National Income

What is National Income?

• The total revenue collected by the government
  

• The total value of goods and services produced by a country

• The total wealth of individuals in a country

• The total imports and exports of a country

Which of the following is a component of National Income?

• Gross Domestic Product (GDP)
  

• Net National Product (NNP)

• Personal Income

• All of the above

What does Net National Product (NNP) measure?

• The value of all goods and services produced within a country
  

• Gross National Product (GNP) minus depreciation

• Total savings in an economy

• The balance of trade

Which sector contributes most to the National Income in developing countries?

• Industry

• Services

• Mining

• Agriculture

What is the difference between GDP and GNP?
a)

c)
d)

• GDP includes foreign income, while GNP excludes it

• GNP includes foreign income earned by nationals, while GDP excludes it

• GDP measures income, while GNP measures wealth

• GDP measures total output, while GNP measures exports

Which of the following Expenditure method

• Income method

• Production method

• Expenditure method

• All of the above

What is considered in the production method of National Income calculation?
a)
b)
c)
d)
Answer: c

• The total income of citizens

• The total expenditure on goods and services

• The value of final goods and services produced in an economy

• The exports of a country

In the income method, which of the following is NOT included?

• Wages and salaries

• Rent

• Transfer payments

• Profits

What is the formula for calculating National Income using the expenditure method?

• NI = C + I + G + (X - M)
  b)
  

• NI = GNP - Depreciation
  

• NI = Wages + Rent + Interest + Profit
  

• NI = GDP + Net Factor Income from Abroad

6. Which of the following is deducted to calculate NNP at factor cost from NNP at market price?
   a) Depreciation
   b) Indirect taxes
   c) Subsidies
   d) Net Exports
   Answer: b

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Section C: Trends in National Income

11. What does a rising trend in GDP indicate?
    a) Decrease in production
    b) Economic growth
    c) Increase in imports
    d) Inflation
    Answer: b

12. Which country had the highest GDP in 2023?
    a) China
    b) India
    c) USA
    d) Japan
    Answer: c

13. In India, which organization is responsible for publishing GDP data?
    a) Reserve Bank of India (RBI)
    b) Central Statistics Office (CSO)
    c) Ministry of Finance
    d) NITI Aayog
    Answer: b

14. What is the significance of per capita income as a trend indicator?
    a) It shows the average income of a population
    b) It measures income inequality
    c) It measures total national wealth
    d) It indicates population growth
    Answer: a

15. What is the impact of inflation on National Income trends?
    a) Understates real income
    b) Overstates real income
    c) Has no impact
    d) Reduces population growth
    Answer: b

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Section D: Importance of National Income

16. Why is National Income important?
    a) To measure economic performance
    b) To evaluate living standards
    c) To formulate economic policies
    d) All of the above
    Answer: d

17. Which measure of National Income helps in comparing living standards across countries?
    a) GDP at current prices
    b) GDP at purchasing power parity (PPP)
    c) Net Domestic Product
    d) GNP
    Answer: b

18. How does National Income data help policymakers?
    a) By determining tax collection
    b) By planning public expenditure
    c) By setting monetary policy
    d) All of the above
    Answer: d

19. Which of the following is an issue in measuring National Income?
    a) Black market activities
    b) Unpaid domestic work
    c) Double counting
    d) All of the above
    Answer: d

20. Which indicator shows the share of National Income spent on investments?
    

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• 16. Consumption function

• 16. Savings rate

• 16. Gross Fixed Capital Formation

• 16. Net Factor Income from Abroad