MCQ
upsc-p1-economy-basics-national-income MCQ - Practice Questions with Answers
Solve 9 upsc-p1-economy-basics-national-income questions for RAS/RPSC preparation.
Practice questions
Q1Starting with Gross Value Added at basic prices, arrange the following adjustments in the correct order to obtain first GDP at market prices, then Gross National Income and finally Net National Income: A. Add net factor income from abroad B. Deduct consumption of fixed capital C. Add product taxes D. Deduct product subsidies Select the correct answer using the code given below.
From GVA at basic prices, add product taxes and deduct product subsidies to obtain GDP at market prices. Next add net factor income from abroad to obtain GNI, and finally deduct consumption of fixed capital to obtain NNI. The order is C-D-A-B, which is option B.
Q2Consider the following statements regarding the production boundary of GDP: 1. Government services may be included even when no market sale occurs. 2. Pure household services for self-use, such as unpaid domestic care, are largely outside the conventional GDP boundary. 3. Unsold output produced during an accounting period can never form part of that period's GDP. Which of the statements given above are correct? Select the correct answer using the code given below.
Statements 1 and 2 are correct. Conventional GDP includes government services and some own-account production even without a market sale, but largely excludes unpaid household services for self-use. Statement 3 is incorrect because unsold output may enter GDP as a change in stocks when it was produced during the period.
Q3Consider the following statements: 1. Advance, provisional and revised national-income estimates can differ as fuller source data become available with a lag. 2. Any revision of a national-income estimate is, by itself, evidence of manipulation. Which one of the following is correct? Select the correct answer using the code given below.
Statement 1 is correct and Statement 2 is incorrect. National accounts are revised because better and more complete data arrive after a lag. The existence of a normal revision cycle does not, by itself, establish manipulation.
Q4Match List I with List II and select the correct answer using the code given below. List I (Item) A. Transfer payment B. Change in stocks C. Owner-occupied housing service D. Intermediate consumption List II (National-account treatment) 1. May require an imputed value 2. Deducted from output while calculating value added 3. Redistributes income but is not payment for current production 4. May include output produced but not sold during the period
Transfer payments redistribute income without paying for current production, so A-3. Unsold output may enter change in stocks, so B-4. Owner-occupied housing services may need imputation, so C-1. Intermediate consumption is deducted from output to obtain value added, so D-2. Therefore option A is correct.
Q5With reference to measurement of real output, consider the following statements: 1. Constant-price estimates use a selected base year's price structure to isolate volume growth. 2. A single consumer inflation number can mechanically convert the whole nominal economy into real GDP. 3. Different sectors may require different deflators or volume indicators. Which of the statements given above are correct? Select the correct answer using the code given below.
Statements 1 and 3 are correct. Constant-price estimation uses base-year prices to separate volume change, and sector-specific deflators or volume indicators may be needed. Statement 2 is incorrect because one consumer inflation measure cannot mechanically deflate every part of the economy.
You've seen 5 of 9 sample questions
Unlimited practice on upsc-p1-economy-basics-national-income comes with the RAS Test Series + Practice pack or Gate Pass.
More questions
6Match List I with List II and select the correct answer using the code given below. List I (Aggregate) A. GDP B. GNI C. NDP D. NNI List II (Basis or adjustment) 1. Residents' net income after deducting depreciation from GNI 2. Final output within domestic territory 3. GDP plus net factor income from abroad 4. Domestic net output after deducting depreciation from GDP
7Consider the following statements: 1. A rise in product subsidies, with Gross Value Added unchanged, can make GDP at market prices lower than it otherwise would be. 2. This is because GDP at market prices equals Gross Value Added at basic prices plus product taxes minus product subsidies. Which one of the following is correct? Select the correct answer using the code given below.
8With reference to national-income aggregates, consider the following statements: 1. Gross Domestic Product follows domestic territory, whereas Gross National Income follows residents. 2. Net Domestic Product is obtained by deducting consumption of fixed capital from Gross Domestic Product. 3. Gross National Income is obtained by deducting net factor income from abroad from Gross Domestic Product. Which of the statements given above are correct? Select the correct answer using the code given below.
9Consider the following statements about economic growth and development: 1. Economic growth is generally measured through a sustained rise in real output. 2. Economic development includes capabilities, resilience and access to basic services. 3. Human Development Index is a ranking of domestic output alone. 4. Development without growth can be constrained because redistribution and public services require resources. Which of the statements given above are correct? Select the correct answer using the code given below.