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Question 1 of 10
1. Question
2 points
11. Consider the following statements:
(i) Real GDP has steadily increased in the last decade
(ii) GDP at current market prices has steadily increased in the last decade
Select the correct answer using the code given below:
Correct
(c)
Real GDP (i.e. GDP at constant market prices) and Nominal GDP (i.e. GDP at current market prices) both have steadily increased in the last decade (in fact in last 30 years) but the growth rate of Real GDP and Nominal GDP has fluctuated and has not increased steadily in the last decade.
Incorrect
(c)
Real GDP (i.e. GDP at constant market prices) and Nominal GDP (i.e. GDP at current market prices) both have steadily increased in the last decade (in fact in last 30 years) but the growth rate of Real GDP and Nominal GDP has fluctuated and has not increased steadily in the last decade.
Question 2 of 10
2. Question
2 points
12. Consider the following statements:
(i) Real per capita GDP has steadily increased in the last five years
(ii) Real per capita income has steadily increased in the last five years
Select the correct answer using the code given below:
Correct
(c)
India’s population growth rate is around 1 percent annually.
Real GDP and Real GNP growth has been more than 5 percent in the last five years. If GDP is represented by Y and population by P. Then per capita GDP is Y/P
Suppose the growth in GDP is 5% i.e. Y to 1.05 Y And the growth rate in population is 1% P to 1.01 P
So, the growth in per capita GDP (Y/P) will be 1.05Y/1.01P = 1.0396 Y/P
So, the growth in per capita GDP (Y/P) will be 3.96%
So, till the time growth in GDP (Y) is more than the growth in population (P), then per capita GDP will always increase. (In fact, our GDP/GNP has always increased more than 4% in the last 30 years). If, the growth of population and growth of GDP is same then per capita GDP growth will be zero.
Hence, Real per capita GDP and Real per capita GNP has steadily increased in the last five years.
Incorrect
(c)
India’s population growth rate is around 1 percent annually.
Real GDP and Real GNP growth has been more than 5 percent in the last five years. If GDP is represented by Y and population by P. Then per capita GDP is Y/P
Suppose the growth in GDP is 5% i.e. Y to 1.05 Y And the growth rate in population is 1% P to 1.01 P
So, the growth in per capita GDP (Y/P) will be 1.05Y/1.01P = 1.0396 Y/P
So, the growth in per capita GDP (Y/P) will be 3.96%
So, till the time growth in GDP (Y) is more than the growth in population (P), then per capita GDP will always increase. (In fact, our GDP/GNP has always increased more than 4% in the last 30 years). If, the growth of population and growth of GDP is same then per capita GDP growth will be zero.
Hence, Real per capita GDP and Real per capita GNP has steadily increased in the last five years.
Question 3 of 10
3. Question
2 points
13. The National Income of a country (India) is equal to which of the following:
Correct
(b)
National Income (NI) and Net National Income (NNI) are same terms and used interchangeably.
National Income = Net National Income (NNI) = Net National Product (NNP)
Earlier (before January 2015) NSO was using factor cost to calculate NNP but now it uses Market Prices to calculate NNP.
Incorrect
(b)
National Income (NI) and Net National Income (NNI) are same terms and used interchangeably.
National Income = Net National Income (NNI) = Net National Product (NNP)
Earlier (before January 2015) NSO was using factor cost to calculate NNP but now it uses Market Prices to calculate NNP.
Question 4 of 10
4. Question
2 points
Which of the following statements are true regarding Gross National Income:
(i) It is the income earned by a country’s Residents
(ii) It is the income earned by a country’s residents and non- residents both
(iii) It is calculated at market price by NSO
(iv) It is equal to GDP plus exports minus imports
Select the correct answer using the code given below
Correct
(a)
Gross National Income (GNI) is the income earned by Indian residents only whether in India or abroad. (If an Indian has gone abroad for less than 6 months then also, he is an Indian resident only). GNI does not include the income earned by Non-Resident Indians (NRIs). And it is equal to GDP plus net factor income from abroad (NFIA).
GNI = GNP = GDP + NFIA
Incorrect
(a)
Gross National Income (GNI) is the income earned by Indian residents only whether in India or abroad. (If an Indian has gone abroad for less than 6 months then also, he is an Indian resident only). GNI does not include the income earned by Non-Resident Indians (NRIs). And it is equal to GDP plus net factor income from abroad (NFIA).
GNI = GNP = GDP + NFIA
Question 5 of 10
5. Question
2 points
Consider the following statements:
(i) Net Factor Income from Abroad is equivalent to net of exports & imports
(ii) Net of Indirect taxes and subsidies are included in the calculation of national income
Select the correct answer using the code given below:
Correct
(b)
Goods and services produced in India and sold outside the country i.e. to the foreigners is referred as exports. But the Net Factor Income from Abroad (NFIA) is the income earned by the four factors of production from abroad. In case of NFIA the production happens in abroad but in case of exports the production happens in the domestic country. So NFIA is different from exports and hence statement (i) is false
Now (post 2015), the indirect taxes and subsidies are included in the GDP and GNP calculation.
So, statement (ii) is true
Incorrect
(b)
Goods and services produced in India and sold outside the country i.e. to the foreigners is referred as exports. But the Net Factor Income from Abroad (NFIA) is the income earned by the four factors of production from abroad. In case of NFIA the production happens in abroad but in case of exports the production happens in the domestic country. So NFIA is different from exports and hence statement (i) is false
Now (post 2015), the indirect taxes and subsidies are included in the GDP and GNP calculation.
So, statement (ii) is true
Question 6 of 10
6. Question
2 points
Welfare of the people of a country is best represented by which of the following parameter
Correct
(a)
The question talks about “people of a country” which is basically residents of the country and the income coming to residents is represented by National Income rather than GDP.
As it talks about welfare, so it should be better calculated as per capita National Income rather than just National Income. And since increase in price can increase the National Income without increasing the welfare of the people. So, welfare can best be represented by per capita National Income at constant market prices rather than current market prices.
Incorrect
(a)
The question talks about “people of a country” which is basically residents of the country and the income coming to residents is represented by National Income rather than GDP.
As it talks about welfare, so it should be better calculated as per capita National Income rather than just National Income. And since increase in price can increase the National Income without increasing the welfare of the people. So, welfare can best be represented by per capita National Income at constant market prices rather than current market prices.
Question 7 of 10
7. Question
2 points
Which of the following constitutes investment in the economy?
(i) Production of consumption goods
(ii) Production of capital goods
(iii) Production of services
(iv) Buying and selling of shares
Select the correct answer using the code given below:
Correct
(b)
The value of capital goods produced is defined as investment.
Hence, production of consumption goods and services are not investment.
Buying and selling of shares from one person to another person is also not investment for the economy as only the ownership changes and nothing happens on ground.
So, only (ii) statement is true.
Incorrect
(b)
The value of capital goods produced is defined as investment.
Hence, production of consumption goods and services are not investment.
Buying and selling of shares from one person to another person is also not investment for the economy as only the ownership changes and nothing happens on ground.
So, only (ii) statement is true.
Question 8 of 10
8. Question
2 points
18. Consider the following statements:
(i) Imported capital equipment are part of investment in Indian economy
(ii) Imported capital equipment are part of India’s GDP
Select the correct answer using the code given below:
Correct
(a)
GDP is the goods and services produced within the domestic territory of the country, so imported items are not part of GDP.
Investment in Indian economy means the value of capital goods that the economy will get in a particular period whether by domestic production or through imports. This is because, whatever capital equipment we import, that also helps in increasing future production. So, investment in India is equal to capital goods produced in India plus imported capital goods minus exported capital goods.
Incorrect
(a)
GDP is the goods and services produced within the domestic territory of the country, so imported items are not part of GDP.
Investment in Indian economy means the value of capital goods that the economy will get in a particular period whether by domestic production or through imports. This is because, whatever capital equipment we import, that also helps in increasing future production. So, investment in India is equal to capital goods produced in India plus imported capital goods minus exported capital goods.
Question 9 of 10
9. Question
2 points
The decrease in dependency ratio (ratio of dependent population to working age population) of a country may lead to which of the following situation:
(i) Increase in savings rate
(ii) Decrease in savings rate
(iii) Increase in Capital Formation
(iv) Decrease in Capital Formation
Select the correct answer using the code given below:
Correct
(a)
Whenever in any country, the working population increases and dependent population decreases, the savings in the economy increases. (This also happens at the family level. If a family has more working members and less dependents then savings of the family increases). The increased savings leads to increase in investments.
So, (i) & (iii) statements are true.
Incorrect
(a)
Whenever in any country, the working population increases and dependent population decreases, the savings in the economy increases. (This also happens at the family level. If a family has more working members and less dependents then savings of the family increases). The increased savings leads to increase in investments.
So, (i) & (iii) statements are true.
Question 10 of 10
10. Question
2 points
In domestic savings, generally which sector has the highest share?
Correct
(a)
Domestic savings consist of Household savings, Corporate (Private) savings and Government (Public) savings.
Household savings (17.2%), Private Corporate (11.6% ), Public Sector (1.7%). Total domestic savings around 30.5% in FY 2017-18.
Investment also consists of household, Corporate (Private) and Government (Public). Here household investment includes unregistered/informal business and construction of houses etc.
Household investment (10.5% ), Private Corporate (11.5%) and Government (Public) (7.3%). Total fixed capital formation (investment) is 29.3% in 2018-19. The maximum decline in investment in the last 8 years is in household sector from 16% to 10.5% .
Incorrect
(a)
Domestic savings consist of Household savings, Corporate (Private) savings and Government (Public) savings.
Household savings (17.2%), Private Corporate (11.6% ), Public Sector (1.7%). Total domestic savings around 30.5% in FY 2017-18.
Investment also consists of household, Corporate (Private) and Government (Public). Here household investment includes unregistered/informal business and construction of houses etc.
Household investment (10.5% ), Private Corporate (11.5%) and Government (Public) (7.3%). Total fixed capital formation (investment) is 29.3% in 2018-19. The maximum decline in investment in the last 8 years is in household sector from 16% to 10.5% .
