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Aggregates And Dimension Of National Earnings

 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


Value in Million $

GNP at Market Prices


Net Factor Income from Foreign nation

- 1002

Capital Consumption Stipend


Net Indirect Taxes



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


Value in Million $

Net Domestic Factor


Earnings from Domestic Product accumulating to the Government Sector


Net Factor Income from Foreign nation


Indirect Taxes




Interest on National Debt


Transfers from Government Administrative Department


Other Current Transfer from other parts of the Globe


Corporation Tax


Undistributed Corporate Profits


Direct Taxes paid by the house holds


Consumption of Fixed Capital



(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
                                                           (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


Value in Million $

Net Domestic Product at Factor Price


Income from Domestic Product accumulating to the Government Sector


Interest on National Debt


Transfer Payments by Government


Net Private donations from foreign nation


Net earned income from foreign nation


Indirect Taxes


Direct Taxes




Taxes on Corporate profits


Undistributed Profits of Corporations



(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
            (- ) 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
(-) 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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