$182,669 + (-1,002) + 9,285 + 20,250 – 3,200

=          \$291,570

To ascertain Private, Personal and Personal Disposable earnings, primarily we must find out the NNP at Factor Cost and as NDP at factor cost is by now made available in the given information. Also the sum of Transfer Payments is ought to be ascertained.

(a) NNP at Factor Cost           =          NDP at Factor Cost + Net Factor Income from
Foreign nation

=          \$182,669 + (-1,002)

=          \$181,667

(b) Transfer Payments            =          \$4,025 + 2,775

=          \$6,800

(ii) Private Earnings                =          NNP at Factor Cost + Transfer Payments +
Interest on Public Debt – Social Security Contributions –
Income from Government Departments – Profits and
Surplus of Public Corporations

=          \$182,669 + 6,800 +2,010 – 3,245

=          \$188,234

(iii) Personal Earnings             =          Private Earnings – Undistributed Corporate
Profit
(or Savings of Private Corporate Sector) –
Corporation Tax

=          \$188,234 – 875 – 2,222

=          \$185,137

(iv) Personal Disposable          =          Personal Earnings – Direct Taxes paid by
Income                                              Households

=          \$185,137 – 3,980

=          \$181,157

Foot Note:

1. Transfer from government administrative departments and erstwhile current transfers from the other divisions of the sphere are under the heading Transfer Payments.
1. Social Security Contributions and Profits and Surpluses of Public Corporations are not provided in the given question and ought to be uncared for.

Illustration 118

The below data is presented with the facts and figures concerning a nation’s economy. Ascertain the following.

1. Net National Product at Market Prices
2. Disposable Personal Earnings

 Data Value in Million \$ Net Domestic Product at Factor Price 28,470 Income from Domestic Product accumulating to the Government Sector 520 Interest on National Debt 460 Transfer Payments by Government 320 Net Private donations from foreign nation 130 Net earned income from foreign nation 280 Indirect Taxes 3240 Direct Taxes 520 Subsidies 375 Taxes on Corporate profits 123 Undistributed Profits of Corporations 154

Solution

(i) Net National Product NNP is computed as follows

NDP at Factor Price                                                                \$28,470
(+) Net Earned Income from Foreign nation                          \$     280

NNP at Factor Cost                                                                \$28,750

(+) Indirect Taxes                                                                  \$  3,240

\$31,990
(- ) Subsidies                                                                          \$     375

NNP at Market Price                                                              \$31,615

First, in order to determine the Disposable Personal Earnings, we have to ascertain the private and Personal Earnings.

(a) Private Earnings

NNP at Factor Cost                                                                \$31,615

(+) Transfer Payments by Government                                  \$     320
(+) Net Private Donations from foreign nation                       \$     130
(+) National Debt Interest                                                      \$     460

\$32,525
(-) Income from Domestic product accumulating                     \$     520
to government
Private Earnings                                                                      \$32,005

(b) Personal Earnings

Private Earnings                                                                      \$32,005

(- ) Taxes on Corporate Profits                                               \$     123
(- )Undistributed Profits of Corporations                                 \$     154

Personal Earnings                                                                    \$31,728

(ii) Disposable Personal Earnings is determined as follows

Private Earnings                                                                      \$31,728
(-) Direct Taxes on Persons                                                     \$     520

Disposable Personal Earnings                                                 \$31,208

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