National Income & Gross Domestic Product (Economic Development) Part-I

Total Questions: 55

11. One of the problems in calculating National Income in India is : [B.P.C.S. (Pre) 2017]

Correct Answer: (d) Non -organized sector
Solution:Non-organized sector is one of the main problems in calculating National Income in India. Quite often, the unorganized sector, i.e., small scale units, agriculture sector, etc., do not keep proper records relating to workers and other factors of production for various reasons.

Other main problems in calculating National Income in India includes: Inadequate and unreliable data, problem of double counting, non-monetized sector, black money transactions, illegal income, problem of transfer payments (old age pensions, scholarships, etc.), problem of definition of National Income, etc.

12. Read the following statements and choose the correct option : [Chhattisgarh P.C.S. (Pre) 2020]

Statement I : Net Domestic Product = Gross Domestic Product + Depreciation.

Statement II : Per Capita Income-Net Domestic Product/ Total Population of the Nation.

Statement III : Net Domestic Product is the better metrics than Gross Domestic Product for comparing the economies of the world.

Correct Answer: (d) None of the above options is true
Solution:Net Domestic Product (NDP) is an annual measure of the economic output of a nation that is calculated by subtracting depreciation from Gross Domestic Product (GDP). It means, Net Domestic Product Gross Domestic Product-Depreciation Hence, Statement I is incorrect while Statement II is also not true.

Per Capita Income is the average income earned per person in a nation or geographic region in a specified year. It can be calculated by dividing National Income (Net National Product) from the total population of the nation.

Only Statement III is correct as Net Domestic Product is the better metrics than Gross Domestic Product for comparing the economies of the world, since the former also reveals the amount of investment spent on improving the obsolete equipments to maintain the production level.

An increase in depreciation alone can push up the GDP level, but it does not indicate improvements in that country's social and economic well-being.

13. Personal Disposable Income (PDI) is : [Chhattisgarh P.C.S. (Pre) 2023]

Correct Answer: (a) PDI Personal income - Personal tax payments
Solution:Personal Disposable Income (PDI) refers to personal income minus direct taxes at a personal level. It measures the amount of net income that remains after households have paid all their direct tax levies. It also represents the amount households will spend on goods and services or will save to invest. Thus, PDI = Personal income - Personal tax payments

14. If over a given period of time both prices and monetary income have been doubled, the real income will be-- [U.P.P.C.S. (Mains) 2004]

Correct Answer: (c) Unchanged
Solution:In a given time period if both the prices as well as monetary income gets twice then there is no change in the real income because increased prices will be balanced by the increased income and vice versa. It will not have any effect on the real income.

Real income reflects the purchasing power of a person's income. It's calculated by dividing monetary income by the price level. When both prices and income double, the ratio remains the same, meaning the consumer can still afford the same quantities of goods and services, and their real income doesn't change.

15. Theoretically, if economic growth is conceptualized, which one of the following is not usually taken into consideration ? [Jharkhand P.C.S. (Pre) 2013]

Correct Answer: (b) Growth in financial aid from World Bank
Solution:Growth in Gross Domestic product (GDP), Gross National Product (GNP) and per Capita Gross National Product are considered for the Economic Development. Growth in World Bank's financial aid is not included in this.

While World Bank aid can contribute to economic development by funding projects and programs, it is not a direct indicator of the growth of the economy itself. Economic growth is primarily measured by the expansion of production and income within the economy, not by external financial transfers.

16. Consider the following statements about Amartya Sen's advices regarding priorities for Indian Economy : [U.P.P.C.S. (Pre) 1999]

1. It should be commodity- oriented

2. It should be people - oriented

3. Economic security to the poorest of the poor

4. Safeguards against integration of these with world economy

Select the correct answer using the code given below :

Correct Answer: (b) 2, 3 and 4 are correct
Solution:Amartya Sen is associated with welfare economic. According to him the main objective of economic development is human development. Due to this perception Amartya Sen has suggested the statement 2, 3 and 4 mentioned in the question for the Indian economy.

Sen's focus is on human development and capabilities, not solely on producing and consuming goods. A commodity-oriented approach might prioritize economic growth but could neglect the needs of the poorest and most vulnerable populations.

17. The view that 'Planning in India should, in future, pay more attention to the people than to commodities ' was given by : [U.P. Lower Sub. (Spl.) (Pre) 2004]

Correct Answer: (a) Amartya Sen
Solution:Indian economist Prof. Amartya Sen, who was awarded the 1998 Nobel Prize in Economic Sciences, had given the view that 'Planning in India should, in future, pay more attention to the people than to commodities'.

Sen's perspective emphasizes the importance of social and human development in economic planning. His work, particularly his concept of "development as freedom," highlights the need to focus on individuals' freedoms and capabilities as a means to achieve sustainable and equitable development.

He argues that true development encompasses more than just economic growth and should include improvements in areas like education, healthcare, and political participation.

18. The Hindu rate growth refers to the growth rate of : [U.P.P.C.S. (Pre) 1996, 2006, U.P.P.C.S. (Mains) 2004]

Correct Answer: (b) National Income
Solution:The term Hindu rate of growth was used for the first time by Prof. Raj Krishna in the year 1981 while speaking in the American Economic Association.

According to him the Hindu tradition which is not favourable to development or which do not promote development is the major cause of the slow growth rate of National Income /GDP in India, which stagnated around 3.5 % from 1950s to 1980s. Hence, it is clear that Hindu rate of growth mentioned by Prof. Raj Krishna is related to National Income/ GDP.

19. Hindu growth rate is related to : [B.P.S.C (Pre) 2019]

Correct Answer: (b) GDP
Solution:The term Hindu rate of growth was used for the first time by Prof. Raj Krishna in the year 1981 while speaking in the American Economic Association.

According to him the Hindu tradition which is not favourable to development or which do not promote development is the major cause of the slow growth rate of National Income /GDP in India, which stagnated around 3.5 % from 1950s to 1980s. Hence, it is clear that Hindu rate of growth mentioned by Prof. Raj Krishna is related to National Income/ GDP.

20. Economic growth is usually coupled with : [U.P.S.C (Pre) 2011]

Correct Answer: (b) Inflation
Solution:Generally along with the economic development there is an increase in the demands of goods with increase in income. That is why economic development is usually accompanied by inflation.

While economic growth often accompanies inflation, there can be instances where economic growth is not associated with inflation, or where it's associated with deflation, stagflation, or hyperinflation. Economists generally believe that a certain level of low, stable, and predictable inflation can be beneficial for an economy.