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National Income & Gross Domestic Product

📆 October 1, 2024

Total Questions: 55

1. The term National Income represents : [U.P.S.C (Pre) 2001]

Correct Answer: (c) Gross National Product at market prices minus depreciation and indirect taxes plus subsidies
Solution:The term National Income (NI) represents Gross National Product at market prices (GNPMP) minus depreciation and indirect taxes plus subsidies. Net National Product at Factor Cost (NNPpc) is known as National Income (NI).

NNPmp)= GNPmp - Depreciation

NNI fc(NI) = NNPmp - Indirect Taxes + Subsidies

NNPmp-Net Product Taxes - Net Production Taxes

NI = GNPmp-Depreciation - Indirect Taxes + Subsidies

The relation between different forms of National Product-

Net Indirect Taxes (NIT) = Indirect Taxes - Subsidy,

GNP = Gross National Product, NNP = Net National Product,

GDP = Gross Domestic Product, NDP = Net Domestic Product,

MP = Market Prices, FC = Factor Cost,

D = Depreciation, NFI = Net Factor Income from Abroad

2. National Income is : [U.P.S.C (Pre) 1997]

Correct Answer: (b) Net National Product at factor cost
Solution:The term National Income (NI) represents Gross National Product at market prices (GNPMP) minus depreciation and indirect taxes plus subsidies. Net National Product at Factor Cost (NNPpc) is known as National Income (NI).

NNPmp)= GNPmp - Depreciation

NNI fc(NI) = NNPmp - Indirect Taxes + Subsidies

NNPmp-Net Product Taxes - Net Production Taxes

NI = GNPmp-Depreciation - Indirect Taxes + Subsidies

The relation between different forms of National Product-

Net Indirect Taxes (NIT) = Indirect Taxes - Subsidy,

GNP = Gross National Product, NNP = Net National Product,

GDP = Gross Domestic Product, NDP = Net Domestic Product,

MP = Market Prices, FC = Factor Cost,

D = Depreciation, NFI = Net Factor Income from Abroad

3. The Net National Product at Market Price (N.N.P.mp) is : [R.A.S./R.T.S.(Pre) 2021]

Correct Answer: (c) Gross National Product at Market Price - Depreciation
Solution:The term National Income (NI) represents Gross National Product at market prices (GNPMP) minus depreciation and indirect taxes plus subsidies. Net National Product at Factor Cost (NNPpc) is known as National Income (NI).

NNPmp)= GNPmp - Depreciation

NNI fc(NI) = NNPmp - Indirect Taxes + Subsidies

NNPmp-Net Product Taxes - Net Production Taxes

NI = GNPmp-Depreciation - Indirect Taxes + Subsidies

The relation between different forms of National Product-

Net Indirect Taxes (NIT) = Indirect Taxes - Subsidy,

GNP = Gross National Product, NNP = Net National Product,

GDP = Gross Domestic Product, NDP = Net Domestic Product,

MP = Market Prices, FC = Factor Cost,

D = Depreciation, NFI = Net Factor Income from Abroad

4. National Income (NI) is : [Chhattisgarh P.C.S. (Pre) 2023]

Correct Answer: (b) NI = NNP at Market Price - (Indirect taxes - Subsidies)
Solution:The term National Income (NI) represents Gross National Product at market prices (GNPMP) minus depreciation and indirect taxes plus subsidies. Net National Product at Factor Cost (NNPpc) is known as National Income (NI).

NNPmp)= GNPmp - Depreciation

NNI fc(NI) = NNPmp - Indirect Taxes + Subsidies

NNPmp-Net Product Taxes - Net Production Taxes

NI = GNPmp-Depreciation - Indirect Taxes + Subsidies

The relation between different forms of National Product-

Net Indirect Taxes (NIT) = Indirect Taxes - Subsidy,

GNP = Gross National Product, NNP = Net National Product,

GDP = Gross Domestic Product, NDP = Net Domestic Product,

MP = Market Prices, FC = Factor Cost,

D = Depreciation, NFI = Net Factor Income from Abroad

5. Which of the following statement is correct ? [Uttarakhand P.C.S (Pre) 2021]

Correct Answer: (c) Both (a) and (b) are correct
Solution:Net National Product (NNP) = Gross National Product (GNP) - Depreciation and, GNP = Gross Domestic Product (GDP) + Net Factor Income from Abroad. Thus, NNP = GDP + Net Factor Income from Abroad Depreciation. Hence, both the options (a) and (b) are correct.

6. The National income of a country for a given period is equal to the : [U.P.S.C (Pre) 2013]

Correct Answer: (d) money value of final goods and service produced
Solution:National income refers to the total monetary value of all the finals goods and services produced by the normal residents of a country in a specific time period (generally one year). In other words, National Income of a country is defined as the sum of total factor incomes accruing to the normal residents of that country from the production activity performed by them both within and outside the national boundaries in a year. In India computation of National Income is the responsibility of National Statistical Office (NSO), Government of India.

7. In an open economy, the national income (Y) of the economy is : [U.P.S.C (Pre) 2000]

(C, I, G, X, M stand for Consumption, Investment, Govt. Expenditure, total exports and total imports respectively)

Correct Answer: (c) Y = C + I + G + (X - M)
Solution:(c) Y = C + I + G + (X - M)

where

Y = National Income

C = Consumption expenditure

I = Investment expenditure

G = Government expenditure

and

X  -  M = Difference in export and import (Net exports)

8. Which of the following is not a method to calculate the Gross Domestic Product (GDP) ? [B.P.P.C.S. (Pre) (Re-Exam) 2020]

Correct Answer: (b) Diminishing cost method
Solution:The 3 methods which are used for calculating the Gross Domestic Product (GDP) are as follows :

1. Product method

2. Income method

3. Expenditure method

The diminishing cost method is not used to calculate the GDP.

9. Net National Product (NNP) and Gross National Product (GNP) are- [Uttarakhand P.C.S. (Pre) 2010]

Correct Answer: (a) Value measures of the National production
Solution:The monetary value of National production is measured by Net National Product (NNP) and Gross National Product (GNP) and both of these are different. GNP is the total monetary value of all the final goods and services that is produced by the normal residents of a country ( inside or outside the country ) in a year. GNP refers to all the economic output produced by a nation's normal residents, whether they are located with in the subtracted from the GNP the obtained value is NNP i.e. GNP - depreciation + NNP. Thus option (a) and (d) both can be correct .

10. Nominal (GDP) is : [chhattisgarh P.C.S. (Pre) 2023]

Correct Answer: (b) GDP evaluated at current market prices
Solution:Nominal gross domestic product (GDP) is GDP evaluated at current market prices, without adjustment for inflation. Nominal GDP measures the value of all finished goods and service produced by a country at their current market prices . Nominal GDP plays a significant role in calculating the GDP deflator as well as determining the real GDP.
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