Some macroeconomic identities - class-XI

A person is treated as resident of a country in the country in which his interest actually lies. It can be an individual living in the same country or in another country. If a person lives in foreign country he should live in other country for less than a year. It not only involves individuals but also involves institutions. Hence, the concept of normal residents applies not only to individuals but also to institutions.

If factor cost is greater than
market price, then it means Indirect taxes < Subsidies. Market price
can be less than factor cost when subsidies will be more than the
indirect tax.

Market price is basically the current price at which an asset is bought or sold in the market. It includes the cost of production in the  form of wages,rent,interest,profit.etc. whereas factor cost may not reflect the effect of taxes and subsidies unlike market price. It takes into account only of the actual cost of production including the profit. Hence, the reason for difference between market price and factor cost is indirect taxes and subsidies.

Mixed income refers to the combined income of self-employed individuals, which includes elements of wages, rent, interest, and profit that are difficult to separate in small-scale operations.

In the demand function Dx = f(Px, T, Y), Px is the price of the good, T represents consumer tastes, and Y represents the income level of the consumer.

Personal income distribution is generally more unequal in urban areas due to the higher concentration of wealth, diverse employment opportunities, and significant income gaps compared to rural areas.

Net Domestic Product at factor cost (NDPfc) includes wages, rent, interest, profit, and mixed income. Therefore, none of these items are excluded.

In macroeconomic accounting, the total value of national income (sum of factor incomes) is equal to the total value of national output (sum of final goods and services produced) due to the circular flow of income.

GNPfc = GNPmp - Net Indirect Taxes. GNPfc = 99000 - 8470 = 90530. The other values (NFIA, CCA) are already accounted for in the GNPmp figure.

Personal saving is calculated as Personal Income minus Personal Income Tax minus Consumption. Here, 7510 - 410 - 5000 = 2100.

Disposable income is defined as Personal Income minus Personal Income Tax. Here, 7510 - 410 = 7100.

Disposable income refers to the income which is freely available to the disposal of the individual. The gap between the personal income of an individual and disposal income is due the taxes and other payments made to the government on the personal income earned. 
Symbolically: ${\text{Disposable Income = Personal Income - Taxes and other payments made to the government on the personal income}}$ 

Personal saving equals (Personal Income - Personal Income Tax) - Consumption. Calculation: (8000 - 1200) - 5000 = 6800 - 5000 = 1800.

Personal income is the total income received by individuals, while disposable income is the amount left for spending after direct taxes are deducted.

A fall in disposable income decreases demand (shifting the demand curve left), and a fall in the number of suppliers decreases supply (shifting the supply curve left). Both shifts lead to a decrease in equilibrium quantity.

Using the equation C = 160 + 0.75Yd, substitute C = 910: 910 = 160 + 0.75Yd. Then 750 = 0.75Yd, so Yd = 750 / 0.75 = 1000.

Using C = 200 + 0.80Yd, substitute C = 1000: 1000 = 200 + 0.80Yd. Then 800 = 0.80Yd, so Yd = 800 / 0.80 = 1000.

Using C = 160 + 0.75Yd, substitute C = 760: 760 = 160 + 0.75Yd. Then 600 = 0.75Yd, so Yd = 600 / 0.75 = 800.

National product at market price includes indirect taxes and excludes subsidies compared to factor cost. Thus, Market Price = Factor Cost + Indirect Taxes - Subsidies.

Net indirect taxes (Indirect Taxes - Subsidies) represent the wedge between the market price paid by consumers and the factor cost received by producers.