Q16 of 20 Page 2

Explain the impact of rise in exchange rate on national income.

Rise in exchange rate means US dollar has become expensive which means domestic country depreciated


I. Resultant country’s Exports will be increase and imports will decrease,


II. Consequently, balance of payments will improve,


III. Ultimately this will have positive impact on country’s National income.


IV. GDPMP = 500


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14

Explain with an example, factor income to abroad and factor income from abroad.

 15

Distinguish between domestic and national product. When can domestic product be greater than the national product?

 17

In a single day Suraj, the barber, collects Rs 500 from haircuts; over this day, his equipment depreciates in value by Rs 50. Of the remaining Rs 450, Raju pays sales tax worth Rs 30, takes home Rs 200 and retains Rs 220 for improvement and buying of new equipment. He further pays Rs 20 as income tax from his income. Based on this information, complete Raju’s contribution to the following measures of income (a) Gross Domestic Product (b) NNP at market price (c) NNP at factor cost (d) Personal income (e) Personal disposable income.

 18

From the following data, calculate Personal Income and Personal Disposable Income. Rs (crore)

(a) Net Domestic Product at factor cost - 8,000


(b) Net Factor Income from abroad - 200


(c) Undisbursed Profit - 1,000


(d) Corporate Tax - 500


(e) Interest Received by Households - 1,500


(f) Interest Paid by Households - 1,200


(g) Transfer Income - 300


(h) Personal Tax – 500