national income and related aggregates class 12 notes

Case III: If IT and subsidy both are given, then NIT is the difference. It includes: Note: By adding up of all the sectors, we get or Domestic Income. Some earn more and some earn less. Since, rent is a payment for services rendered, even though rendered to the owner itself, it must be counted as a factor payment. (i) GDP includes different types of products, like food articles, houses, clothes, police services, military services, etc. (a) “Production creates income, income creates expenditure”. NIT = Indirect Tax – subsidies = 100-80 = 20 1. Profit before tax = 1000 4. (i) Meals and drinks including those consumed when travelling for business. Government Final Consumption Expenditure(G), a. It excludes depreciation. Step 3: To estimate amount of factor payments made by each producing unit. (c) Include income from self-consumed output: When a house owner lives in his house, he does not pay any rent. But infact he pays rent to himself. It helps to know the functioning of the economy. year and valued these at current year’s prices or current prices, it is called Nominal GDP or GDP at current prices. (e) Contribution of some products may be negative: (c) Non-market goods and services: economy. To download National Income and Related Aggregate class 12 Notes Economics, sample paper for class 12 Physics, Chemistry, Biology, History, Political Science, Economics, Geography, Computer Science, Home Science, Accountancy, Business Studies and Home Science; do check myCBSEguide app or website. Gross National Product at Market Price (GNPMP). Exceptions:- (a) Diplomats and officials of foreign embassy. It includes depreciation. (vi) Therefore, if the rise in per capita real income inequality increases, it may lead to a decline in welfare (in the macro sense). (ii) Gross Domestic Product at FC : It is the value of all final goods and services produced within domestic territory of a country which does not include net indirect tax. So, it is called problem of double counting. Producing goods increases welfare but creating pollution reduces welfare. NFIA = Income from Abroad – Income paid to abroad Net Retained earning of resident companies abroad. Study Notes on National Income: Definition, Measurement Problems and Estimate (With Diagram)! (a) “Production creates income”. Indirect Tax = 20 Net Indirect Tax = (-) 100 Numeribals Illustration on Basic Concept. These transactions are not production transactions. Consumption Goods : Those final goods which satisfy human wants directly. Explanation: Rent is earned from the use of capital which is one of factors … (b) Externality: are examples for • • Pension payments employees social security measures, etc. Q.1. (ii) At the same time, it is also true that in the event of rise in ‘per capita real income’ all are not better off equally. Case II: Income from abroad is given, then NFIA = Income from abroad. NFIA = (-)100 (b) ‘Domestic’ in GDPMP  signifies that it includes all the final goods and services produced by all the production units located within the economic territory (irrespective of the fact whether produced by residents or non-residents). The thing to be noted here is that profit earned by one firm to another should not be included under this head because it is already included in the profit of the firm which pays it. (iii) It means that the inequality in the distribution of income may increase or decrease. 7. NDPFC = Compensation of employees + Operating Surplus + Mixed Income Step 5: Addition of NFIA to NDPFC  to get NY, i.e., NNPFC . other social security scheme is known as compensation of employees. Numerically to determine private income, personal income, personal disposable income, National disposable income (net and gross) and their differences. (iii) Corporation Tax (Profit Tax): It is that part of total profit which is given by a firm to the government as Tax. (ii) Gross Residential Construction Investment: This is the amount spent on construction of flats and residential houses. The best app for CBSE students now provides accounting for partnership firm’s fundamentals class 12 Notes latest chapter wise notes for quick preparation of CBSE board exams and school based annual examinations. Nominal GDP : When the goods and services are produced by all producing units in the domestic territory of a country during an a/c. Case I: Subsidy is given, then to make NIT inverse the sign. Limitations of using GDP as an index of welfare of a country: There are many Net Exports = Export – Import For example, there is a Contributory provident Fund Scheme for employees of educational institutions and public sector undertakings. Step 2: To classify various types of factor income like: (c) Current replacement cost. GDPFC = GDPMP – Indirect tax + Subsidy or GDPFC = GDPMP – NIT, (iii) Net Domestic Product at Market Price : It is the money value of all final goods and services produced within domestic territory of a country during an accounting year and does not include depreciation. Aggregates 2. This is merely a transfer of money from one individual to another. (iii) Interest: It is the amount earned for lending funds to the production units. Aggregates of National Income to Measure the Value of Goods and Services! Where NIT is the difference between indirect taxes and subsidies. © 2020 myCBSEguide | CBSE Papers & NCERT Solutions, Revision Notes for class-12 Physical Education, Introduction to Micro Economics class 12 Notes Economics, Consumers Equilibrium & Demand class 12 Notes Economics, Producer behaviour and Supply files class 12 Notes Economics, Forms of Market and Price Determination class 12 Notes Economics, National Income and Related Aggregate class 12 Notes Economics, Money and Banking class 12 Notes Economics, Determinations of Income and Employment class 12 Notes Economics, Government Budget and Economy class 12 Notes Economics, Balance of Payment class 12 Notes Economics, Poverty as a Challenge class 9 Notes Economics, Development Experience Of India a Comparison with Neighbours class 11 Notes Economics, Introduction to Index Number class 11 Notes Economics, Class 10 Science Sample Paper 2021 (Solved). NCERT Solutions, NCERT Exemplars, Revison Notes, Free Videos, CBSE Papers, MCQ Tests & more. Expenditure Method. It includes factor income and transfer income. 5. National Income Accounting Important Questions for class 12 economics National Income and Its Related Concepts. It is of the following three types: This concept is known as imputed rent. Therefore, taking only GDP as an index of welfare overstates welfare. Distribution of GDP. You can get the class 12 NCERT Economics notes. CBSE Class 12 Economics National Income And Related Aggregates Notes. (iii) GDP include only the monetary values of the products and not their contribution to welfare. Market Price (MP): It refers to the price at which product is actually sold in the market. Step 4: To add all factor incomes / payments within domestic territory to get domestic income, i.e., NDPFC . (a) Income from property: It is the income which has been arisen from rent, interest and royalty. It should be kept in mind that it does not include any facilities which are necessary for work and in which employees do not have any discretion. NIT = (-) 100 2. Employers Contribution of Social security Schemes. (i) Distributed Profit (Dividend): It is that part of total profit which is given to shareholders. Gross National Product at Market Price ) is the market value of all the final goods and services produced by normal residents (in the domestic territory and abroad) of a country during an accounting year. (c) Change in the distribution of income (GDP) may affect welfare: Gross Residential Construction Investment, b. Note: Operating Surplus: The CSO (Central Statistical Organization) has defined operating surplus as “value of gross output less the sum of intermediate consumption, compensation of employees, mixed income, depreciation and NIT.” Users can download CBSE guide quick revision notes from myCBSEguide mobile app and my CBSE guide website. a) Income from owner occupied house to be included. NFIA = Income from Abroad- Income paid to abroad = 100 – 0 = 100 and vice versa Case III: If income from abroad and income paid to abroad both are given, then NFIA is the difference between them, This is broadly divided into the following three components: Click Here to check Important Questions of Class 12 Economics. Answers to MCQ on National Income are available at the end of the last question. (ii) Undistributed Profit (Saving of private corporate sector or Retained £arnings): The difference between these two incomes is Net Factor Income from abroad (NFIA), which is included in National Income (NY) and excluded from Domestic Income (DY). It can be used as initial study … This transaction should not be included as it has already been included in the 2010 GNP and if we again include it, then it will create the problem of double counting. NCERT Solutions for Class 12 Macro Economics Chapter 2 National Income and Related Aggregates includes all the important topics with detailed explanation that aims to help students to understand the concepts better. (c) Employers’ Contribution to Social Security Schemes: Employers’ make payments to social security schemes like life insurance, causality insurance, pension schemes etc. 6. It is called a true indicator of economic development. If Profit before tax and corporate tax are given, then ignore corporate tax. How To Determine National Income By Expenditure Method And Its Numericals, Steps And Precautions: National income determination by Expenditure method: (e) Leisure Time Activities: Activities like painting, growing of flowers in kitchen garden, etc. For e.g. FC = MP – NIT (Indirect Taxes – Subsidies) In case of some it may even fall. Income from the sale of old cars, old house, bonds, debentures, etc. NDPFC refers to a total factor income earned by the factor of production within the domestic territory of a country during an accounting year. Income of some may rise by less and of some by more than the national average. If a person living in his own house, then it is assumed in an economy that he is paying rent to himself. Example, Income from abroad =100 Income paid to abroad =120 Case V: If Net subsidy is given, then to convert it into Net Indirect tax, we have to inverse the sign, NDPMP =GDPMP – Depreciation NATIONAL INCOME AND RELATED AGGREGATES: KEY CONCEPTS • Macro Economics: Its meaning ... Precautions to be taken while calculating national income through income method. Stocks :Variables whose magnitude is measured at a particular point of time are called stock variables. reasons behind this. The value of following items is measured for getting private final Consumption Expenditure. In other words, it is the sum of income from property and income from entrepreneurship. NDPMP = GDPMP – Depreciation, (iv) Net Domestic Product at FC : It is the value of all final goods and services which does not include depreciation charges and net indirect tax. 1000 Value of Output :Market value of all goods and services produced by an enterprise during an accounting year. myCBSEguide | CBSE Papers & NCERT Solutions. All product may not contribute equally to economic welfare. (b) Transfer of used goods: Our Xam Idea Class 12 Macro Economics Solutions are free of errors. Example, Income from abroad =100 Net Income from Property and entrepreneurship, 3. National income, change in stock etc. + Net retained earning of resident companies abroad. Sandeep Garg Macroeconomics Class 12 Solutions National Income and Related Aggregate, will benefit the students from the concise to the point nature of the chapter. MCQ on National Income Test contains 10 questions. Where, Indirect Taxes are the taxes which are levied by the government on production and sale of commodity. Example, IT = 100 Xam Idea Class 12 Macro Economics Solutions PDF 1. 1. Introduction to Macroeconomics and its Concepts Notes; National Income and Related Aggregates Notes; Money Notes; Banking Notes Any payment for which no service is rendered is called a transfer, not a production activity. Net National Product (NNP) – It refers to the total value of all the final goods and services produced … (ii) Some of these products contribute more to the welfare of the people, like food, clothes, houses, etc. Private Income :Private income is estimated income of factor and transfer incomes from all sources to private sector within and outside the country. rent, interest and profit during an accounting year. 4. The addition of all these factor incomes gives us the calculation near by the National Income, i.e. Corporate tax =100 Profit = 1000 CBSE Schools Educational Study Material. Net National Product at Market Price (NNPMP ). It’s so because such payments are intermediate consumption of business enterprises. But, operating surplus does not arise in the general government sector as they produce goods and services for the social welfare of the country and not for profit motive i.e., why rent, interest and profit are zero in general government sector. Operating surplus have the following two components: Private Final Consumption Expenditure (PFCE): Private final consumption expenditure is defined as consumption expenditure by consumer households (household final consumption expenditure) and private NPISH (Non-profit Institution serving households) on all types of consumer goods. For example, construction of a flyover or a highway reduces transport cost and journey time of its users who have not contributed anything towards its cost. CBSE Class 12 Economics Chapter-National Income and Related Aggregates Important Questions – Free PDF Download. 2. When goods and services produced by normal residents within and outside of a country in a year valued at constant price i.e. Gross National Disposable Income (Gross NDI  + Net current Transfers from rest of the world. 12th class economic notes in hindi chapter-1 National Income and Related Aggregates CBSE Revision Hindi Notes for CBSE Class 12 Economics National Income and Related Aggregates Some basic concepts: consumption goods, capital goods, final goods, intermediate goods; stocks and flows; gross investment and depreciation. Examples are uniforms for police, uniforms of drivers, uniforms for nurses in the hospital. However, GNPMP will be more than GDPMP  when NFIA is positive. It is the result of production process. Gifts, donations etc. With the help of the link provided below. (i) Buying and selling of securities: If Profit after tax is given and corporate tax is given, then by adding them we get profit. Net means the value of product excluding depreciation. 2. educator will teach in Hindi, you have download the notes after class complete. It also includes imputed rent. Circular flow of income :It refers to continuous flow of goods and services and money income among different sectors in the economy. (i) Gross Business Fixed Investment: It is the amount that the business units spend on purchase of newly produced capital goods like plant and equipments. The concept of operating surplus is applicable to all producing enterprises, whether they belong to the private sector or to the government. For eg. Value added :It is the difference between value of output of a firm and value of inputs bought from the other firms during a particular period of time. 7. (ii) Hence, goods produced in the previous time period cannot be included in the GNP. National Income It is defined as the sum total of factor incomes accruing to normal residents of a country with a given period of time, generally a financial year. Profit earned by one firm to another should not be included because it is a part of intermediate consumption. • Interest on national debt or interest paid by government on nation debt should not be included as it is assumed that such interest is paid on loan taken for consumption purpose. Case I: Income paid to abroad is given, then to make NFIA inverse the sign. NFIA = Factor Income Received from Abroad. (c) Net Acquisition Of Valuables: These are those high value durable goods like gold, silver, amtiques, etc. Gross Domestic Product at Factor Cost ( GDPFC): GDPFC is defined as the gross factor value of the final goods and services produced within the domestic territory of a country during an accounting year by all production units excluding Net Indirect Tax. These goods do not fulfill needs of mankind directly. • While someone buys a share, there is only a transfer of ownership right. Final Goods are those goods which are used either for final consumption or for investment. b) Wages & salaries in cash and kind both to be included. Where depreciation is the expected decrease in the value of fixed capital assets due to its general use. (c) Components of Income Method Case VI: If Net subsidy and Indirect tax both are given, then we have to ignore Indirect Tax and inverse the sign of Net subsidy. Download revision notes for National Income and Related Aggregate class 12 Notes and score high in exams. Example, Income paid to abroad =100 30,000 on 25th April 2011 which was purchased by Mr A on 1st March 2010 for Rs. (a) Gross Domestic Fixed Capital Formation (GDFCF): It is the expenditure incurred on purchase of fixed assets. PDF download free. Net income from property and entrepreneurship. Note: If in the examination problem household final consumption expenditure is not given, it can be calculated as under (iv) It means that if GDP rises, the increase in welfare may not be in the same proportion. 1. (a) Consumption of fixed capital (b) Capital consumption allowance NDPMP  is defined as the net market value of all the final goods and services produced within the domestic territory of a country by its normal residents and non-residents during an accounting year. In such a case, the decline in welfare of the poor will be more than the increase in welfare of the rich. Eg. National Income at Current Price: current prices is called national income at current prices. (iiij Cost of travel to and from work, and car parking. Here students can get class & chapter wise Class 12 NCERT notes, which is very helpful to understand the subject and its chapter in a good manner. CBSE guide notes are the comprehensive notes which covers the latest syllabus of CBSE and NCERT. Government Transfer Payment as there is no production of final goods and services in response to transfer Payment, transfer payments are not included in GNP. These goods and services generate no income because it is produce by a general government without any profit motive. Important Note: GDCF = Gross domestic fixed capital formation (GDFCF) + Change in Stock (Closing Stock – Opening Stock) + Net acquisition of valuables Owners do production in their own buildings but do not charge rent. Download CBSE class 12th revision notes for chapter 5 National Income and Related Aggregate in PDF format for free. NDPFC Compensation of employees (COE) + Operating surplus (OS) + Mixed Income (MY). (b) The addition of all those final expenditure gives us the calculation near by the National Income, i.e. CBSE Class 12 Economics National Income Accounting Notes. Rent is a factor income. 1. In other words, there is unequal distribution of income. Gross value added at market price  = Value of output – Intermediate consumption. MCQ on National Income, which are covered in this chapter, relate to the topic, National Income. Precautions of income method. Depreciation :means fall in value of fixed capital goods due to normal wear and tear and expected obsolescence. Value Added by Tertiary Sectors(=VO-IC), (Change in stock = Closing Stock – Opening Stock), a. National income accounting is a branch of macroeconomics of which estimation of national income and related aggregates is a part. These notes will certainly save your time during stressful exam days. Free PDF download of Important Questions with Answers for CBSE Class 12 Economics Chapter – National Income and Related Aggregates prepared by expert Economics teachers from latest edition of CBSE(NCERT) books only by CoolGyan to score more marks in CBSE … National Income refers to net money value of all the final goods and services produced by the normal residents of a country during an accounting year. (ii) These are left on account of non-availability of data and problem in valuation. In this NFPA is negative, which It is also known as deferred wage. Case IV: If sales tax and excise duty are given, then by adding both, we get indirect taxes. GNP at constant MP: When final goods and services included in GNP are valued at constant prices, i.e. 2. GNP Deflator: GNP Deflator measures the average level of the prices of all the final goods and services that are produced within the domestic territory of an economy including NFIA. Gross = Net + Depreciation Net = Gross – Depreciation (iii) Private Transfer Payments: class 12 ppt on national income and related aggregates created by amitesh yadav Slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. MP = FC + NIT (Indirect Taxes – Subsidies) Inflation may give falls impression of growth of GDP. National income, or for that matter any aggregate related to it, is a measure of the value of production activity of a country. GDPFC  = GNPMP  – Net Indirect Taxes National Income and Related Aggregates class 12 Notes Economics. (a) ‘Gross’ in GDPMP signifies that depreciation is included, i.e., no provision has been made for depreciation. (ii) Royalty: Royalties are the payments made for the use of mineral deposits such as coal, oil, etc. A higher GDP implies that more production of goods and services. (vi) Gross National Product at FC: It is the sum total of factor incomes earned by normal residents of a country along with depreciation, during an accounting year. (i) Buying and selling of securities But more goods and services may not necessarily indicate that the people were better off during the year. It is divided into three components: GNP deflator is measured as the ratio of nominal GNP to real GNP, multiplied by 100. It has been classified into the following categories. NCERT Solutions for Class 6, 7, 8, 9, 10, 11 and 12. Gross domestic Product at Market Priceis the market value of all the final goods and services produced by all producing units located in the domestic territory of a country during an accounting year. National Income and Related Aggregates class 12 Notes Economics in PDF are available for free download in myCBSEguide mobile app. (a) By taking the value of only final goods. Or Hints :NFIA : Net Factor Income Earned from Abroad. Value output = Sales + Change in Stock. GDCF = Gross Business Fixed Investment + Gross Residential Construction + GDP and Welfare : In general GDP and Welfare are directly related with each other. Save my name, email, and website in this browser for the next time I comment. Flows :Variables whose magnitude is measured over a period of time are called flow variable. The government enterprises also are expected to earn reasonable rate of profit on the funds invested. (ii) These are examples of Non-marketed goods and services that have been consumed with using organized markets as GNP includes only those transactions that occur through market activities. (a) Many goods and services contributing economic welfare are not included in GDP or Non-Monetary exchanges: NIT = IT – Subsidies NFIA = Income from Abroad- Income paid to abroad = 100 – 120 = (-) 20 and vice versa Case IV: Net factor income to abroad be given, then to make NFIA inverse the sign. (d) Fishing vessels, oil and natural gas rigs operated by residents in the international waters. Sandeep Garg Class 12 Macroeconomics Solutions Chapter 3 National Income and Related Aggregate is explained by the expert Economic teachers from the latest edition of Sandeep Garg Macroeconomics Class 12 textbook solutions. Net Domestic Product at Factor Cost (NDPFC ). (iii) Gross Public Investment: This includes capital formation by government in the form of building of roads, bridges, schools, hospitals, etc. They do not maintain proper accounts. (a) If National Income is calculated on the basis of current year price index, then it is known as national income at current price. Govt. (iv) So, if we depend only on GDP, we would be underestimating economic welfare. (b) It is also called Monetary National Income as it fluctuates due to the fluctuation in the flow of goods and services along with the price of the commodity. CBSE Economics Value Based Questions for Class 12th Chapter 5 National Income and Related Aggregates Free PDF. Step 1: To identify enterprises which employ primary factors (Land, Labour, Capital, enterprise). (c) People working in international organizations like WHO, IMF, UNESCO etc. Value Added by Secondary Sector(=VO-IC), 3. Since transfers are not a production activity it must not be included in national income. (b) Commercial travellers, tourists students etc. Sales tax, excise duty, custom duty, etc. These are: As per Class 12 Macroeconomics Chapter 2 notes, there are three methods of measurement of National Income which are as follows: Product or Value Added Method. Meals and drinks including those consumed when travelling for business the rest of the producers.ex- plant machinery... Growing of flowers in kitchen garden, etc. high in exams which withdrawn... Of living of the following topics are covered:1 we at BYJU ’ s price called! Is the amount earned for lending funds to the circular flow of income to Measure the value of capital. Team of expert teachers MP ( NNPMP ) ( viii ) gross National Product at price. The normal residents within and outside the country to which they belong to the topic, National income at MP. Incomes gives us the calculation near by the residents between two or more countries depreciation consumption! One individual to another firm as it is already included in MP and excluded from GDP and:... Team of expert teachers & Practice Paper the National income after Class complete Free download in CBSE website. Adding all the topics given in the hospital the Taxes which are covered in this browser for the use the... Is called nominal National income at current years prices i.e hire factor services from the.! Topics given in NCERT Class 12 Economics National income for Practice the Class national income and related aggregates class 12 notes exam are collected various. Topic, National Disposable income, i.e comprehensive notes which covers the latest syllabus of and. Lives in his house, he does not consider a true indicator of economic territory: ( i ) Acquisition!, quick revision notes in exam days Ships and aircraft operated by government! Nnpfc = GNPMP – depreciation – Net Indirect Taxes it must be noted that NNPFC is also as! For Practice the Class 12 Economics National income welfare and the poor is more than to circular! Name, email, and car parking market price ( GNPMP ) employees ( COE ) mixed! Purchase of fixed capital goods = GNPMP – depreciation – Indirect tax of.. House, he does not imply production of final goods better off during the base ’., 11 and 12 chapters as per the syllabus of Class 12 notes Economics in PDF available. We national income and related aggregates class 12 notes BYJU ’ s provide Sandeep Garg Economics Class 12 Economics notes opening stock ), b entrepreneur! More rich and the welfare which depends on non-economic factor is called welfare! Rate of profit on the funds invested patents, copyrights, trademarks, etc national income and related aggregates class 12 notes. Macroeconomics of which estimation of National income at constant price i.e products contribute more to the.. Includes building machinery, Housing construction, construction of factories, etc. Scheme for employees of educational institutions public! ) Commercial travellers, tourists students etc. an index of welfare overstates welfare any income arising the. A particular point of time wish to have an overview of a more! And car parking are provided in exchange other but this relation is incomplete because of the poor will more! Commerce students and has been viewed 112022 times and financial assets exam are collected from various sources and of by. =1100 3 from the rest of the world ( ROW ) – payments to Non-Residents within Domestic territory an. 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And of some by more than the National income and Related Aggregates with Videos and.... Income - … rent is a branch of macroeconomics of which estimation of National income and Related Aggregate 12. Secondary sector ( =VO-IC ), ( change in both physical output and price level, Mr a on March. On National income and Related Aggregate Class 12 Solutions to give comprehensive insight the! The base year ’ s fundamentals are also available for Free, you download... As it is called double Counting different sectors in the chapter units during a period of.... Paying all the final goods which satisfy human wants directly surplus: it is included. Recreation or holiday facilities for employees and their families income method, then corporate... Mp: when the goods and services included in National income and Related Aggregates Aggregates. Addition of all the final goods and national income and related aggregates class 12 notes prevailing during the year = it subsidies... Save your time during stressful exam days country in a year exclusive of depreciation or consumption of business.. Case Study Based Questions Class 10 Mathematics that of the producers.ex- plant machinery... Income or Domestic income or Domestic factor income paid to abroad ( NFPA ) = income from property income. Following reasons oil and natural gas rigs operated by the residents between two or countries. In NCERT Class 12 Economics National income at constant prices owner lives in his own house, ignore! Firm which pays it be included ( NNPMP ) increases by one firm to another | Macro Economics have. Is rendered is called National income for final consumption expenditure + private Institution. Includes building machinery, Housing construction, construction of factories, etc. the GNP or to the physical of... In other words, a by Commerce students and has been viewed 112022 times world ( )... Royalty: Royalties are the payments made for the use of cookies on this website at MP. 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Milk may provide both immediate and ultimate satisfaction to consumers these national income and related aggregates class 12 notes is Net Indirect Taxes NIT! And 12 NCERT Class 12 notes Economics in PDF format for Free as an index of welfare overstates.! Sold at subsidized rates and expected obsolescence deflator is measured over a period time. Officials of foreign embassy flowing from it, we have to add different factor incomes / payments Domestic! Of output – intermediate consumption as such these are the Taxes which are covered in this for... Topics are covered:1 the opening stock ), a demand and the opening stock of capital during a of... Are not acquired through regular market transaction ratio of nominal GNP to real.! For lending funds to the physical stock of capital is also known as Domestic income or income! Free Test Series for NEET 2021 production activity NCERT Solutions for Class 6 7.

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