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Correct option is (C) Pigou

Correct option is (C) Expenditure

The monetary value of goods and services obtained after deducting depreciation from gross national product (GNP) is called the net national product (NNP).

∴ Net National Product (NNP) = GNP – Depreciation

The Green GNP is the measurement of the national income adjusted for degradation of environment.

E.g. The National Income for a current year is 8,000 units and the degradation of environment is 500 units, so Green GNP is 8000 – 500 = 7500 units.

The green GNP considers the environmental degradation or resource depletion. It is defined as, "Green GNP is an indicator of sustainable use of natural environment and equitable distribution of benefits of development."

The features of Green GNP are :

1. Sustainable economic development means economic development without creating pollution or environmental degradation.

2. The benefits of sustainable economic development should be equally distributed. In the long period of time it helps to promote economic welfare. Green GNP = (Net fall in stock of natural capital + Pollution load)

The market value of the total goods and services produced, by citizens of a country, within the country or in foreign country is called Gross National Product (GNP).

Correct  option: (3) only c

The major difference between GDP and GNP is that in GDP production done within the boundary of the country is considered irrespective whether it is done by Indians or foreigners in India. However, in GNP production done by citizens done in a country or in a foreign country is considered.

Correct option: (4) only d

Correct option: (1) a

(i) Both (A) and (R) are true and (R) is the correct explanation of (A).

Correct option: (3) only d

Capital Sector refer to Saving and Investment activities.

The Economy is divided into the five sectors.

(d) The Government Sector – Private Enterprises

PQLI is considered as a better Indicator of economic welfare.

In Product method, the measures of GDP.

(b) Capital Income – Profit, Interest, Dividend & Royalty

(b) dividing GNP by population

(d) Personal Expenditure

GDP is measure of an economy’s total output.

(b) A (ii) B (iii) C (i) D (iv)

(a) Two Sector Model – Households, firms

(c) A (iii) B (i) C (iv) D (ii)

(a) A (ii) B (iv) C (i) D (iii)

There are three methods that are used to measure national income.

1. Production or value added method 

2. Income method or factor earning method 

3. Expenditure method

And if these methods are done correctly, the following equation must hold

Output = Income = Expenditure

This is because the three methods are circular in nature. It begins as production, through recruitments of factors of production, generating income and going as incomes to factors of production.

Product Method: Product method measures the output of the country. It is also called inventory method. Under this method, the gross value of output from different sectors like agriculture, industry, trade and commerce, etc., is obtained for the entire economy during a year. The value obtained is actually the GNP at market prices. Care must be taken to avoid double counting.

Income Method (Factor Earning Method): This method approaches national income from the distribution side. Under this method, national income is calculated by adding up all the incomes generated in the course of producing national product. National income is calculated as domestic factor income plus net factor incomes from abroad. In short,

Y = w + r + i + π + (R – P)

w = wages, r = rent, i = interest, n = profits,

This method is adopted for estimating the contributions of the remaining sectors, viz., small enterprises, banking and insurance, commerce and transport, professions, liberal arts and domestic service, public authorities, house property and foreign sector transaction.

The Expenditure Method (Outlay method): The total expenditure incurred by the society in a particular year is added together. To calculate the expenditure of a society, it includes personal consumption expenditure, net domestic investment, government expenditure on • consumption as well as capital goods and net exports. Symbolically,

GNP = C + I + G + (X – M)

C – Private consumption expenditure 

I – Private Investment Expenditure 

G – Government expenditure 

X – M = Net exports

(a) Disposable Income – Gross National Product

Yes,we agree with the given statement that many precautions are to be taken while estimating national income by the income method. Precautions regarding the calculation of national Income by the income method are:

i. Transfer earnings, such as old age pensions, unemployment allowances etc. are excluded from the estimation of the national income. While estimating the national income, only earned income is included and unearned income in the form of transfer earnings is excluded.

ii. Income from illegal activities such as theft, gambling etc. should not be included in the estimation of national income.

iii. Income from the sale and purchase of second hand goods is not included in the national income. However, commission/ brokerage paid on the sale and purchase of second hand goods should be included in the national income estimation.

iv. Similarly, commission/ brokerage paid on the sale and purchase of shares and bonds should also be included in the national income.

v. Windfall gains such as lotteries and capital gains are unearned income and thus, are not included in the estimation of the national income.

vi. If profit as a whole is included in the national income estimation, any of the individual components of profits should not be included separately. Similarly, if the compensation of employees as a whole is included, any of the individual components of the compensation of employees should not be included separately.

vii. Duties such as gift tax, death duties, wealth tax etc. should not be included in the national income estimation in the current accounting year. This is because such duties are paid out of the tax payer’s past savings or wealth and hence, should not be included in the national income estimation in the current accounting year.

(c) product Method

(b) national Income

Under the product method, the national income is calculated by adding up the money value of goods and services produced by the primary, secondary and tertiary sectors. It is useful for assessing the contribution of each of these sectors towards the national income. It is also used to analyze which sector contributes the most to national income.

Yes, I agree with this statement.

National Income is one of the important indicators of economic growth and development.

National Income is a macro variable that represents the economy as a whole.

When there is an increase in National Income it indicates that the country’s production of goods and services have increased, employment increases, trade with rest of the world increases.

When National Income of a country increases at a higher rate than the rate of increase in population, it leads to improvement in the standard of living and welfare of the people.

The Per Capita Income also increases when  National Income increases.

Therefore, National Income is an important tool to measure the overall performance of the economy.

Answer is (c) To calculate the population of a country

• National income is a basic concept of macroeconomics and so it is studied while studying macroeconomics.
• In order to derive national income of a nation, the nation measures all the economic activity done in the nation or say in the whole economy of the nation.
• The national income of a country is a balance sheet of the performance of its economy. So, national income tells us with the economic health of the economy.
• If the national income of an economy increases it is generally a symbol of well-being and if the national incom of an economy decreases or increases slowly it can be said that it is a symbol of an unhealthy economy.
• Thus, we can say that national income is one of the most important criteria to measure the economic prosperity of a country.

No, I do not agree with this statement. 

National Income data is important for many other purposes, like:

• For the Economy : National Income data are very important for marco economic analysis and performance of the economy.
• Economic Planning: The data of National Income is very important tools for long term and short term economic planning.
• Economic Research: The data of National [ Income is very useful to the research students to study aggregate consumption expenditure, investment expenditure, etc.
• Speed of Economic Growth : National Income makes it possible to know the trends or speed of the economic growth of our ( country in relation to previous years.

Correct option is (A) Production

Correct option: (3) a, b and c

1. Marco economics 

2. Four sector economy 

3. Y = C + I + G + (X-M) 

4. Difference between value of export and import 

5. NDP 

6. Green GNP 

7. Final goods approach 

8. Expenditure Method

9. Theoretical difficulty

Correct option: (4) d

Evaluation of the meaning of national income on the basis of various definitions:

• National income is a measurement of income obtained in a definite period of one year.
• In national income, the final products and services are only considered i.e. partially produced products and services are not considered.
• National income is a monetary value of final products and services.
• National income is calculated after deducting depreciation.
• Goods and services should either be produced or consumed in order to consider them in national income.

National income is the subject matter of Macro Economics.

Explanation: 

Macroeconomics focuses on how income levels are determined in the economy. Also, it studies the causes behind fluctuations in the income levels and accordingly what strategies can be adopted to accelerate growth in national income. Thus, national income is the subject matter of macroeconomics.

• Education
• Innovation
• Information and communication technology

Output Method Or Product Method:

1. According to the product or output method, National Income is estimated by adding up the value of all final goods and services produced in the country during one year. 

2. NI = C+I+G+(X-M)+(R – P) – Depreciation – Income Tax + Subsidies 

3. In India, this method is applied to agriculture, mining and manufacturing. 

4. Here we look at National Income from production side. 

5. In this method we deduct indirect tax and then add subsidies to arrive at National Income at Factor Cost from Market Price

Expenditure Method:

1. It is the sum of expenditure incurred by private sector and government on consumption and investment in a year. 

2. In this method, national income is estimated from the expenditure side. 

3. Symbolically -NI = C + I + G + (X-M) + (R-P) 

4. This method is very rarely used by any country

Income Method:

1. It is the sum of income earn by all factors of production in a year. 

2. In this method, national income is estimated from the distribution side 

3. Symbolically – NI = R + W + I + MI + (X-M) 

4. This method is extremely popular in developed countries.

Expenditure Method:

1. It is the sum of expenditure incurred by private sector and government on consumption and investment in a year. 

2. In this method, national income is estimated from the expenditure side. 

3. Symbolically -NI = C + I + G + (X-M) + (R-P) 

4. This method is very rarely used by any country.

Three Sector economy:

1. In this economy, flow of goods and money is circulated in households, business firms and government sector. 

2. Symbolically – Y = C + I + G

Four Sector economy:

1. In this economy, flow of goods and money is circulated in households, business firms, government sector and foreign sector.

2. Symbolically – Y= C + I + G + (X-M)

Two Sector economy:

• In this economy flow of goods and money is circulated in households and business firms.
• Symbolically – Y = C + I

Three Sector economy:

• In this economy flow of goods and money is circulated in households, business firms and government sector.
• Symbolically – Y= C + I + G.

The knowledge sector in the sector which efficiently uses knowledge and technology to attain economic growth.

(b) Depreciation

People giving expert advice on shares and taxes, software experts, etc. are part of this sector. Top business executives, researchers, scientists, expert policymakers, economic experts, etc. strengthen this sector. The government also gives priority to the development of the knowledge sector. Initiatives of Govt, of Kerala like the Info park and Techno park, are examples for this.

Tertiary sector is also called as Service sector.

(a) April 1 to March 31