National Income & Gross Domestic Product

Total Questions: 55

31. One of the reasons for India's occupational structure remaining more or less the same over the years has been that : [U.P.S.C (Pre) 1995]

(a) investment pattern has been directed towards capital intensive industries
(b) productivity in agriculture has been high enough to induce people to stay with agriculture
(c) ceiling on land holdings have enabled more people to own land and hence their preference to stay with agriculture
(d) people are largely unaware of the significance of transition from agriculture to industry for economic development

Correct Answer: (a) investment pattern has been directed towards capital intensive industries

Solution:The occupational structure of any country is defined by the segment of a country's population that is engaged in economic ventures and various professions. In India after independence, inspite of multiple times increase in GDP and inspite of huge changes in the share of primary, secondary and tertiary sector in GDP, the occupational structure is still more or less remained the same as it was earlier. The main reason behind that is the investment pattern has been directed towards capital intensive industries. It has been one of the chief criticisms of planning in India, which emphasised the capital intensive industries in place of promoting the labour intensive industries. The efforts of the planners with regard to the development of the industries turned beneficiary towards the large scale capital sector, whilst the small scale and cottage industries failed to respond to the developments. The large scale industries are intensively capital oriented, and their development failed to procure employment to the workforce.

32. Which of the following activities constitute real sector in the economy ? [U.P.S.C (Pre) 2022]

1. Farmers harvesting their crops

2. Textile mills converting raw cotton into fabrics

3. A commercial bank lending money to a trading company.

4. A corporate body issuing Rupee Denominated Bonds overseas.

Select the correct answer using the code given below :

(a) 1 and 2 only
(b) 2, 3 and 4 only
(c) 1, 3 and 4 only
(d) 1, 2, 3 and 4

Correct Answer: (a) 1 and 2 only

Solution:The real sector of an economy is the key section as activities of this sector persuade economic output and is represented by those economic segments that are essential for the progress of GDP of the economy. The real sector of economy concerns the production, purchase and flow of goods and services within an economy. It is contrasted with the financial sector of economy, which concerns the aspects of the economy that deal purely in transactions of money and other financial assets, which represent owner- ship or claims to ownership of real sector goods and ser- vices. Among the given activities, farmers harvesting their crops and textile mills converting raw cotton into fabrics constitute real sector in the economy, while a commercial bank lending money to a trading company and a corporate body issuing Rupee Denominated Bonds overseas are parts of financial sector activities. Hence, option (a) is the correct answer.

33. Which among the following is NOT a major factor of economic growth ? [U.P.P.C.S. (Pre) 2021]

(a) Accumulation of capital and reforms in technology
(b) Change in population
(c) Division of labour in specialised activities
(d) Technocrats and Bureaucrats

Correct Answer: (d) Technocrats and Bureaucrats

Solution:Major factors of economic growth are as follows :

• Natural Resources

• Physical Capital or Infrastructure

• Population or Labour

• Human Capital

• Technology

• Law

Among the given options, Technocrats and Bureaucrats are not the major factors of economic growth. So, option (d) is the correct answer.

34. Which one of the following is a sign economic growth ? [R.A.S./R.T.S. (Pre) 2013]

(a) An increase in National Income at constant prices during a year.
(b) A sustained increase in real Per Capita Income.
(c) An increase in National Income at current prices over time.
(d) An increase in National Income along with increase in population.

Correct Answer: (b) A sustained increase in real Per Capita Income.

Solution:Economic growth indicates the growth in the real income in any economy in a specific time period. Generally it is said that if there is an increase in Gross Domestic product, Gross National Product and Per Capita Income, then there is economic growth of the country, but the most suitable measure of the economic growth and development is a sustained increase in real Per Capita Income.

35. The best index of economic development is provided by : [B.P.S.C (Pre) 2022]

(a) growth in national income at current prices
(b) growth in per capita real income from year to year
(c) growth in saving ratio
(d) improvement in balance of payments position
(e) None of the above

Correct Answer: (b) growth in per capita real income from year to year

36. The most appropriate measure of a country's economic growth is its - [U.P.P.C.S. (Pre) 2013, U.P. Lower Sub. (Pre) 2013, Chhattisgarh P.C.S. (Pre) 2015, U.P.S.C (Pre) 2001]

(a) Gross Domestic Product (GDP)
(b) Net National Product (NNP)
(c) Net Domestic Product (NDP)
(d) Per Capita Product (PCP)

Correct Answer: (d) Per Capita Product (PCP)

Solution:The most suitable measure of the economic growth of any country is its Per Capita Real Income or Per Capita Net National Product. It is used to measure a country's standard of living and thus a better indicator or economic growth and development.

37. The standard of living in a country is represented by : [U.P.P.C.S. (Mains) 2013]

(a) Poverty Ratio
(b) Per Capita Income
(c) National Income
(d) Unemployment Rate

Correct Answer: (b) Per Capita Income

38. Increase in absolute and per capita real GNP do not con- note a higher level of economic development, if : [U.P.S.C (Pre) 2018]

(a) industrial output fails to keep pace with agricultural output
(b) agricultural output fails to keep pace with industrial output
(c) poverty and unemployment increase
(d) imports grow faster than exports

Correct Answer: (c) poverty and unemployment increase

Solution:Economic growth is a conservative concept and it denotes the rise in a nation's actual level of output whereas economic development is comparatively a normative concept, and it denotes economic growth with enhancement in the standards of living. Better standard of living includes various things like safe drinking water, improved sanitation systems, medical facilities, spread of primary education to improve literacy rate, eradication of poverty, increase in employment opportunities etc. Thus, increase in absolute and per capita real GNP (i.e. economic growth) do not connote a higher level of economic development, if poverty and unemployment increases.

39. The growth rate of Per Capita Income at current prices is higher than that of Per Capita Income at constant prices, because the latter takes into account the rate of: [U.P.S.C (Pre) 2000]

(a) growth of population
(b) increase in price level
(c) growth of money supply
(d) increase in the wage rate

Correct Answer: (b) increase in price level

Solution:Per Capita Income at constant prices is obtained by adjusting the effects of inflation (increase in price level) from Per Capita Income at current prices. Thus, it is clear that the growth rate of Per Capita Income at current prices will be comparatively more than the growth rate of Per Capita Income at constant prices and this difference will be equal to the corresponding growth rate of inflation or increase in price level.

40. That the Per Capita Income in India was Rs. 20 in 1867-68, was ascertained for the first time by : [U.P.S.C (Pre) 2000, U.P.P.C.S. (Pre) 2007,U.P.P.C.S. (Mains) 2013]

(a) M.G. Ranade
(b) Sir W. Hunter
(c) R.C. Dutta
(d) Dadabhai Naoroji

Correct Answer: (d) Dadabhai Naoroji

Solution:Dadabhai Naoroji was the first to estimate National Income of India in 1867-68. According to his estimates the Per Capita Income of India was Rs. 20 at that time.

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