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InterviewSolution
This section includes InterviewSolutions, each offering curated multiple-choice questions to sharpen your knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
Which of the following willl be included in National Income ?A. Sale of bonds by a companyB. Transport expenses by a firmC. Interest on loan paid by households to banksD. None of these |
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Answer» Correct Answer - D D |
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| 2. |
Calculate Gross National Disposable Income from the following data : |
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Answer» `GNDI=N NP_(FC)+NIT+"Current transfers from abroad"+"Depreciation"` `=2000+250+(200)+100= Rs 2550` crore |
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| 3. |
Fro the following following data calculate national income by (a) Income method (b) Expenditure method : |
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Answer» (a) Income method `NDP_(FC)=COE+OS+MI` `=(i)+(iii+iv+vi)+ix` `=800+(500+200+150)+630=800+850+630` `=Rs 2280` crore `N NP_(FC)=NDP_(FC)+NFIA` `=2280+20= Rs 2300` crore (b) Expenditure method `GDP_(MP)=PFCE+GFCE+(NDCF+"Dep.")+`Net exports `=1200+800+(500+150)+(-30)` `=1200+800+650-30` `= Rs 2620` crore `N NP_(FC)=GDP_(MP)-"Dep."+NFIA-NIT` `=2620-150+20-190=2620-320` `= Rs 2300` crore |
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| 4. |
Calculate National income and from the following data : |
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Answer» `GDP_(MP)=PFCE+GFCE+(NDCF+"Dep.")+` Net exports `=600+200+(100+30)+(-50)` `=600+200+130-50` `= Rs 880` crore `N NP_(FC)` or National Income `=GDP_(MP)-"Dep."+NFIA-NIT` `=880-30+(-20)-40=880-30-20-40` `= Rs 790` crore |
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| 5. |
Calculate national income from the following data : |
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Answer» `GDP_(MP)=PFCE+GFCE+(NDCF+CFC)+("Exports - Imports")` `=200+60+(70+15)+(20-20)` `=200+60+85+0= Rs 345` crore `N NP_(FC)=GDP_(MP)="Dep."+NFIA-NIT` `=GDP_(MP)-"Dep"+NFIA-`(Indirect Taxes - Subsidies) `=345-15+(-5)-(40-10)` `=345-15-5-30=345-50= Rs 295` crore |
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| 6. |
Calculate National income from the following data : |
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Answer» `NDP_(FC)=(vii)+(viii)` `=70,000+25,000` `= Rs 95,000` crore `N NP_(FC)=NDP_(FC)+NFIA` `=NDP_(FC)+ (iv-v)` `=9500+(10,000-6,000)=95000+4000` `= Rs 99000` Crore |
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| 7. |
From the following data, calculate "Gross value added at factor cost". |
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Answer» 1. `GVO_(MP)=` Sales + Change in stocks `=180+15=Rs 195` crore 2. `GVA_(MP)//GDP_(MP)=GVO_(MP)`- Intemediate consumption `=195-100= Rs 95` crore 3. `GVA_(FC)//GDP_(FC)=GVA_(MP)-NIT` `=GVA_(MP)-` [Indirect Taxes - Subsidies] `=95-(0-10)=95+10= Rs 105` crore |
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| 8. |
Find gross value added at market price : |
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Answer» `GVO_(MP)`= (Domestic sales + Exports) `+ Delta` in stocks `=(200+10)+(-10)=210-10= Rs 200` lacs `GDP_(MP)//GVA_(MP)=GVO_(MP)`- Intermediate consumption `=200-120= Rs 80` lakh |
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| 9. |
(a) Describe value added method. (b) What is double counting ? Name the methods to avoid it. |
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Answer» (a) Value added method measures the market value of a final goods and services, produced by each producing enterprise, within the domestic territory of the country. `GVA_(MP)=underset((i))(GVO_(MP))-underset((ii))(IC)` Here, (i) Value of output refers to the market value of goods produced in domestic territory during a period of one year. (ii) Intermediate consumption refers to the value of non-factor inputs, which are used up in the process of production. (b) Double counting refers to including value of same products more than once. Two ways to Avoid Double counting : `**" "`Use value of final output, `**" "`Use value added of each firm. |
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| 10. |
How should the following be treated in estimating national income of a country ? Give reasons. Addition to stocks during a year. |
| Answer» Yes, as change in stock is a part of gross domestic capital formation (investment expenditure). | |
| 11. |
How should the following be treated in estimating national income of a country ? Give reasons. Bonus paid to employees. |
| Answer» Yes, as it is a part of COE. | |
| 12. |
How should the following be treated in estimating national income of a country ? Give reasons. Expenditure on providing police services by the government. |
| Answer» Yes, as it a part of government final consumption expenditure. | |
| 13. |
How should the following be treated in estimating national income of a country ? Give reasons. Purchase of taxi by a taxi driver. |
| Answer» Yes, as taxi will be used for providing services, therefore, it is part of investment expenditure. | |
| 14. |
Following will be included in national incomeA. expenditure on construction of a houseB. expenditure on adding a floor to the buildingC. expenditure on construction of a damD. all of these. |
| Answer» Correct Answer - D | |
| 15. |
From the following data relating to a firm (a) estimate the net value added at market prices (b) show that the net value added at factor cost is equal to the sum of factor income : |
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Answer» `GVO_(MP)=` Sales + Change in stock = Domestic sales + Exports + Increase in stocks `=1080+120+120` `= Rs 1320` thousand `GDP_(MP)=GVO_(MP)-` Intermediate consumption `=GVO_(MP)-` (Domestic purchases + Import of Raw material) `=1320-(360+60)=1320-420` `= Rs 900` thousand (a) `NDP_(MP)=GDP_(MP)-"Dep."` `=900-45` `= Rs 855` thousand (b) To prove that `NVA_(FC)=` Sum of factor income (i) `NVA_(FC)` or `NDP_(FC)=GDP_(MP)-"Dep."-NIT` `=GDP_(MP)-"Dep."-` [Indirect taxes - subsidies] `=900-45-(30-0)=900-45-30` `= Rs 825` thousand ...(i) (ii) Sum of factor income `=COE+OS+MI` =(Salaries + Wages)+(Rent + Interest + Dividend + Undistributed Profits)+MI `=360+(45+270+90+60)+0=360+465+0` `= Rs 825` thousand ...(ii) From (i) and (ii) : `NDP_(FC)//NVA_(FC)=` Sum of factor income |
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| 16. |
Brokerage paid to the broker for sale and purchase of shares is included in national income because :A. it is operating surplusB. it is C.O.E.C. it is mixed income of self employedD. broker is rendering productive serices |
| Answer» Correct Answer - D | |
| 17. |
Money value of final goods and services, measured at prices of base yearA. nominal incomeB. real incomeC. national income at current pricesD. none of these. |
| Answer» Correct Answer - B | |
| 18. |
How should the following be treated in estimating national income of a country ? Give reasons. Taking care of aged parents. |
| Answer» Yes, as it is generation of services towards aged parents and expenditure incurred thereon is a part of private final consumption expenditure. | |
| 19. |
Calculate `N NP_(MP)` : `{:(,,("Rs in Crores")),((i),"Mixed income of self-employed ","8,000"),((ii),"Depreciation",200),((iii),"Profit","1,000"),((iv),"Rent",600),((v),"Interest",700),((vi),"Compensation of employees","3,000"),((vii),"Net indirect taxes",500),((viii),"Net factor income to abroad",60),((ix),"Net exports",(-)50),((x),"Net current transfers to abroad",20):}` |
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Answer» `NDP_(FC)=COE+OS+MI` `=COE+("Profit + Rent + Interest")+MI` `=3000+(1000+600+700)+8000` `=3000+2300+8000` `=13,300` `N NP_(MP)=NDP_(FC)+NFIA+NIT` `13,300+(-60)+500` `=13,300-60+500` `=13740` Crore |
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| 20. |
Purely financial transactions, not included in national income :A. sale of shares and bondsB. govt. transfer paymentsC. old age pensionD. all of these. |
| Answer» Correct Answer - D | |
| 21. |
A city in north west India is hit by a massive earthquake causing huge loss of property. Life of people has come to a standstill. Government of India announces a compensation to earthquake victims to meet the needs of their food, clothes and shelter. (a) Is this expenditure included in national income ? (b) How does it impact life in the city ? |
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Answer» (a) This expenditure by the government is not included in national income as it is transfer payment and does not correspond to the flow of goods and services. (b) Thi expenditure will help the people to get their lives back on track. It will add to their consumption expenditure. Also, if some expenditure is incurred to rebuild their houses, it will add to the capital formation in the city. |
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| 22. |
Which one out of the following is the best indicator of economic growth ?A. Increase in GNPB. Increase in GDPC. Increase in real per capita GDPD. Increase in per capita GDP. |
| Answer» Correct Answer - C | |
| 23. |
Calculate GNP at MP from the following data : |
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Answer» 1. `NDP_(FC)=COE+OS+MI` `=COE+("Rent + Interest + Dividend + Saving of private corporate sector")+MI` `=1000+(1000+200+500+400)+300=1000+2100+300= Rs 3400` crore 2. `GNP_(MP)=NDP_(FC)+"Dep."+NFIA+NIT` `=3400+400+(-20)+900=3400+400-20+900= Rs 4680` crore |
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| 24. |
Calculate GNP at MP from the following data : |
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Answer» 1. `NDP_(FC)=COE+OS+MI` `=COE+("profit + interest + rent")+MI` `=350+(220+100+80)+150 = Rs 900` crore 2. `GNP_(MP)=NDP_(FC)+"Depreciation"+NFIA+NIT` `=NDP_(FC)+"Depreciation"+NFIA+` [Indirect taxes - Subsidies] `=900+50+10+(90-20)= Rs 1030` crore |
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| 25. |
If the Nominal GDP is Rs 600 and price index (base 100) is 120 calculate the real GDP. |
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Answer» Price Index `=("Nominal GDP")/("Real GDP")xx100" "rArr" "120=(Rs 600)/("Real GDP")xx100` `120xx"Real GDP"=600xx100` Real `GDP=(600xx100)/(120)= Rs 500` |
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| 26. |
How will you treat the following in the calculation of Gross Domestic Product of India ? Give reasons for your answer. (i) Profit earned by a branch of foreign bank in India. (ii) Salaries of Indian employees working in embassy of Japan in India. (iii) Salary of residents of Japan working in Indian embassy in Japan. |
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Answer» (i) yes, it will be included in the Gross Domestic Product of India as profits are earned within the domestic territory of India. (ii) No, it will not be included in the Gross Domestic Product of India as the embassy of Japan is not a part of the domestic territory of India. (iii) Yes, it will be included in the Gross Domestic Product of India as the Indian Embassy is a part of the domestic territory of India. |
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| 27. |
According to income method, domestic income is equal to :A. Rent and royalty + Interest + Profit + Compensation of employees + Mixed IncomeB. Operating Surplus + Compensation of employees + Income of self-employedC. Both (a) and (b)D. Neither (a) nor (b) |
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Answer» Correct Answer - C C |
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| 28. |
Operating Surplus refers to :A. Income from propertyB. Income from entrepreneurshipC. Income from property and entrepreneurshipD. None of these |
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Answer» Correct Answer - C C |
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| 29. |
Which of the following is not an economic activty and not included in national income ?A. Medical services rendered by a dispensaryB. A housewife doing household workC. A lawyer doing his practiceD. A maid working full time with a family |
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Answer» Correct Answer - B A housewife doing household work is not included in national income because it is difficult to ascertain its market value and it is non market transaction. |
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| 30. |
How are following treated in the estimation of domestic factor income ? Profits earned by a company in India which is owned by a non-resident. |
| Answer» Yes, it will be included in the domestic factor income as profits are earned within the domestic territory of India. | |
| 31. |
Will the following be included in the domestic product of India ? give reason for your answer (i) Profits erned by foreign companies in India. (ii) Salaries of Indians working in the russian Embassy in India. (iii) Profit earned by a branch of State Bank of Indian in Japan. |
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Answer» (i) Profits earned by foreign companies will be a part of domestic product of India as Foreign companies in India are a part of fomestic territory of India. (ii) Salaries of Indians working in the Russian Embassy in India will not be a part of domestic product of India as Russian Embassy in India is not a part of domestic territory of India. (iii) Profits earned by a branch of State bank of India in Japan will not be a part of domestic product of India as the bank is located out of the domestic territory of India. |
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| 32. |
When the entire output is sold in an accounting year, then vlaue of output is equal to :A. Sales + Change in stockB. SalesC. Sales - Change in stockD. None of these |
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Answer» Correct Answer - B B |
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| 33. |
Which of the following is included in domestic income ?A. Factor Income from abroadB. Windfall gainsC. Capital GainsD. Bonus to employees |
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Answer» Correct Answer - D D |
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| 34. |
Income method is also known as :A. Distributive share methodB. Income Disposal methodC. Industrial Origin MethodD. None of these |
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Answer» Correct Answer - A A |
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| 35. |
Which of the following sector comes under the category of tertiary sector ?A. Primary sectorB. Secondary sectorC. Service sectorD. None of these |
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Answer» Correct Answer - C he tertiary industry is the segment of the economy that provides services to its consumers, including a wide range of businesses such as financial institutions, schools and restaurants. It is also known as the tertiary sector or service industry/sector.,so answer is C |
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| 36. |
Which of the following flowchart is incorrect ?A. B. C. D. |
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Answer» Correct Answer - C flowchart of C is incorrect |
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| 37. |
Commodity Service method is another name for :A. Expenditure methodB. Income methodC. Value-added methodD. None of these |
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Answer» Correct Answer - C C |
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| 38. |
Which of the following is not a component of domestic income ?A. Net factor income from abroadB. Operating SurplusC. Mixed IncomeD. Compensation of Employees |
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Answer» Correct Answer - A Domestic Income includes the income earned (i.e. only factor income, not transfer income) by all production units (whether residents or non-residents), located within the domestic territory of the country, as a reward of their productive services or contribution to the flow of goods and services in the current year.so net factor income from abroad is not icluded here.. Ans is A |
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| 39. |
How will you treat the following while estimating national income of India ? Give reasons for your answer. (i) Salaries received by Indian residents working in Russian Embassy in India . (ii) Profits earned by an Indian bank from its branches abroad. (iii) Goods and Services Tax received by the government. |
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Answer» Correct Answer - Refer Items included/excluded in National Income. 1.Yes, it will be included in the national income as it is a pan of factor income from abroad.2.Yes, they will be included in the national income as they are a part of the factor income from abroad.3.NO we will not be included it in national income , because we calculate national income at factor cost . |
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| 40. |
How are following treated in the estimation of national income ? Payment of wealth tax. |
| Answer» No, it will not be included in the national income as it is a compulsory transfer payment to the government and also these are paid out of past saving of the tax payer. | |
| 41. |
Mention the situations in which following equations will hold true : (i). Value of Output is equal to Value Added. (ii) National income at Current Price=National income at Constant Price (iii) Gross domestic capital formation=Gross domestic fixed capital formation (iv) Operating Surplus=Rent+Royatty+Profit |
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Answer» (i) When intermediate consumption is zero. (ii) When Price in the base year=Price in the current year. (iii) When change in stock (or inventory investment ) is zero. (iv) When there is no income in the form of interest. |
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| 42. |
How are following treated in the estimation of national income ? Payment for cloth by a garment manufacturing firm. |
| Answer» It is an intermediate expenditure for the firm because it involves purchase of goods by one production unit (firm) from another production unit. So, it is deducted from the value of output of the firm to arrive at the value added. So, it is not included in national income. | |
| 43. |
Net Exports is calculated as :A. Exports + ImportsB. Exports- ImportsC. Imports - ExportsD. None of these |
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Answer» Correct Answer - B B |
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| 44. |
Value Added by a firm is equal to :A. SalesB. ProfitsC. Sales - Intermediate ConsumptionD. Sales + Intermediate Consumption |
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Answer» Correct Answer - C Value Added by a firm is equal to :value of output -intermediate consumption. so ans is C . BECAUSE value of output is sales here. |
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| 45. |
How are following treated in the estimation of national income ? Commission received by a dealer from the buyer and seller of a house. |
| Answer» Yes, it will be included in the national income as it is the income of the dealer for his prodctive services. | |
| 46. |
Calculate GNP at MP from the following data : |
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Answer» Correct Answer - Rs. 3680 crores GNP at MP =Rent+Dividend+Mixed income+Saving of private corporate sector+Interest +Compensation of employes + Net indirect tax+Depreciation +Net Factor income from abroad =1000+500+200+400+200+100+900+400+(-)20= Rs. 3680 crores |
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| 47. |
From the following data, calculate : (a) Value of output, (b) Intermediate Consumption, (c ) Net value added at factor cost. |
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Answer» Correct Answer - Rs. 1470 crores Rs. 540 crores Rs. 900 crores (a) Value of Output =Domestic Sales + Exports + Increase in the unsold stock + Goods used for self Consumption =1200+200+60+10 1470 Crores (b) Intermediate Consumption = Purchase of raw material from domestic market + Import of raw material + Power Charges =400+120+20 Rs. 540 crores (c ) Net value added at factor cost = Value of Output -Intermediate Consumption-(Goods and Services Tax- Subsidy)- Replacement of Fixed Capital =1470-540-(10-30)-50 =Rs. 900 crores |
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| 48. |
From the following data, calculate Net Domestic Product at factor cost. |
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Answer» Correct Answer - Rs. 1560 crores Net Domestic Product at factor cost = Sales of all sectors-Opening Stock of all sectors - Intermediate Consumption of all sectors- Consumption of Fixed Capital of all sectors - Net Indirect Taxes of all sectors = (1,000+1,500+700)-(50+40+20)-(300+750+250)-(10+80+60)-(50+30+0) = Rs. 1,560 crores |
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| 49. |
From the following data, calculate (a) Gross Domestic Product at Factor Cost and (b) Factor Income To Abroad : |
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Answer» Correct Answer - Rs. 1300 crores (a) Gross doemstic Product at Factor Cost = Compensation of employees+Profits+Rent +Interest+ Depreciation =800+200+150+100+50 =1300 crores (b) Factor Income To Abroad =Factor income from abroad -{Gross national product at market price -)Gross Domestic Product at Factor Cost+ Net indirect taxes)} =60-{1400-(1300+120)} Rs. 80 crores |
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| 50. |
Calculate (a) Net National Product at Market Price, and (b) Gross Domestic Product at Factor Cost : |
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Answer» Correct Answer - 9630 crores Rs. 9650 crores (a) Net National Product at Market Price `(NNP_(MP))` =(i)+(ii)+(x)+(iii)+(vi)+(viii)+(xi)-(vii)+(iv) = 6000+1800+200+400+120+80+1000-70+100 = 9630 crores (b) Gross Domestic Product at Factor Cost =`NNP_(MP)` +(ix)+(vii)-(iv) =9630+50+70-100 = Rs. 9650 crores |
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