Explore topic-wise InterviewSolutions in .

b. National income

1. employment generation 

2. Mobilization of Resources 

3. Equitable distribution of income. 

4. Regional dispersal of industries. 

5. Development of technology 

6. Promotes exports

• The rate of economic growth 
• Changes in average living standards 
• Changes in distribution of income

Total income = 567890

Total members = 5

= 567890/5

= 113.578

1. Non – availability of row 

2. Problem of finance 

3. Low technical skill

4. Marketing problems 

5. Competition from large scale industries.

1. As a population dependent on agriculture has increased , the holdings have been subdivided into smaller peices. 

2. It is not possible take up any kind of development works on such a small peice of land.

1. Increasing public investment 

2. Expanding credit availability 

3. Marketing reforms 

4. Crop insurance 

5. Counseling and moral supports 

6. Regulating private money lenders. Increasing public investment Water harvesting Research in new varieties of seeds New cultivation methods Extension and training of farmers

1. Uneconomic size of cultivated holding. 

2. High population. 

3. Rain-fed farming and droughts 

4. Partial impact of the green revolution 

5. Lack of government support to Irrigation. 

6. Inadequate credit from institutional sources. 

7. Inability to get remunerative prices.

a. to help the small scale industries.

d. lack of irrigation and frequent droughts.

c. Manufacturing sector

1. Employment generation 

2. Mobilization of resource 

3. Equitable distribution of income 

4. Regional dispersal of industries 

5. Development of technology 

6. Promotes exports.

National Income and Social Accounting:

1. National income is also being measured by the social accounting method. 

2. Under this method, the transactions among various sectors such as firms, households, government, etc., are recorded and their interrelationships traced. 

3. The social accounting framework is useful for economists as well as policy makers, because it represents the major economic flows and statistical relationships among various sectors of the economic system. 

4. It becomes possible to forecast the trends of economy more accurately.

Social Accounting and Sector:

1. Under this method, the economy is divided into several sectors. 

2. A sector is a group of individuals or institutions having common interrelated economic transactions.

3. The economy is divided into the following sectors:

1. Firms 

2. Households 

3. Government 

4. Rest of the world and 

5. Capital sector.

4. “Firms” undertake productive activities. Thus, they are all organizations which employ the factors of production to produce goods and services. 

5. “Households” are consuming entities and represent the factors of production, who receive payment for services rendered by them to firms. Households consume the goods and services that are produced by the firms.  

6. “The Government sector” refers to the economic transactions of public bodies at all levels, center, state and local. 

7. The main function of the government is to provide social goods like defenceses, public health,education, etc.

8. “Rest of the world sector” relates to international economic transactions of the country. It contains income, export and import transactions, external loan transaction, and allied overseas investment income and payments.

9. “Capital sector” refers to saving and investment activities. It includes the transactions of banks, insurance corporations, financial houses, and other agencies of the money market.

(a) Simon Kuznets

(b) Per capita income

(d) Real national income

We agree with the above statement. Only the value of final goods and services are included in the estimation of national income and the value of intermediate goods is not included in the national income. This is because the value of intermediate goods is already reflected in the value of the final goods. Thus, if the value of these goods is also included in the current year, it will lead to the problem of double counting of the value of those goods.

Correct option: (4) only a

Correct option is (C) Sales method

(c) Net Domestic Product

Correct option is (B) GDP – Depreciation

Correct option is (B) 3

(c) Agriculture

There are three concepts of national income namely :

1. Production
2. Income and
3. Expenditure.

Based on these three methods there are methods to calculate national income. They are:

1. Production Method
2. Income Method and
3. Expenditure Method.

1. Production (output) method:

• The sum of monetary value of finished goods and services produced in agriculture, industries and service sector in a country is called the national income of that country.
• This method of calculating national income has been developed from the definition given by Prof. Marshall.

2. Income method:

• The summation of the income earned by the citizens of a country and the state is called the national income of that country obtained as per the income method.
• This method of measuring national income has been developed from the definition given by Prof. Pigou.

3. Expenditure method:

• The method of considering the total expenditure incurred in purchasing finished goods or services during a financial year is called the expenditure method of measuring national income.
• This method has been devefoped from the definition given by Prof. Fisher.

(4) Unpaid services – Services of house wife

(1) Output method The final goods approach.

Wrong pair : India used – Expenditure method

Correct option: (2) only b

Wrong pair method : Income Method – Output

Counting the value of same product or expenditure twice is known as doubte counting.

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

A year used for comparing the level of a particular economic index such as national income is called base year.

The circular flow of three important components namely production, income and expenditure in a closed economy is called the circular flow of closed economy.

(a) NNP at factor cost

GDP includes net income from abroad. - False

Explanation: 

The above statement is incorrect. GDP is the value of all the goods and services produced during an accounting year within the domestic country. As GDP is limited to the domestic territory, it excludes the net factor income from abroad.

(d) (i) is false but (ii) is true

Personal income: Personal income is the total income received by the individuals of a country from all sources before payment of direct taxes in a year.

Disposable income: Disposable Income is also known as Disposable personal income. It is the individuals income after the payment of income tax. This is the amount available for households for consumption.

Correct Answer is : (a) GNP

Personal Income refers to the total income actually received by an individual or household from all the sources i.e. factor incomes and current transfers.

Personal Income = Private Income – Corporate Savings – Corporate Tax

It excludes profits that the corporate retains and also excludes corporate taxes.

No, I do not agree with this statement.

OR

Yes, I agree with this statement.

• National income is a flow concept.
• National income is expressed per year.
• National income refers to money value of all goods and services produced by the economy in a year.
• It considers the production of current year and not previous year.

Correct Answer is : (c) GDP

The cost incurred to remedy the wear and tear of machinery is termed as depreciation charges.

National income is the total market value (in monetary terms) of all final goods and services produced by the firms during an accounting year. In other words, it can be defined as the aggregate of all factor incomes flowing from the firms to the households (i.e. by aggregating the rent, wages, interest and profit earned in the economy). There are three methods of measuring national income, namely: value-added/ product method, income method and expenditure method.

Correct option: (iii) (A) is true but (R) is false.

Concept : National Income. 

Explanation : National Income estimate (measures the column of commodities and) services turned out during a given period, counted without duplication. 

NI is the macro concept. It is flow concept.

Final goods refer to those goods and services that are meant for final consumption by the consumers. In other words, such goods are ready for final use. This implies that they need not pass through any further stage of production i.e. no further transformation is required for these goods to make them consumable. Such goods have already crossed the boundary line of production.

Answer is (c) Services of housewives

Paid services are those services for which the user of those services makes payment to the service provider. Since paid services can be measured in monetary terms, and they add to the total production of the country, they are included in the national income.

Services of housewives are included in national income. - False

Explanation: 

The above statement is incorrect. The services of the housewives are not included in the national income. This is because it is difficult to estimate the market value of such services.

Yes, I agree with this statement.

• National Income at factor cost is the income earned by the factor owners (landlord, labourer, capitalist) in the course of contributing to the country’s output.
• NI(FC) = C + I + G + (X – M)+ (R – P) – Depreciation – Indirect Tax + Subsidies
• Subsidies is a negative tax. It is a sought of concession or discount given by the government to the consumers and producers.
• Subsidies are paid by the government to the firms / producers.
• Also the goods are sold at a price lower than their cost.
• Subsidies reduce the price of product below the factor cost. So to arrive at N.I. at factor cost we add subsidies.