What are the four factors of production and what are the remunerations to each of these called?
The four factors of production are –
a) Land - It is the gift of nature and it is called natural, original or primary factor of production.
b) Labour - It is a person engaged in some physical work, it is called human factor of production.
c) Capital - It means wealth, money or income which is invested in business, it helps in production function.
d) Entrepreneur - It is the work of an entrepreneur to bring the required factors together and work harmoniously.
The remuneration paid to each of these factors are –
•Rent for land
•Wages and salaries for labour
•Interest for capital and
•Profit for entrepreneur
Net National Product at Factor Cost of a particular country in a year is Rs 1,900 crores. There are no interest payments made by the households to the firms/government, or by the firms/government to the households. The Personal Disposable Income of the households is Rs 1,200 crores. The personal income taxes paid by them is Rs 600 crores and the value of retained earnings of the firms and government is valued at Rs 200 crores. What is the value of transfer payments made by the government and firms to the households?
(a) Net Domestic Product at factor cost
(b) Net Factor Income from abroad
(c) Undisbursed Profit
(d) Corporate Tax
(e) Interest Received by Households
(f) Interest Paid by Households
(g) Transfer Income
(h) Personal Tax
In a single day Raju, the barber, collects Rs 500 from haircuts; over this day, his equipment depreciates in value by Rs 50. Of the remaining Rs 450, Raju pays sales tax worth Rs 30, takes home Rs 200 and retains Rs 220 for improvement and buying of new equipment. He further pays Rs 20 as income tax from his income. Based on this information, complete Raju’s contribution to the following measures of income (a) Gross Domestic Product (b) NNP at market price (c) NNP at factor cost (d) Personal income (e) Personal disposable income.
The value of the nominal GNP of an economy was Rs 2,500 crores in a particular year. The value of GNP of that country during the same year, evaluated at the prices of same base year, was Rs 3,000 crores. Calculate the value of the GNP deflator of the year in percentage terms. Has the price level risen between the base year and the year under consideration?