National income refers to
A Total money supply in an economy
B Total value of final goods and services produced
C Total income earned by residents of a country
D Total government revenue
National income measures the total income earned by residents from productive activities during a year.
Gross Domestic Product (GDP) measures
A Income earned abroad by residents
B Value of intermediate goods
C Value of final goods and services produced within a country
D Total wealth of a nation
GDP includes only final goods and services produced within domestic territory.
GDP excludes
A Services
B Final goods
C Intermediate goods
D Government expenditure
Intermediate goods are excluded to avoid double counting.
Gross National Product (GNP) differs from GDP because it includes
A Depreciation
B Net factor income from abroad
C Indirect taxes
D Transfer payments
GNP = GDP + Net Factor Income from Abroad (NFIA).
Net factor income from abroad is the difference between
A Imports and exports
B Foreign investment inflows and outflows
C Factor income received from abroad and paid abroad
D Foreign aid received and given
NFIA = Income earned by residents abroad − Income paid to foreigners domestically.
Net Domestic Product (NDP) is obtained by
A GDP + Depreciation
B GDP − Depreciation
C GNP + Depreciation
D GNP − Indirect taxes
NDP adjusts GDP by subtracting depreciation to reflect net production.
Net National Product (NNP) at market price is
A GDP − Depreciation
B GNP − Depreciation
C GDP + NFIA
D GNP − Indirect taxes
NNP = GNP − Depreciation.
National Income is defined as
A NNP at market price
B NDP at market price
C NNP at factor cost
D GDP at factor cost
National Income = NNP at factor cost.
To convert NNP at market price to NNP at factor cost, we subtract
A Depreciation
B Net indirect taxes
C Subsidies
D Direct taxes
Market price includes indirect taxes; subtracting net indirect taxes gives factor cost.
Which of the following is included in national income?
A Pension payments
B Capital gains
C Interest on government bonds
D Transfer payments
Interest on bonds is earned for productive service of capital.
Which of the following is excluded from national income?
A Rent
B Wages
C Old-age pension
D Interest
Pension is a transfer payment, not linked to current production.
Nominal GDP is measured at
A Constant prices
B Base-year prices
C Current prices
D Factor cost prices
Nominal GDP uses prevailing market prices of the current year.
Real GDP is measured at
A Current prices
B Market prices
C Constant prices
D Factor prices only
Real GDP adjusts for inflation by using base-year prices.
GDP deflator is used to
A Measure unemployment
B Adjust nominal GDP for inflation
C Calculate per capita income
D Measure poverty
GDP deflator converts nominal GDP into real GDP.
GDP deflator is calculated as
A Real GDP ÷ Nominal GDP × 100
B Nominal GDP ÷ Real GDP × 100
C GDP ÷ Population
D Price index ÷ GDP
GDP deflator = (Nominal GDP / Real GDP) × 100.
If GDP deflator is 120, it indicates
A Deflation
B Base year
C Inflation of 20%
D Inflation of 120%
Prices are 20% higher than base year.
Real GDP increases when
A Prices rise only
B Output increases
C Money supply increases
D Taxes decrease
Real GDP reflects actual increase in production.
Which GDP measure is better for welfare comparison?
A Nominal GDP
B GDP at current prices
C Real GDP
D GDP at market prices
Real GDP accounts for inflation and reflects real output.
Depreciation refers to
A Appreciation of assets
B Wear and tear of capital
C Capital gains
D Increase in productivity
Depreciation measures loss in value of capital due to use.
Which aggregate includes depreciation?
A NDP
B NNP
C GDP
D National Income
Gross measures include depreciation.
GDP at factor cost is obtained by
A GDP at market price − Net indirect taxes
B GDP at market price + Net indirect taxes
C GDP at market price − Depreciation
D GDP at market price + NFIA
Removing indirect taxes gives factor cost valuation.
National income includes income earned by
A Residents only
B Citizens only
C Domestic firms only
D Foreigners only
National income includes income of residents regardless of location.
Which income is earned without production?
A Rent
B Wages
C Transfer income
D Interest
Transfer income involves no productive service.
Capital gains are excluded from national income because
A They are illegal
B They are unearned income
C They do not arise from current production
D They are taxed heavily
Capital gains arise from price changes of assets, not production.
Which of the following is included in GDP?
A Sale of old car
B Brokerage on sale of old house
C Purchase of shares
D Transfer payments
Brokerage is payment for current service rendered.
Which activity contributes to GDP?
A Housewife’s unpaid work
B Voluntary services
C Illegal activities
D Paid domestic services
Paid services are counted as they have market value.
Which of the following is NOT included in GDP calculation?
A Government services
B Final goods
C Black market activities
D Services
Illegal or unreported activities are excluded due to measurement difficulty.
GDP includes government expenditure on
A Transfer payments
B Interest payments
C Defence and administration
D Subsidies
Government services contribute to production.
Which aggregate best measures economic growth?
A Nominal GDP
B Real GDP
C GDP deflator
D National income
Real GDP reflects actual increase in output over time.
Per capita income is calculated as
A National income × Population
B GDP ÷ Population
C National income ÷ Population
D GNP ÷ Population
Per capita income shows average income per person.
Rising per capita income generally indicates
A Population growth
B Inflation
C Improvement in standard of living
D Increase in inequality
Higher per capita income usually implies better living standards.
Which income measure best reflects average living standard?
A GDP
B GNP
C National income
D Per capita income
It adjusts income for population size.
Which of the following increases GDP but not welfare?
A Education expenditure
B Health expenditure
C Pollution control spending
D Environmental degradation cleanup
Defensive expenditures increase GDP without increasing welfare.
Which aggregate excludes depreciation?
A GDP
B GNP
C NDP
D Gross income
Net measures exclude depreciation.
National income accounting avoids double counting by
A Including all goods
B Excluding services
C Including only final goods
D Including only intermediate goods
Counting final goods avoids duplication.
The value-added method avoids double counting by
A Adding total sales
B Subtracting intermediate consumption
C Ignoring services
D Using market prices
Value added = Output − Intermediate inputs.
Which GDP concept adjusts for population size?
A Nominal GDP
B Real GDP
C Per capita GDP
D GDP deflator
Per capita GDP divides GDP by population.
National income estimates are usually prepared annually by
A RBI
B Planning Commission
C CSO/NSO
D Ministry of Finance
National Statistical Office prepares official estimates.
Which sector contributes most to India’s GDP currently?
A Agriculture
B Industry
C Services
D Mining
Services sector dominates India’s GDP share.
GDP includes income earned by foreign firms within the country because it follows
A Citizenship principle
B Residence principle
C Territorial principle
D Welfare principle
GDP is based on production within domestic territory.
GNP follows which principle?
A Territorial
B Welfare
C Citizenship
D Residence
GNP counts income earned by residents.
Which measure is best for international comparison of output?
A Nominal GDP
B GDP at current prices
C Real GDP
D GDP at factor cost
Real GDP removes price differences across time.
Which is added to NDP at factor cost to get personal income?
A Corporate tax
B Undistributed profits
C Transfer payments
D Depreciation
Personal income includes transfer incomes received by individuals.
Which income is actually received by households?
A National income
B Personal income
C Disposable income
D Domestic income
Personal income is income earned and received by households.
Disposable income equals
A Personal income + Direct taxes
B Personal income − Direct taxes
C National income − Indirect taxes
D GDP − Taxes
Disposable income is income available after paying direct taxes.
Disposable income is used for
A Production only
B Investment only
C Consumption and saving
D Government spending
Households either consume or save disposable income.
Saving is defined as
A Income − Consumption
B Consumption − Income
C GDP − Saving
D Investment − Saving
Saving is the unspent part of income.
Personal income differs from national income because it
A Includes corporate profits
B Excludes undistributed profits
C Includes depreciation
D Includes indirect taxes
Undistributed profits are not received by households.
Which income is smallest in magnitude?
A GDP
B GNP
C National income
D Disposable income
Disposable income is after deductions of direct taxes.
GDP deflator differs from CPI because it
A Covers only consumer goods
B Covers only services
C Covers all domestically produced goods and services
D Uses fixed basket
GDP deflator has a variable basket covering entire domestic output.