Answer to Question #285055 in Macroeconomics for Noor

Question

Calculate 1) GDP at MP

(Rs. '000)

2,000

40

560

500

100

60

200

60

2) NNP at FC

1. Consumption of fixed capital

2. Employer's contribution to social security schemes

3. Rent

4. Interest

5. Profits

6. Royalty

7. Wages and salaries

8. Net indirect taxes

9. Net factor income from abroad

(Crores)

34

30

10

20

25

5

170

38

(-) 3

Answer 1

(1) To get the GDP at MP given the data

Using the Income approach:

The GDP at MP is there by calculated by

GDP_MP=(employer's contribution to social

security) + (Rent) + (Interest) +

(Profit) + ( Consumption of fixed

capital) - (Net indirect tax)

= 2000 + 40 + 560 + 500 + 1000 - 200

= 3900

Hence, the GDP_MP is 3900 Rs

(2) To calculate the NNP at FC given the formula

NNP_Mp = GDP_MP - Consumption of fixed

capital + Net factor income from

abroad - Net direct taxes

Now, we must first find the GDP_MP

GDP_MP = (employer's contribution to social

security) + (Rent) + (Interest) +

(Profit) + ( Consumption of fixed

capital) - (Net indirect tax)

= 30 + 10 + 20 + 25 + 34 - 38

= 81

$\therefore$ NNP_MP = 81 - 34 + (-3) - 38

= 81 - 34 - 3 - 38

= 6

Hence, the NNP_MP is 6