National Income — Set 7
Economics · राष्ट्रीय आय · Questions 61–70 of 70
Nominal National Income is measured at?
Correct Answer: B. Current market prices
Nominal National Income is calculated using the prices prevailing in the current year. It reflects both changes in production and changes in the general price level. Therefore, it may increase even if there is no growth in real production.
The value of 'NDP' is always ________ than 'GDP' in a functioning economy.?
Correct Answer: D. Lower
Net Domestic Product (NDP) is always lower than GDP because it is calculated by subtracting depreciation from GDP. Since every economy has some wear and tear of capital assets, depreciation is always a positive value. NDP represents the net value of production after maintaining the existing capital stock.
Which of the following is an example of 'Final Goods'?
Correct Answer: D. Machine bought by a firm for production
Final goods are those purchased for final consumption or for capital investment. A machine used in a factory is a final good because it is not converted into another product within the same year. Intermediate goods, on the other hand, are used up during the production process.
The 'Expenditure Method' calculates GDP by summing up which of the following?
Correct Answer: D. Final expenditures on goods and services
The Expenditure Method measures GDP as the sum of all final spending on goods and services in an economy. This includes consumption, investment, government spending, and net exports. It is based on the idea that all production is eventually purchased.
If the per capita income of a country is increasing, it implies that?
Correct Answer: A. National income is growing faster than population
Per capita income increases when the growth rate of national income exceeds the growth rate of the population. It suggests that, on average, the residents are becoming wealthier. However, it does not account for how that income is distributed across the population.
Inventory investment refers to the change in?
Correct Answer: D. Stock of finished and semi-finished goods
Inventory investment is the change in the stock of raw materials, semi-finished goods, and finished products held by firms. It is considered a part of the total investment in national income accounting. A positive change indicates an increase in the economy's stock of goods.
Which of the following is a component of 'Net Factor Income from Abroad'?
Correct Answer: C. Net compensation of employees
NFIA consists of net compensation of employees, net property and entrepreneurial income, and net retained earnings from abroad. It captures the net flow of income between residents and the rest of the world. It is the factor that converts domestic income into national income.
Which economic aggregate excludes both depreciation and net income from abroad?
Correct Answer: B. NDP
Net Domestic Product (NDP) is obtained by subtracting depreciation from GDP. Since it is 'domestic', it does not include factor income from abroad. It measures the net value of production within the country's borders.
Market Price = Factor Cost + ?
Correct Answer: B. Net Indirect Taxes
The market price of a good is the sum of its factor cost and net indirect taxes (indirect taxes - subsidies). This relationship explains why products often cost more than their production expenses. It is the price at which a good is actually traded in the market.
Domestic income includes factor income generated by?
Correct Answer: C. Both residents and non-residents within borders
Domestic income (NDP at factor cost) refers to all factor income generated within the geographical boundaries of a country. It includes the earnings of both citizens and foreign nationals working inside the country. It focuses on the location of production rather than the nationality of the producer.