National Income — Set 6
Economics · राष्ट्रीय आय · Questions 51–60 of 70
Which of the following is considered the most accurate measure of National Income?
Correct Answer: D. NNP at Factor Cost
Net National Product (NNP) at factor cost is technically termed as National Income. It accounts for depreciation and net income from abroad while excluding indirect taxes and subsidies. It represents the actual net value of goods and services available to the citizens.
Who was the first person to estimate the national income of India in 1867-68?
Correct Answer: B. Dadabhai Naoroji
Dadabhai Naoroji provided the first unofficial estimate of India's national income in his book 'Poverty and Un-British Rule in India'. He estimated the per capita income to be 20 rupees per year. His work aimed to highlight the economic drain of India under British rule.
The difference between GDP and GNP is?
Correct Answer: D. Net Factor Income from Abroad
Gross Domestic Product (GDP) measures production within a country's borders, while Gross National Product (GNP) measures production by its residents. The bridge between the two is Net Factor Income from Abroad (NFIA). NFIA accounts for the cross-border earnings of residents and non-residents.
National Income = GNP - ?
Correct Answer: C. Depreciation + Net Indirect Taxes
To reach National Income (NNP at factor cost) from GNP at market price, one must subtract depreciation and net indirect taxes. Depreciation converts gross to net, and net indirect taxes convert market price to factor cost. This gives the pure value of national production.
The NNP at Market Price is calculated as?
Correct Answer: A. GNP at Market Price - Depreciation
Net National Product (NNP) at market price is obtained by deducting depreciation from Gross National Product (GNP) at market price. Depreciation represents the wear and tear of capital assets during production. Subtracting it provides the 'net' addition to the national output.
Which method is also known as the 'Industrial Origin Method'?
Correct Answer: C. Product Method
The Product Method, also known as the Value Added Method, calculates national income by adding up the contribution of each sector. It identifies the origin of production in different industries like agriculture or manufacturing. It is very useful for understanding the structural composition of an economy.
Which of the following is NOT included in the calculation of GDP?
Correct Answer: A. Value of resale of old goods
The resale of old or second-hand goods is excluded because their value was already counted in the year they were originally produced. Including them again would lead to overestimation of current production. However, any commission or brokerage earned on the sale is included.
Net National Product at Factor Cost is equivalent to?
Correct Answer: A. National Income
In economic terms, 'National Income' refers specifically to Net National Product (NNP) at factor cost. It reflects the total factor income earned by the normal residents of a country. This measure is the most comprehensive indicator of a nation's earning capacity.
The formula for calculating Real GDP is?
Correct Answer: C. (Nominal GDP / GDP Deflator) x 100
Real GDP is derived from Nominal GDP by using the GDP deflator to remove the effects of price inflation. This calculation allows for a comparison of output volume across different years. It is a standard tool for measuring real economic growth.
Transfer payments are excluded from national income because they represent?
Correct Answer: B. Unearned income without production
Transfer payments like scholarships or relief aid are payments for which no productive service is rendered in return. National income only measures the value of goods and services produced in the current year. Including transfer payments would result in an inaccurate measure of economic activity.