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Value Added Method Practice Questions PDF

The document contains practice questions and answers related to the measurement of national income using the value-added method. It includes calculations for value of output, intermediate consumption, and net value added at factor cost based on provided data. Additionally, it covers scenarios involving multiple sectors and transactions to determine gross value added and total consumption expenditure.

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108 views2 pages

Value Added Method Practice Questions PDF

The document contains practice questions and answers related to the measurement of national income using the value-added method. It includes calculations for value of output, intermediate consumption, and net value added at factor cost based on provided data. Additionally, it covers scenarios involving multiple sectors and transactions to determine gross value added and total consumption expenditure.

Uploaded by

kanica bathla
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Bhatnagar International School

Paschim Vihar
CH 4 – Measurement of National Income

Value Added Method – Practice questions

Q 1. From the following data, calculate: (a) Value of output: (b) Intermediate Consumption: (c) Net
Value added at factor cost.

Particulars Rs. In crores


(i) Purchase of Raw materials from domestic market 400
(ii) Increase in the unsold stock 60
(iii) Import of raw material 120
(iv) Domestic Sales 1200
(v) Replacement of Fixed Capital 50
(vi) Power charges 20
(vii) Exports 200
(viii) Import of Machinery 40
(ix) Goods and Services Tax (GST) 10
(x) Subsidy 30
(xi) Goods used for self consumption 10

Answer: (a) Rs.1,470 crores (b) Rs. 540 crores (c) Rs. 900 Crores

Q 2. There are only two producing sectors A and B in an economy. Calculate:


(a) Gross value added at market price by each sector
(b) National Income

Particulars Rs. In crores


(i) Net factor Income from abroad 20
(ii) Sales by A 1000
(iii) Sales by B 2000
(iv) Change in stock of B (-) 200
(v) Closing stock of A 50
(vi) Opening stock of A 100
(vii) Consumption of fixed capital by A and B 180
(viii) Indirect Taxes paid by A and B 120
(ix) Purchase of raw materials etc. by A 500
(x) Purchase of raw materials etc. by B 600
(xi) Exports by B 70

Answer: (a) GVAmp Sector A : Rs. 450 crores, GVAmp Sector B : Rs.1,200 crores
(b) National Income : Rs. 1,370
Q 3. Calculate Net Value Added at factor Cost from the following data:

Particulars Rs. In lakhs


(i) Durable producer goods (with a life span of 10 years) 10
(ii) Single use producer goods 5
(iii) Sales 20
(iv) Unsold Goods (Stock) 2
(v) Goods and Service Tax (GST) 1

Answer: Rs. 15 Lakhs

Q 4. In an economy, the following transactions take place:

(a) A sells goods of Rs.20 crores to B, Rs.30 crores to C, Rs.40 crores to households and goods
worth Rs. 10 cores remain unsold. Value of inputs of firm A is assumed to be zero.
(b) B sells his output worth Rs.40 crores to C, Rs. 60 crores to D and Rs.50 cores to final
consumption.
(c) C sells his output worth Rs.100 crores to D, Rs. 100 crores to households and exports worth
Rs.100 crores.
(d) D sells Rs.300 crores to households and Rs.100 crores to government.

Calculate: (i) Value Added by each firm;


(ii) Total Value Added;
(iii) Total Consumption Expenditure

Answer : (i) GVAmp of A = Rs. 100 crores


GVAmp of B = Rs. 130 crores
GVAmp of C = Rs. 230 crores
GVAmp of D = Rs. 240 crores
(ii) Total Value Added = Rs. 700 crores
(iii) Total Consumption Expenditure = Rs. 590

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