Question
Net National Product at FC of a particular country in a year is र 1900 crores. There are no interest payments made by the households to the firms/government or firms/ government to the households. The personal disposable income of the households is र 1200 crores. The personal income tax paid by them is र 600 crores and the value of retained earnings of the government and firms is valued at र 200 crores. What is the value of transfer payment made by the government and firms to the households?
Solution
Personal Income = Personal Disposable income + Personal income tax
= 1200 + 600 = 1800 crores
Personal income = National income - Retained earning of govt. and firms + Transfer payments
1800 = 1900 - 200 + Transfer payments.
Transfer payments = 1800 - 1900 + 200 = 100 crores.
