Author: ForumIAS

What is Gross Value Added ?  The term that is used to denote the net contribution made by a firm is called its value added  The raw materials that a firm buys from another firm which are completely used up in the process of production are called ‘intermediate goods’.  Therefore  Value added of a firm… Continue reading Gross value Addition (GVA)

This method approaches national income from distribution side. In other words, this method measures national income at the phase of distribution and appears as income paid and or received by individuals of the country.   National income is obtained by summing up of the incomes of all individuals of a country. Individuals earn incomes by contributing their… Continue reading Income Method in GDP calculation

This method is also called as Output Method or Value Added Method  In this model economy is divided into different industrial sector such as agriculture, fishing, mining, construction, manufacturing, trade and commerce, transport and communication etc. Then, the net value added by each productive enterprises as well as by each industry or sector is estimated.   Net… Continue reading Production Method (GVA) in GDP calculation

Final goods and services produced in a country during a period of time are taken into account under the expenditure method of calculating National Income or Gross Domestic Product. In this method, the final expenditure made by each stakeholder is taken into account Final expenditure is that part of the expenditure that is undertaken not… Continue reading Expenditure Method in calculating GDP

What is Factor Cost and how it is different from Market Price? Factor cost is the total amount which the manufacturer had to invest in production of a good or commodity. It doesn’t include any taxes imposed on the final product. But it includes the subsidies provided to the manufacturer during the production stage Market Price: It… Continue reading Factor Price and Market Price

What is Nominal GDP and Real GDP ? and What is GDP Deflator?  Nominal GDP refers to the current year production of final goods and services valued at current year prices.  Real GDP refers to the current year production of goods and service valued at base year prices. Base year prices are constant prices.  Currently, the base year for GDP calculation is 2011-12.  What is… Continue reading Nominal GDP and Real GDP and GDP Deflator

What is the difference between Gross Vs Net Terms used in economy?  Production factors such as machines, equipment, tools, factory buildings, tractors etc. depreciate over a period of time during the process of production. It may be the case that after certain time these capital goods needs replacement. The capital used for the this wear… Continue reading Difference between Gross Vs Net Terms used in economy

Private income is the total of factor incomes and transfer incomes received from all sources by private sector (private enterprise and households) within and outside the country.  The formula for Private Income is  Private Income = Factor income from net domestic product accruing to the private sector + National debt interest + Net factor income… Continue reading Private Income

National Disposable Income is the sum of the disposable incomes of all resident and institutional units.  National Disposable Income gives us an idea of what is the maximum amount of goods and services the domestic economy has at its disposal  The formula for National Disposable Income is   National Disposable Income = Net National Product at market prices… Continue reading National Disposable Income