For a hypothetical economy, assuming there are only two firms (X and Y) with equal values of Gross Value Added (GVA). On the basis of the following data, estimate the values of Domestic sales of firm X : Ms. Reeta D'Costa, retired from the post of Income Tax Commissioner in the year 2023. Apart from her pension, she also receives the following from various sources : - Rental income from a flat she owns. - Interest income from her fixed deposits. - Money sent by her children settled abroad. Identify and classify, her monthly incomes into `factor income' and `transfer income', with valid reasons.

Question

Accepted Answer

(i) Given: GVA_X = GVA_Y

From table:
- Value of Output of firm Y = 700
- Purchases by X from Y = 200
- Exports by X = 100
- Purchases by Y from X = 150
- Additions to Stock of X = 50

GVA_Y = 700 - 150 = 550
GVA_X = 550
Value of Output_X = 550 + 200 = 750
Sales of X = 750 - 50 = Rs. 700 crore

(ii) Reeta's incomes:
- Rental income = Factor income (income from property)
- Interest income = Factor income (income from lending)
- Money from children = Transfer income (no productive service)