Suppose in a financial year, the Gross Domestic Product (GDP) at market price of a country was ? 1,100 crore. Net factor income .....................

Question :Suppose in a financial year, the Gross Domestic Product (GDP) at market price of a country was ? 1,100 crore. Net factor income from Abroad was ? 100 crore, the net indirect taxes was ? 150 crore and National income was ? 850 crore. Calculate the value of depreciation, on the basis of above information.

The correct answer is -We know that,

GDP at market price = National income + Net indirect taxes or, 1,100 = 850 + 150

Also, we know that,

National income = Net domestic product at factor cost - Depreciation or, 850 = NDPFC - Depreciation

Further, we know that,

Net domestic product at factor cost (NDPFC) = GDP at factor cost - Net factor income from abroad or, NDPFC = GDP at factor cost - 100

As net factor income from abroad is given as ? 100 crore, we have,

NDPFC = GDP at factor cost - 100 or, NDPFC = 1,100 - 100 or, NDPFC = 1,000

Now, substituting the value of NDPFC in the second equation, we get

850 = 1,000 - Depreciation or, Depreciation = 1,000 - 850 or, Depreciation = 150 crore

Therefore, the value of depreciation is ? 150 crore.