GDP & National Income — Set 3

Correct Answer: B. B. Income earned by residents abroad exceeds income earned by foreigners domestically

NFIA is positive when income earned by a country's residents working or investing abroad exceeds income earned by foreign nationals within the domestic territory. For India, NFIA has traditionally been positive due to large remittances from the Indian diaspora. Positive NFIA means GNP > GDP.

Correct Answer: B. B. GDP = C + I + G + (X - M)

Using the Expenditure Method, GDP = C + I + G + (X - M), where C is household consumption, I is investment (capital formation), G is government expenditure, X is exports, and M is imports. The term (X - M) represents Net Exports. This formula captures all spending on domestically produced final goods.

Correct Answer: B. B. India's GNP is typically higher than GDP due to large remittances

India's GNP is typically higher than GDP because India receives substantial remittances from Non-Resident Indians (NRIs) abroad. These remittances constitute a major part of India's NFIA. India is consistently one of the world's top recipients of remittances, making NFIA positive.

Correct Answer: C. C. 8.2%

India's real GDP growth rate for FY 2023-24 was approximately 8.2%, making it one of the fastest-growing major economies in the world. This growth was driven by strong domestic consumption, capital investment, and services sector performance. India maintained its position as the fastest-growing G20 economy.

Correct Answer: B. B. Environmental degradation and depletion of natural resources

Green GDP adjusts traditional GDP by subtracting the costs of environmental degradation and natural resource depletion. It provides a more accurate picture of sustainable economic growth. The concept recognises that conventional GDP may overstate welfare if growth comes at the cost of environmental damage.

Correct Answer: B. B. Ministry of Statistics and Programme Implementation

MOSPI stands for the Ministry of Statistics and Programme Implementation. It is the nodal agency responsible for the collection, processing, and publication of official statistics in India. MOSPI oversees the NSO, which releases national income accounts and GDP estimates.

Correct Answer: C. C. Services

The Services sector contributes the most to India's GDP, accounting for approximately 55-57% of GVA. Industry (including manufacturing and construction) accounts for about 28-30%, while agriculture contributes around 15-18%. India's service-led growth model distinguishes it from other developing economies.

Correct Answer: B. B. (Nominal GDP / Real GDP) × 100

The GDP Deflator = (Nominal GDP / Real GDP) × 100. It measures the ratio of the value of production at current prices to the value at base year prices. A GDP Deflator of 110 means prices have increased by 10% compared to the base year. It is broader than CPI as it includes all domestically produced goods.

Correct Answer: C. C. Wear and tear of capital goods (Capital Consumption Allowance)

In National Income accounting, Depreciation refers to the wear and tear or consumption of fixed capital goods during the production process, also called Capital Consumption Allowance (CCA). It represents the reduction in the productive capacity of capital. Subtracting depreciation from Gross measures gives Net measures (e.g., GNP - Depreciation = NNP).

Correct Answer: B. B. Goods used as inputs in producing final goods, excluded from GDP to avoid double counting

Intermediate goods are inputs used in the production of final goods and services, such as steel used in car manufacturing. They are excluded from GDP to avoid double counting. If intermediate goods were included, their value would be counted multiple times—once at each stage of production—overstating actual output.