CBSE 2025, Set 2

Question

(a) (i) Explain the likely impact of construction of 100 new super speciality hospitals in a nation on Gross Domestic Product (GDP) and welfare in the economy.

(ii) Suppose, there are only three firms in a hypothetical economy, viz. A, B and C. During a given period of time, the following transactions were undertaken by them:
(I) Firm A sold goods worth ₹ 2,000 to Firm B and ₹ 1,200 to Firm C.
(II) Firm B sold goods worth ₹ 1,100 to Firm A and ₹ 3,500 to Firm C.
(III) Firm C sold to households for final consumption, goods worth ₹ 5,700.

Estimate the value of Gross Domestic Product at Factor Cost ($GDP_{FC}$), assuming the value of Net Indirect Taxes to be ₹ 240.

Edvaya · Accepted Answer

The correct answer is Subjective. **(i)** The construction of 100 new super speciality hospitals may impact the Gross Domestic Product (GDP) positively as improved health infrastructure represents capital formation and may lead to an increase in employment opportunities. Moreover, it may improve the health status and in turn well-being of the people, consequently improving the welfare in the economy. **(ii) Estimation of $GDP_{FC}$:** | Firms | Value of Output (in ₹) (i) | Intermediate Consumption (in ₹) (ii) | Value Added {(i)-(ii)} (in ₹) | |---|---|---|---| | A | 2,000 + 1,200 = 3,200 | 1,100 | 2,100 | | B | 1,100 + 3,500 = 4,600 | 2,000 | 2,600 | | C | 5,700 | 1,200 + 3,500 = 4,700 | 1,000 | | **Total** | **13,500** | **7,800** | **5,700** | Gross Domestic Product at Market Price ($GDP_{MP}$) = ₹ 5,700 Gross Domestic Product at Factor Cost ($GDP_{FC}$) = $GDP_{MP}$ - Net Indirect Taxes $= 5,700 - 240$ $= 	ext{₹ } 5,460$

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Economics > Introductory Macroeconomics > National Income Aggregates

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