Define the following :

(a) Value Addition

(b) Gross Domestic Product

(c) Flow Variables

(d) Income from property and entrepreneurship

OR

Given the following data, find the values of ‘‘Gross Domestic Capital Formation’’ and ‘‘Operating Surplus’’.

(a) Value Addition: Value addition refers to the increase in the value of a good at each successive stage of production. It is the difference between the total value of output and the total value of intermediate consumption.

(b) Gross Domestic Product: Gross Domestic Product is the market value of all the final goods and services produced within the domestic territory of a country during a year.

(c) Flow Variables: Flow is a quantity of any economic variable which is measured over a duration of time. For example, a week, a month or a year. they have an element of time attached to them. For example, monthly wages, production of wheat in a year, etc.

(d) Income from property and entrepreneurship: The income from property and Entrepreneurship refers to the income earned in the form of rent, Royalty, interest, and profit. These are together called as the operating surplus. Profit is further distributed into three types- dividend, corporate profit tax and undistributed profit.

OR

National income or NNP at Fc = 22100

GDP at Mp = NNP at Fc +Depreciation+Net indirect tax 9 +NFIA

= 22100 +500+(-150)

= 23450

GDP at Mp = Private final consumption expenditure+ gross domestic capital formation+ government final consumption expenditure+ net export

23450 = 7200+ gross domestic capital formation+ 6100+ 3400

23450 = gross domestic capital formation + 16700

Gross domestic capital formation= 23450- 16700 = Rs 6750.

NDP at Fc = NNP at fc -NFIA

NDP at Fc = 22100-(-150)

= 22250

Ndp at Fc = Wages and salaries+ operating surplus+ mixed income of self-employed

22250 = 12000 + operating surplus+ 4800

is a curve that22250 = operating surplus+16800

Operating surplus= 22250 - 16800 = 5450