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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.
| 101. |
Calculate intermediate consumption from the following data : |
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Answer» Correct Answer - Rs. 90 lakhs Intermediate consumption =Value of Output-Net value added at factor cost-Depreciation - (GST-Subsidy) =200-80-20-(15-5) =Rs. 90 lakhs |
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| 102. |
The value of intermediate consumption will be _____ if purchase of raw material is Rs. 1200, exports are of Rs. 600 and imports are of Rs. 200.A. 1200B. 800C. 1800D. 1400 |
| Answer» Correct Answer - A | |
| 103. |
National income is the sum of factor incomes accruing to :A. NationalsB. Economic territoryC. ResidentsD. Both residents and non-residents |
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Answer» Correct Answer - C National income is the sum total of factor incomes earned by normal residents of a country in the form of rent, wages, interest and profit in an accounting year. so here answer is C |
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| 104. |
How are following treated in the estimation of domestic factor income ? Old age pension given by the governmet. |
| Answer» No, it is not included in the domestic factor income as it is a transfer income (and not a factor income). | |
| 105. |
The factor income earned by an economy amounted to Rs. 5,000 crores during a year. The economy suffers a capital loss of Rs. 300 crores due to an earthquake. The resident producers pay indirect taxes of Rs. 70 crores and they were also offered subsidies of Rs. 30 crores. Calculate `NNP_(MP)` of the economy. |
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Answer» `NNP_(MP)`=National Income+Net Indirect Taxes = 5,000+(70-30)=Rs. 5040 Crores. |
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| 106. |
Calculate National Income by Income and Expenditure method. |
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Answer» Correct Answer - Rs. 670 Crores Rs. 670 crores National Income by Income method = Compensation of employes+ Mixed income of self employed+Rent+Interest+Profit + Net factor income from abroad =250+50+100+200+50+20 = Rs. 670 crores National Income by Expenditure method = Gross fixed capital formation + Change in stock + Private Final consumption expenditure+ (Exports-Imports)+Government final consumption expenditure -Consumption of fixed capital+ Net factor income from abroad -(Indirect taxes -Subsidies) =120+20+550+(10-20)+60-10+20-(100-20) = Rs. 670 crores |
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| 107. |
From the following data, calculate National Income by (a) Income method and (b) Expenditure method : |
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Answer» Correct Answer - Rs. 2600 crores. Rs. 2600 crores National Income `(NNP_(FC))` by Income method =(iv)+(vii)+(xi) =1900+720+(-)20 =Rs. 2600 crores National Income `(NNP_(FC))` by Expenditure method =(i)+(ii)+(x)+(xii)-(viii)+(xi) =2000+400+20+600-400+(-)20 = Rs. 2600 crores. |
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| 108. |
From the following data, calculate National Income by Income and Expenditure methods. |
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Answer» Correct Answer - Rs. 1000 crores. Rs. 1000 crores National Income `(NNP_(FC))` by Income method = (iv)+(viii)+(iii)+(ix)+(xi)+(xiii)-(x) =600+55+200+25+20+130-30 =Rs. 1000 crores National Income `(NNP_(FC))` by Expenditure method =(vi)+(i)+(vii)+(xiv)-{(v)-(ii)}-(xii)-(x) =800+100+120+70-{60-10}-10-30 = Rs. 1000 crores |
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| 109. |
Calculate national income |
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Answer» 1. `GDP_(MP)=PFCE+GFCE+GDCF+`Net exports `=PFCE+GFCE+(NDCF+"Consumption of fixed capital")-`Net imports `=250+60+(40+20)-10= Rs 360` crore 2. `N NP_(FC)` (National income)`=GDP_(MP)-"Dep."+NFIA-NIT` `=360-20+(-5)-15` `=360-20-5-15= Rs 320` crore |
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| 110. |
Find out National Income from the following data : |
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Answer» 1. `GDP_(MP)=PFCE+GFCE+GDCF+`Net exports `=PFCE+GFCE+(NDCF+"Consumption of fixed capital")+ ("Exports - Imports")` `=200+60+(70+15)+(20-20)` `=200+60+85+0= Rs 345` crore 2. `N NP_(FC)=GDP_(MP)-"Dep."+NFIA- NIT (IT-"subsidies")` `=345-15+(-5)-(40-10)` `=345-15-5-30= Rs 295` crore |
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| 111. |
Calculate National income from the following data : |
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Answer» 1. `GDP_(MP)=(i)+(iii)+(v)-(ix)` `=900+400+250-30=1520` crore 2. `N NP_(FC)=GDP_(MP)-(viii)+(vii)-(iv)` `=1520-20+(-40)-100` `=1520-20-40-100= Rs 1360` crore |
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| 112. |
Calculate National Income by output method and Income method. |
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Answer» Correct Answer - Rs. 290 crores Rs. 290 crores National Income by Output Method = (i)-(ii)-{(iv)-(iii)}+{(v)-(vi)}-(xi) =800-400-{60-10}+{10-20}-50 =Rs. 290 crores National Income by Income Method =(viii)+(ix)+(x)+(xii)+(vii)+{(v)-(vi)} =40+20+110+10+120+{10-20} = Rs. 290 crores |
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| 113. |
From the following data, calculate National Income: |
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Answer» Correct Answer - Rs. 3050 crores National Income =(ii)+(iii)+(vi)+(vii)+(ix)+(iv) =800+900+350+600+450+(-)50 = Rs. 3050 Crores |
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| 114. |
From following information determine `GDP_(MP)` with Expenditure Method : |
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Answer» `GDP_(MP)=PFCE+GFCE+GDCF+`Net exports `=PFCE+GFCE+(GDFI+"Inc. in inventories")+(X-M)` `=9950+1250+(1500+1250)+(850-1050)` brgt `=9950+1250+2750-200` `= Rs 13750` crore |
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| 115. |
Calculate : (a) Domestic Income, (b) Compensation of employees. |
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Answer» Correct Answer - Rs. 510 crores. Rs. 400 crores (a) Domestic Income =(ii)+(vi)+(ix)+(xi)-(iii) =10+400+50+100-50 =Rs. 510 crores (b) Compensation of employees =`NDP_(FC)`-Rent and royalty-Interest -Corporate tax-Dividends-Undistributed profits-Mixed Income =510-20-30-10-22-5-23 =Rs. 400 crores |
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| 116. |
Calculate: (a) `GDP_(MP)` by Income method, and (b) Closing stock. |
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Answer» Correct Answer - Rs. 820 crores Rs. 40 crores. (a) `GDP_(MP)` by Income method =(ii)+(v)+(xiv)+(vi)+(x)+(vii)+{(iv)-(xiii)} =120+150+250+20+200+30+{60-10} = Rs. 820 crores (b) Closing Stock =`GDP_(MP)` - Private final consumption expenditure-Government final consumption expenditure-Gross fixed capital formation +Opening stock - Net exports =820-450-50-300+10-(-)10 = Rs. 40 crores |
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| 117. |
Calculate "Gross National Product at Factor Cost" from the following data by (a) Income method, and (b) Expenditure method: |
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Answer» Correct Answer - Rs. 1650 crores. Rs. 1650 crores. Gross National Product at Factor Cost by Income Method =(v)+(viii)+(iii)+(iv)+(vii)+(x) =250+150+400+800+60(-10) =Rs. 1650 crores Gross National Product at Factor Cost by Expenditure Method =(i)+(vi)+(ii)+(vii)+(xi)+(x)-(xii) = 1000+500+200+60(-20)+(-10)-80 =Rs. 1650 crores |
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| 118. |
From the following data, caluclate Gross National Product at Market Prices by (a) Income method and (b) Expenditure method. |
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Answer» Correct Answer - Rs. 880 crores Rs. 880 crores Gross National Product at Market Price by Income method =(iv)+(v)+(vii)+(xvi)+{(viii)-(x)}+(xiv)+{(ix)-(xii)} =90+210+100+450+{20-40}+20+{55-25} = Rs. 880 crores Gross National Product at Market Price by Expenditure method =(i)+(iii)+{(xi)-(xiii)}+(xv)+{(viii)-(x)}+(xiv) = 250+150+{60-80}+500+{20-40}+20 = Rs. 880 crores |
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| 119. |
Which of the following method can be used to caluclate National Income ?A. Income MethodB. Expenditure MethodC. Value Added MethodD. All of the above |
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Answer» Correct Answer - D D |
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| 120. |
From the following data, caluclate GNP at MP by Income and Expenditure method |
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Answer» Correct Answer - Rs. 1700 crores Rs. 1700 crores GNP at MP by Income method =(i)+(ii)+(ix)+(x)+(xi)+(vi)+(iv)+(v) =400+500+350+100+150+120+(-)20+100 =Rs. 1700 crores GNP at MP by Expenditure method =(iii)+(vii)+(viii)+(xii)+(iv)+(vi) =900+280+(-)30+450+(-)20+120 =Rs. 1700 crores |
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| 121. |
Net factor income from abroad is taken into account when national income is calculated by :A. Value added methodB. Income methodC. Expenditure methodD. Any of the three methods |
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Answer» Correct Answer - D D |
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| 122. |
Calculate NDP at FC by expenditure method and GDP at MP by income method. |
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Answer» Correct Answer - Rs. 610 crores Rs. 730 crores NDP at FC by Expenditure method =(i)+(xiii)+(ii)+{(v)-(vi)}+(viii)-(ix)-{(x)-(xi)} = 130+30+510+{50-60}+70-40-{90-10} = Rs. 610 crores GDP at MP by Income method =(iii)+(vii)+(xii)+(ix)+{(x)-(xi)} =280+240+90+40+{90-10} = Rs. 730 crores |
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| 123. |
Gross Investment is also known as : (i) Gross Domestic Capital Formation, (ii) Gross Capital Formation, (iii) Groos Fixed Capital Formation, (iv) Gross Domestic Fixed Capital Formation.A. Both (i) and (ii)B. (i)C. (ii)D. (i), (ii) and (iv) |
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Answer» Correct Answer - A A |
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| 124. |
Calculate GNP at FC by Income and Expenditure method. |
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Answer» Correct Answer - Rs. 2120 crores Rs. 2120 crores GNP at FC by Income method =(i)+(ii)+(vi)-(vii)+(viii) =1000+500+600-20+40 = Rs. 2120 GNP at FC by Expenditure method =(ix)+(x)+(xi)+(xii)+(iv)-(v)-(vii) =1440+490+250+30+(-30)-40-20 = Rs. 2120 crores |
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| 125. |
Calculate GNP at FC : |
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Answer» Correct Answer - Rs. 2060 crores GNP at FC =(i)+{(ii)-(v)}+(iii)+(viii)+(vii)+(vi)-(iv)+(x) =350+{100-60}+200+1500+(-)10+50-40+(-)30 = Rs. 2060 crores |
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| 126. |
Calculate Gross Fixed Capital Formation from the following data : |
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Answer» Correct Answer - Rs. 1150 crores Gross Fixed Capital Formaation =(v)-(i)-(ii)-(iii)-{(vii)-(vi)} =2500-1000-500-(-)50-{200-300} = Rs. 1150 crores |
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| 127. |
Giving reason explain how should the following be treated in estimating gross domestic product at market price ? (i) Fees to a mechanic paid by a firm. (ii) Interest paid by an individual on a car loan taken from a bank. (iii) Expenditure on purchasing a car for use by a firm. |
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Answer» (i) It is not included because it is an intermediate cost of the firm. (ii) It is not included because the loan is taken to meet consumption expenditure and therefore interest paid on such a loan is not a factor payment. (iii) It is included because it is an investment expenditure, a final expenditure. |
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| 128. |
Calculate Cross Domestic Product of Factor Cost from the following data : |
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Answer» Correct Answer - Rs. 1300 crores Gross Domestic Product at Factor Cost `(GDP_(FC))` =(i)+(vi)+(ii)+(vii)+(viii)-(v) =800+450+150+(-30)+50-120 = Rs. 1300 crores |
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| 129. |
From the information given below, calculate : `**` Value added by firm A and firm B, `**` Gross Domestic Product at market price, `**` Net Domestic Product at factor cost. |
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Answer» Correct Answer - Rs. 200 crores Rs. 260 crores Rs. 460 crores Rs. 265 crores Value added by firm A =Sales by firm A + Change in stock of firm A- Purchases by firm A =500+20-320 =Rs. 200 crores Value added by firm B =Sales by firm B to general government+Sales by firm B to housholds+(Closing stock of firm B - Opening stock of firm B)-Purchases by firm B from firm A =100+350+(40-30)-200 =Rs. 260 crores Gross Domestic Product at market price =Value added by firm A+Value added by firm B =200+260=Rs. 460 crores Net Domestic Product at factor cost =Gross Domestic product at market price-Consumption of fixed capital-Indirect Taxes paid by both the firms =460-120-75 =Rs. 265 crores |
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| 130. |
How are following treated in the estimation of national income ? Services rendered by family members to each other. |
| Answer» No, it will not be included in the national income as it is difficult to determine the value of services provided by family members to each other. | |
| 131. |
Ananya makes the following transactions. Discuss the impact of each transaction on the National Income of the country. (i) She sells her car for Rs. 80,000. (ii) She pays Rs. 5,000 as commission to the broker on sale of car. (iii) She imports an Apple i-pod for Rs. 7000 (iv) She buys a new car for Rs. 9,00,000. (v) She purchases an antique painting for Rs. 4500. (vi) She purchased shares of Reliance industries for Rs. 12,000. (vii) She pays interest of Rs. 2,000 on loan taken from ICICI to buy the new car. |
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Answer» (i) No impact as transactions of second hand goods are not part of National Income. (ii) Yes, this amount will be included in National as it is the income of broker for his productive services. (iii) National Income will be less by this amount of import. (iv) Yes, it will be included as it is a part of private final consumption expenditure. (v) No impact as it is not a transaction involving goods produced in the current year. (vi) No impact as it involves a change of title only and does not contribute to any productive activity. (vii) No impact as it is a non-factor payment because the loan is not used for production but for consumption. |
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| 132. |
Which of the following statement is correct ?A. `"Real GDP"=("Price Index")/("Nominal GDP")xx100`B. `"Real GDP"=("Nominal GDP")/("Price Index")xx100`C. `"Nominal GDP"=("Real GDP")/("Price Index")xx100`D. `"Nominal GDP"=("Price Index")/("Real GDP")xx100` |
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Answer» Correct Answer - B `"Real GDP"=("Nominal GDP")/("Price Index")xx100` |
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| 133. |
Which of the following is a part of Expenditure Method ?A. Rent and RoyaltyB. Mixed IncomeC. Net ExportsD. Sales |
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Answer» Correct Answer - C C |
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| 134. |
Whether the following items will be included in National Income ? Give reasons for your answer. (i) Payment of electricity bill by a factory. (ii) Dividend on shares. (iii) Increase in stock of consumer goods with households. (iv) Bus fare paid by a passenger. (v) Gains from sale of shares. (vi) Rent earned by Reliance from its building in USA. (vii) Gifts from Abroad. (viii) Retained earnings of resident companies from abroad. (ix) Expenses of foreign visitors in India. (x) Gifts to a trust from Japan. (xi) Purchase of books by a student. (xii) Bonus to employees. (xiii) Interest paid by an individual on loan taken. (xiv) Expenditure on repair of fixed capital asset. (xv) Free medical facilities by the employer. (xvi) financial help to flood vitims. (xvii) Payment of telephone bill. (xviii) Employers contribution to Provident Fund. (xix) Rent received by an Indian from Building rented to Chinese Embassy. (x x) Free meals to employees. (x xi) Free meals to beggars. (x xii) Wages received by an Indian working in Britis Embassy. (x xiii) Medical facilities to government employees. (x xiv) Purchase of vegetables by a restaurant. (x xv) Government Expenditure on streel light. (x xvi) Purchase of a second hand machine from a domestic firm. (x xvii) Interest received on loans taken by government. (x xviii) Leave travel allowance paid to employees by a company. (x xix) Direct purchases made by resident households. (x x x) Interest received on debentures by debenture-holders. (x x xi) Montly allowance received by a college student from home. (x x xii) Expenditure incurred by a firm on sponsoring a Reality show. (x x xiii) Expenditure incurred by normal residents on foreign travel. (x x xiv) Prize won in a lottery. (x x xv) Expenditure by government in providing free education. (x x xvi) Money received by people from their family members who are permanently settied abroad. |
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Answer» (i) No, it is a part of intermediate consumption expenditure. (ii) Yes, as it is a part of profits. (iii) No, as it is assumed that such goods are consumed, the moment they are purchased. (iv) Yes, it is a part of private final consumption expenditure. (v) No, as it is a capital gain. (vi) Yes, it is a tactor income from abroad. (vii) No, it is a transfer income. (viii) Yes, it is a factor income from abroad. (ix) Yes, it is a part of Net Exports. (x) No, it is a current transfer from rest of the world. (xi) Yes, it is a part of private final consumption expenditure. (xii) Yes, it is a part of COE. (xiii) No, as it is a non-factor payment since the loan is not used for production but for consumption. (xiv) No, it is a part of intermediate consumption expenditure. (xv) Yes, it is a part of COE. (xvi) No, it is a transfer payment (xvii) Yes, it is a part of private final consumption expenditure. (xviii) Yes, it is a part of COE. (xix) Yes, it is a factor income from abroad. (x x) Yes, it is a part of COE. (x xi) No, it is a transfer payment. (x xii) Yes, it is a factor income from abroad. (x xiii) Yes, it is a part of Government final consumption expenditure. (x xiv) No, it is a part of intermediate consumption expenditure. (x xv) Yes, it is a part of Government final consumption expenditure. (x xvi) No, as it has already been included in the year of its original purchase. (x xvii) No, as such interest is treated as a transfer income because government generally borros money to meet its consumption expenditure and no productive activity is linked with such loan. (x xviii) Yes, as it is a part of COE. (x xix) Yes, it is a part of private final consumption expenditure. (x x x ) Yes, Interest received is a factor income debenture is a sort of loan taken by a production unit. (x x xi) No, it a transfer income. (x x xii) No, it is a part of intermediate consumption expenditure. (x x xiii) Yes, it is a part of private final consumption expenditure. (x x xiv) No, as it is a windfall gain and there is no productive activity involved in it. (x x xv) Yes, it is a part of Government final consumption expenditure. (x x xvi) No, it is a transfer income. |
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| 135. |
How are the following treated while estimating private final consumption expenditure ? Give reasons for you answer. (i) Exports. (ii) Direct purchases made abroad by resident households. (iii) Final consumption expenditure of non-profit institutions serving households. (iv) Change in stocks. |
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Answer» (i) Exports will not be included in private final consumption expenditure as exports do not reflect consumption expenditure by residents. (ii) It will be included in private final consumption expenditure as such purchases are meant for consumption. (iii) It will be included in private final consumption expenditure as non-profit institutions serving households are a component of household sector. (iv) It will not be included in private final consumption expenditure as it is a component of capital formation. |
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| 136. |
Value added means value of :A. Output at market pricesB. Output less depreciationC. Output less Intermediate CostD. Output plus Intermediate Cost |
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Answer» Correct Answer - C Value added means value of output minus intermediate consumption . so ans is C |
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| 137. |
Distributed Profits is also known as :A. Corporate TaxB. DividendC. Retained EarningsD. None of these |
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Answer» Correct Answer - B B |
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| 138. |
How are following treated in the estimation of domestic factor income ? Factor income from abroad. |
| Answer» No, it is not included in the domestic factor because the factor income is not earned in the domestic territory of India. | |
| 139. |
Which one of the following items is excluded in calculating national income ?A. Services of a rental TV setB. Rupees 10,000 won in a lotteryC. Imputed value of owner occupied houseD. Salery of a house maid |
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Answer» Correct Answer - B Lottery is not included in National Income estimation because it is a part of transfer payments. so ans is B |
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| 140. |
Which of the following is not a part of profits ?A. Corporate TaxB. DividendsC. Retained EarningsD. Royalty |
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Answer» Correct Answer - D D |
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| 141. |
Which of the following is not included in compensation of employees ?A. Wages and salaries in cashB. Wages and salaries in kindC. Employees contribution to social security schemesD. Employers contribution to social security schemes |
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Answer» Correct Answer - C C |
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| 142. |
will the following factor income be included in domestic factor income of India ? give reasons for your answe : (i) Compensation of employees to the residen of Japan working in Indian embassy in Japan. (ii) Payment of fees to a Chartered Accountant by a firm. (iii) Rent received by an Indian resident from Russian embassy in India. (iv) Compensation given by insurance company to an injured worker. |
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Answer» (i) Yes, it will be included in domestic factor income of India as Indian embassy in Japan is a part of domestic territory of India. (ii) No, payment of fees to a chartered accountant by a firm is an intermediate expenditure for the firm, hence will not be included in domestic factor income of India. (iii) No, rent received by an Indian resident from Russian embassy in India will be included in domestic income of India as Russian embassy is not a part of domestic territory of India. (iv) No, as compensation is given by the insurance company to the employee and not by the employer. COE refers to monetary and non-monteary benefits received by an employee from his/her employer. |
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| 143. |
How are following treated in the estimation of domestic factor income ? Compensation of employees to the residents of Japan working in Indian Embassy in Japan. |
| Answer» Yes, it will be included in the domestic factor income as the Indian Embassy is a part of the domestic territory of India. | |
| 144. |
What precautions (any four) should be taken while estimating national income by production method ? `" "` OR State the various precautions of Product Method that should be kept in mind while estimating national income. |
| Answer» Precautions of Product Method: 1. Avoid double counting. 2. Production for self consumption should be included. 3. Sale of second hand goods is not to be included. 4. Production from illegal activities is not to be included. 5. Value of services rendered by housewives/family members is not to be included | |
| 145. |
Which of the following is included in compensation of employees ?A. Dearness AllowanceB. Tools given to employees to be used during workC. Payment by insurance company to an injured employeeD. Contribution by employee to provident fund |
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Answer» Correct Answer - A A |
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| 146. |
The net value added at factor cost of a producing unit is equal to :A. Sum of factor paymentsB. Sum of intermediate consumptionC. Sum of final consumptionD. Sum of intermediate and final consumption |
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Answer» Correct Answer - A A |
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| 147. |
A growing country is one with :A. Rising GNP at constant pricesB. Constant GNP at constant pricesC. Rising GNP at current pricesD. None of these |
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Answer» Correct Answer - A A |
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| 148. |
Change in stock is negative when :A. Closing stock ` gt` Opening stockB. Closing `lt ` Opening stockC. Closing =0D. Opening stock =0 |
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Answer» Correct Answer - B B |
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| 149. |
Normal residents of India working in an American company in England add to :A. Domestic product of IndiaB. Domestic product of EnglandC. National product of EnglandD. None of these |
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Answer» Correct Answer - B B |
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| 150. |
Factor income paid to non-residents withink the domestic territory of a country leads to :A. Increase in Domestic IncomeB. Decrease in National IncomeC. Both (a) and (b)D. None of these |
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Answer» Correct Answer - C Here we subtract Factor income paid to non-residents within the domestic territory of a country from national income. So due to this Decrease in National Income. Ans is C |
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