Net National Product at Factor Cost of a particular country in a year is Rs. 1900 crore. There are no interest payments made by the households to the firms/government to the households.
The Personal Disposable Income of the households is Rs.1200 crore. The personal income taxes paid by them is Rs. 600 crore and the value of retained earnings of the firms and government is valued at Rs. 200 crore. What is the value of transfer payments made by the government and firms to the households?
Given, Personal Disposable Income = Rs.1200 crore
Personal Taxes (Direct tax) = Rs. 600 Personal Income = PDI + Direct Taxes = 1200+600 = Rs.1800
Private Income = Personal Income + Retained Saving = 1800 + 200 = Rs. 2000 crore
NN${{P}_{FC}}$ = Private Income - Transfer Payments 1900= 2000 -Transfer Payments
Value of Transfer Payment = Rs.100 crore