Question

Arrange the following statements in the context of calculating Gross National Product (GNP) at Market Price: \[ (A)\ \text{Add Net Factor Income from Abroad} \] \[ (B)\ \text{Calculate value of output} \] \[ (C)\ \text{Determine total sales in the country} \] \[ (D)\ \text{Deduct intermediate consumption} \]

• A. BDCA
• B. DCBA
• C. BCDA
• D. ABCD

Hint:

To calculate GNP at Market Price, first calculate domestic production and then add Net Factor Income from Abroad: \[ GNP_{MP} = GDP_{MP} + NFIA \]

Answer 1

The Correct Option is C

Step 1: Understanding the Concept:
GNP at Market Price is calculated using the Value Added Method by finding the contribution of domestic production and then adjusting for foreign income.
Step 2: Detailed Explanation:
The logical steps for the Value Added Method are:
1. First, we identify the Value of Output (B).
2. To find the value of output, we must first determine total sales (C) (since $Value\ of\ Output = Sales + Change\ in\ Stock$).
3. Next, to avoid double counting, we must deduct intermediate consumption (D) from the Value of Output. This gives us Gross Value Added at Market Price (which is equal to $GDP_{MP}$).
4. Finally, to convert "Domestic" product to "National" product, we add Net Factor Income from Abroad (A).
Formula: $GNP_{MP} = (Value\ of\ Output - Intermediate\ Consumption) + NFIA$.
Step 3: Final Answer:
The correct sequence is (B) $\rightarrow$ (C) $\rightarrow$ (D) $\rightarrow$ (A), which is BCDA.