Practice test

National income - Test Set 5

Review 20 exam-focused questions with detailed explanations, then start the interactive test when you are ready.

20 questions

Questions and explanations

  1. Question 1

    NDP = ______.
    1. GDP + Net factor income from abroad
    2. GDP + Depreciation
    3. GDP – Net factor income from abroad
    4. GDP – Depreciation
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  2. Question 2

    Each of the following statements includes two terms. In three cases, the two terms mean the same as each other. In which of the following cases do the two terms NOT mean the same as each other?
    1. The base period and the reference period
    2. Nominal GDP and GDP at current prices
    3. Changes in real GDP and the GDP deflator
    4. Real GDP and GDP at constant prices
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  3. Question 3

    Which of the following statements is correct about the composition of the agriculture sector and employment in GDP post-independence?
    1. The proportion of GDP contributed by the agricultural sector declined significantly but not the employment depending on the agriculture sector.
    2. The proportion of employment has declined significantly but not the share of the agriculture sector in GDP.
    3. The proportion of both the agriculture sector and employment in GDP has increased significantly.
    4. The proportion of both the agriculture sector and employment in GDP has declined significantly.
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  4. Question 4

    Which of the following is a correct statement?
    1. National Income is NNP at FC
    2. National Income is GDP at MP
    3. National Income is GNP at FC
    4. National Income is NDP at MP
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  5. Question 5

    Which of the following options best describes the primary cause of the per capita income decline?
    1. Decline in the population growth
    2. Increase in the population growth
    3. Decline in the gross domestic product
    4. Equitable distribution of income
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  6. Question 6

    Which of the following is NOT correct regarding circular flow of income?
    1. The income of one sector becomes the expenditure of the other.
    2. Savings as well as government expenditure are injections to the circular flow.
    3. In a circular flow, leakages are equal to injections.
    4. The real flow and monetary flow move in a circular manner in an opposite direction.
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  7. Question 7

    If GNP is 16% higher than the last year and the rate of inflation is 9%, production in the economy has grown by: ______.
    1. 7%
    2. 4%
    3. 6%
    4. 5%
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  8. Question 8

    The proportions of GDP contributed by the industrial sector increased in the period from 11.8% in 1950-51 to ______% in 1990-91.
    1. 20.6
    2. 26.6
    3. 22.6
    4. 24.6
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  9. Question 9

    Which of the following statements is correct regarding Depreciation?
    I. Depreciation is termed as loss of value of fixed assets due to wear and tear during its useful life.
    II. Depreciation does not take into account unexpected or sudden destruction.
    1. Neither I nor II
    2. Only I
    3. Only II
    4. Both I and II
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  10. Question 10

    The GDP of a country is derived from the different sectors of the economy namely ______.
    1. Agricultural sector; the industrial sector and the service sector
    2. Agricultural sector and the industrial sector only
    3. Commercial and trading sector
    4. Rural and urban sectors
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  11. Question 11

    Which term is used to denote the mean income computed for every man, woman, and child in a particular group including those living in group quarters?
    1. Per hundred income
    2. GDP
    3. Per capita income
    4. PRCS
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  12. Question 12

    When calculating Net National Product (NNP), what is deducted from Gross National Product (GNP)?
    1. Personal Income
    2. Indirect Taxes
    3. Depreciation
    4. Subsidies
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  13. Question 13

    Private Income minus tax payment minus non-tax payment will give us the estimate for ______.
    1. Personal disposable income
    2. Gross income
    3. National income
    4. Private income
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  14. Question 14

    Which of the following is NOT included while estimating National Income?
    I. Goods sold by street hawkers
    II. Services of housewives
    III. Production of vegetable in kitchen garden
    1. Only I and II
    2. All I, II and III
    3. Only II and III
    4. Only III
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  15. Question 15

    Calculate personal income from the following data.
    I. National Income = Rs. 1,000
    II. Corporate tax = Rs. 10
    III. Subsidies = Rs. 5
    IV. Undistributed profits = Rs. 15
    V. Rent = Rs. 15
    1. Rs. 975
    2. Rs. 950
    3. Rs. 1,000
    4. Rs. 980
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  16. Question 16

    At higher levels of development, which sector of the economy contributes less to the GDP?
    1. Both service and agriculture sector
    2. Agriculture sector
    3. Industrial sector
    4. Service sector
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  17. Question 17

    Why are the intermediate goods NOT included in the National Income?
    1. Intermediate goods decreases the income.
    2. Intermediate goods increases the income.
    3. For the prevention of double accounting.
    4. Intermediate goods are not reliable.
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  18. Question 18

    Which of the following is the correct formula for calculating NNP?
    1. NNP = GNP – DEPRECIATION
    2. NNP = GDP – INCOME
    3. NNP = GDP – DEPRECIATION
    4. NNP = GNP + DEPRECIATION
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  19. Question 19

    ______ at Market Price refers to the sum total of factor incomes earned by residents of a country during an accounting year including net indirect taxes.
    1. Net Domestic Product (NDP)
    2. Gross National Product (GNP)
    3. Net National Product (NNP)
    4. Gross Domestic Product (GDP) sectors
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  20. Question 20

    National income at constant prices means ______.
    1. Income estimated at base year prices
    2. Income estimated at any year prices
    3. Income estimated for next year prices
    4. Income estimated at current year prices
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