Class 12 Income Method Solutions | Prepared by CHK Students

Understanding national income is one of the most crucial parts of Class 12 Economics, and among the three main methods, the Income Method holds great importance in board examinations as well as competitive exams. To make your preparation simple and effective, our CHK Student Keshav Khandelwal has carefully prepared these step-by-step solutions for the Income Method.

What is the Income Method?

The Income Method of calculating national income focuses on the earnings received by the factors of production in an economy. It involves summing up all factor incomes like rent, wages, interest, and profit earned within a given period.

Mathematically,
National Income = Compensation of Employees + Rent + Interest + Profit + Mixed Income of Self-Employed

Steps in Solving Income Method Questions

Identify Factor Incomes – Wages & salaries, rent, interest, profit, and mixed income.
Exclude Transfer Incomes – Like pensions, donations, or gifts, as they are not factor incomes.
Adjust for Depreciation & Taxes – Add subsidies, subtract indirect taxes, and depreciation wherever required.
Arrive at National Income – By adding all the net factor incomes at factor cost.

Here’s the Solutions –

1. Calculate a) Operating Surplus, and b) Domestic Income;

Items	₹ in Crore
i) Compensation of Employees	2,000
ii) Rent and interest	800
iii) Indirect Taxes	120
iv) Corporation tax	460
v) Consumption of fixed capital	100
vi) Subsidies	20
vii) Dividend	940
viii) Undistributed Profits	300
ix) Net Factor Income to abraod	150
x) Mixed Income	200

2. Calculate National Income

Items	(₹ in crore)
i) Compensation of employees	2,000
ii) Profit	800
iii) Rent	300
iv) Interest	250
v) Mixed income of self employed	7000
vi) Net current transfers to abroad	200
vii) Net Exports	– 100
viii) Net indirect taxes	1,500
ix) Net Factor income to abroad	60

3. Calculate Net National Product at Market Price:

Items	(₹ in thousand crore)
1. Compensation of Employees	250
2. Mixed income of self employed	600
3. Profit	80
4. Rent	30
5. Interest	40
6. Net factor income to abroad	– 10
7. Net exports	15
8. Consumption of fixed Capital	20
9. Net indirect taxes	10
10. Net current transfers to abroad	8

4. Calculate National Income:

Items	(₹ in crore)
1. Profit	1,000
2. Mixed Income of self employed	15,000
3. Dividends	200
4. Interest	400
5. Compensation of employees	7,000
6. Net factor income to abroad	100
7. consumption of fixed capital	400
8. Net exports	– 200
9. Net Indirect taxes	800
10. Net Current transfers to rest of the world	40
11. Rent	500

5. Calculate the Gross National Product at Market Price:

Items	(₹ in crore)
1. Compensation of employees	2500
2. Profit	700
3. Mixed income of self employed	7500
4. Government final consumption expenditure	3000
5. Rent	400
6. Interest	350
7. Net factor income from abroad	50
8. Net current transfers to abroad	100
9. Net indirect taxes	150
10. Depreciation	70
11. Net exports	40

6. Calculate the Net National Product at Market Price

Items	(₹ in Crore)
1. Mixed income of self Employed	8000
2. Depreciation	200
3. Profit	1000
4. Rent	600
5. Interest	700
6. Compensation of employees	3000
7. Net indirect taxes	500
8. Net factor income to abroad	60
9. Net exports	(-) 50
10. Net current transfers to abroad	20

7. Calculate National Income:-

Items	(₹ in Crore)
1. Compensation of employees	2000
2. Rent	400
3. Profit	900
4. Dividend	100
5. Interest	500
6. Mixed income of self employed	7000
7. Net factor income to abroad	50
8. Net exports	60
9. Net indirect taxes	300
10. Depreciation	150
11. Net current transfers to abroad	30

8. Find Net National Product at Market Price:

Items	(₹ in crore)
1. Personal taxes	200
2. Wage and Salaries	1200
3. Undistributed Profit	50
4. Rent	300
5. Corporation tax	200
6. Private Income	2000
7. Interest	400
8. Net Indirect tax	300
9. Net factor income to abroad	20
10. Profit	500
11. Social Security contributions by employers	250

9. Find Net Domestic Product at Factor cost:

Items	(₹ in crore)
1. Rent	200
2. Net Current transfers to abroad	10
3. National debt interest	60
4. Corporate tax	100
5. Compensation of employees	900
6. Current transfers to government	150
7. Interest	400
8. Undistributed Profits	50
9. Dividend	250
10. Net Factor income to abroad	– 10
11. Income accruing to government	120

10. Find National Income:-

Items	(₹ in crore)
1. Wages and Salaries	1000
2. Net Current transfers to abroad	20
3. Net Factor income paid to abroad	10
4. Profit	400
5. National debt interest	120
6. Social security contributions by employers	100
7. Current transfers from government	60
8. National income accruing to government	150
9. Rent	200
10. Interest	300
11. Royalty	50

11. Calculate Net National Product at Market Price:-

Items	(₹ in crore)
1. Net Factor Income to abroad	– 10
2. Net current transfers to abroad	5
3. Consumption of fixed capital	40
4. Compensation of employees	700
5. Corporate tax	30
6. Undistributed Profits	10
7. Interest	90
8. Rent	100
9. Dividends	20
10. Net Indirect tax	110
11. Social security contributions by employees	11

12. Calculate the Gross National Product at Market Price:

Items	(₹ in crore)
1. Wages and Salaries	800
2. Personal tax	150
3. Operating Surplus	200
4. Undistributed Profits	10
5. Social Security contributions by employers	100
6. Corporate tax	50
7. Net factor income to abroad	– 20
8. Personal disposable income	1200
9. Net indirect tax	70
10. Consumption of fixed capital	30
11. Mixed income of self employed	500
12. Royalty	9

13. Calculate National Income

Items	(₹ in crore)
1. Rent	200
2. Net Factor income to abroad	10
3. National debt interest	15
4. Wages and Salaries	700
5. Current transfers from government	10
6. Undistributed profits	20
7. Corporation tax	30
8. Interest	150
9. Social Security Contributions by employers	100
10. Net domestic product accruing to government	250
11. Net Current transfers to rest of the world	5
12. Dividend	50

14. Calculate ‘Gross National Product at Market Price.

Items	(₹ in crore)
1. Rent	100
2. Net Current transfers to rest of the world	30
3. Social Security contributions by employers	47
4. Mixed Income	600
5. Gross Domestic Capital Formation	140
6. Royalty	20
7. Interest	110
8. Compensation of Employees	500
9. Net Domestic Capital Formation	120
10. Net Factor income from abroad	– 10
11. Net Indirect tax	150
12. profit	200

15. Calculate Net Domestic Product at Market Price from the following.

Items	(₹ in crore)
1. Income from domestic product accruing to government	120
2. Wages and Salaries	400
3. National Debt Interest	60
4. Profit	200
5. Net Factor income to abroad	– 20
6. Rent	100
7. Current transfers from government	30
8. Interest	150
9. Social Security contribution by employers	50
10. Net indirect tax	70
11. Net current transfers to abroad	– 10

16. Calculate ‘Gross National Product at Market Price from the following.

Items	(₹ in crore)
1. Net factor income to abroad	– 10
2. Net current transfers to abroad	20
3. Wages and Salaries	400
4. Corporation tax	50
5. Profit after corporation tax	150
6. Social Security contributions by employers	50
7. Rent	100
8. Interset	70
9. Mixed income of self employed	300
10. Net Indirect tax	140
11. Consumption of fixed capital	80

17. Calculate ‘Net National Product at Factor Cost from the following:-

Items	(₹ in crore)
1. Social Security contributions by employees	90
2. Wages and Salaries	800
3. Net Current transfers to abraod	– 30
4. Rent and Royalty	300
5. net factor income to abraod	50
6. Social security contributions by employers	100
7. Profit	500
8. Interest	400
9. Consumption of fixed capital	200
10. Net indirect tax	250

18. Calculate ‘Net National Product at Factor Cost from the following:-

Items	(₹ in crore)
1. National debt interest	60
2. Wages and salaries	600
3. Net current transfers to abroad	20
4. Rent	200
5. Transfer payments by government	70
6. Interest	300
7. Net domestic product at factor cost accruing to government	400
8. Social security contributions by employers	100
9. Net factor income paid to abroad	50
10. Profits	300

19. From the following data, calculate National Income:-

Items	(₹ in crore)
1. Profit	1500
2. Rent	1300
3. Net Indirect taxes	350
4. Mixed income of self employed	600
5. Compensation of employees	3000
6. Reimbursement to the employees for medical expenses	300
7. Depreciation	200
8. Excess of factor income to rest of the world over factor income from rest of the world	50
9. Excess of imports over exports	40
10. Interest	1100

20. Calculate Operating Surplus from the following data:-

Items	(₹ in crore)
1. Compensation of employees	300
2. Indirect taxes	200
3. Consumption of fixed Capital	100
4. Subsidies	50
5. Gross Domestic Product at market price	600

21. The following information is available for an economy, On the basis of this information using income method, calculate: a) Domestic Income, and b) National Income

Items	(₹ in crore)
1. Wages	10,000
2. Rent	5,000
3. Interest	400
4. Dividend	3,000
5. Mixed Income	400
6. Undistributed profit	200
7. Social Security Contribution	400
8. Corporate profit tax	400
9. Net factor income from abroad	1000

22. Given the following data and using income method calculate:-
a) Net Domestic Income
b) Gross Domestic Income
c) Net National Income
d) Net National Product at Market Price

Items	(₹ in crore)
1. Indirect taxes	9000
2. Subsidies	1800
3. Depreciation	1700
4. Mixed Income of self employed	28000
5. Operating surplus	10000
6. Net factor income from abroad	– 300
7. Compensation of employees	24000

23. Calculate the national income from the following data:-

Items	(₹ in crore)
1. Mixed income of self employed	200
2. Old age pension	20
3. Dividends	100
4. Operating surplus	900
5. Wages and Salaries	500
6. Profits	400
7. Employer’s contribution to social security schemes	50
8. Net factor income from abroad	– 10
9. Consumption of fixed capital	50
10. Net indirect tax	50

24. Calculate National Income from the following data:-

Items	(₹ in crore)
1. Rent	80
2. Interest	100
3. Profits	210
4. Tax on Profits	30
5. Employee’s contribution to social security schemes	25
6. Mixed income of self employed	250
7. Net indirect tax	60
8. Employer’s contributions to social security schemes	50
9. Compensation of employees	500
10. Net factor income from abroad	– 20

25. Calculate National Income from the following data:-

Items	(₹ in crore)
1. Compensation of employees	400
2. Profits	200
3. Rent	150
4. Interest	100
5. Dividends	120
6. Employer’s contributions to social security schemes	40
7. Mixed income of self employed	500
8. Direct tax	100
9. Net factor income from abroad	– 50

26. From the following data, calculate Gross National Product at Market prices:-

Items	(₹ in crore)
1. Undistributed profits of private corporate enterprises	200
2. Rent	400
3. Interest	200
4. Profits	600
5. Dividends	300
6. Wages and Salaries	225
7. Net exports	– 20
8. Net indirect tax	70
9. Consumption of fixed capital	30
10. Compensation of employees	250
11. Mixed income of self employed	100
12. Net factor income from abroad	– 10

27. Calculate national income from the following data:

Items	(₹ in crore)
1. Interest	50
2. Corporate tax	10
3. Net indirect tax	40
4. Rent	20
5. Dividends paid	30
6. Compensation of employees	200
7. Consumption of fixed capital	15
8. Undistributed profits	5
9. Net factor income received from abroad	– 5
10. Royalty	10

28. Calculate GDP at MP and GNP at FC from the following data:-

Items	(₹ in crore)
1. Operating Surplus	700
2. Profit	100
3. Wages and Salaries (cash)	1000
4. Interest	200
5. Consumption of fixed capital	50
6. Net factor income from abroad	– 10
7. Value of benefits in kind provided to employees	200
8. Goods and service tax	150
9. Subsidies	10

29. Calculate GNP at MP:-

Items	(₹ in crore)
1. Mixed income of the self employed	800
2. Consumption of fixed capital	50
3. Wage and salaries	700
4. Compensation of employees from abroad	20
5. Rent on land	200
6. Royalty of sub soil assets	30
7. Interest paid by production units	150
8. Interest paid by consumers	100
9. Profits	300
10. Social security contribution by employers	100
11. Property and entrepreneurial income from abroad	– 20
12. Net indirect tax	200

30. Calculate GDP at MP

Items	(₹ in crore)
1. Dividend paid	20
2. Depreciation	25
3. Rent	75
4. Interest	125
5. Undistributed profits	50
6. Subsidies	10
7. Goods and services tax (GST)	40
8. Corporation tax	30
9. Mixed Income	500
10. Net factor income from abroad	– 20
11. Compensation of employees	300

31. Calculate Operating Surplus

Items	(₹ in crore)
1. GNP at market price	1000
2. Wages and Salaries	400
3. Consumption of fixed capital	50
4. Net factor income to abroad	– 10
5. GST	100
6. Social security contributions by employees	60
7. Subsidies	20
8. Mixed income of the self employed	200
9. Interest	40
10. Social security contribution by employers	100

Also download – Class 12 Expenditure Method Solutions

Why you should Study with CHK Solutions?

✅ Simplified Explanations – Step-by-step breakdown for every type of question.
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Conclusion

The Income Method might look tricky at first, but with the right guidance and structured solutions, you can master it with ease. The CHK Students’ prepared notes and solutions are the perfect support for your Class 12 Economics preparation.