Table of Contents
Distinguish between ‘Value Addition’ and ‘Final Value of Output’.
“National income is always greater than domestic income”. Do you agree with the given statement? Support your answer with a valid reason.
In the estimation of Gross Domestic Product (GDP) using expenditure method, focus lies only on expenditure by the residents of the country.”
Do you agree with the given statement? Give valid reasons for your answer.
“National income exceeds domestic income only when exports are greater than imports”. Comment.
Should purchase of wheat in the whole sale market be treated as the purchase of intermediate goods?
Increase in national income always implies increase in domestic income. Elucidate.
“Many goods and services which may contribute to welfare, but are not included in estimating Gross Domestic Product (GDP).”
Do you agree with the given statement? Give valid reason in support of your answer.
With suitable examples, distinguish between final goods and intermediate goods.
Using a suitable numerical example, distinguish between Real Gross Domestic Product (GDP) and Nominal Gross Domestic Product (GDP).
State the meaning of ‘normal resident’ of a country.
Differentiate between ‘Value of Output’ and ‘Value Added’.
Read the following text carefully:
In India, after Covid-19 period, household and private sector consumption, as measured by Private Final Consumption Expenditure (PFCE), was ₹ 39.7 trillion in nominal terms in Q1 FY23, compared with ₹ 28.4 trillion for the same period last year, and ₹ 39.2 trillion in the fourth quarter (Q4) of 2021-22 (FY22).
As a percentage of Nominal GDP, PFCE was 61.1 per cent, compared with 55.5 per cent in Q1 FY22. However, in real terms at constant prices, PFCE grew just 9.88 per cent, compared with Q1 of 2019-20-the year before the Covid-19 pandemic.
“Recovery in domestic demand is reflected in the growth rates of PFCE and Gross Fixed Capital Formation (GFCF) over the corresponding quarter of the previous year,” said D.K. Srivastava. GFCF came in at ₹ 19 trillion in Q1 FY23, compared with ₹ 14.4 trillion in Q1 FY22. However, it was slightly lower than ₹20.2 trillion in Q4 FY22.
In the media briefing after the GDP numbers, Finance Secretary T.V. Somanathan said this trend was expected as GFCF in present Q1 was usually lower than the previous year’s Q4.
On the basis of the given text and common understanding, answer the following questions:
Compare and analyse the trends of change in PFCE as a percentage of GDP, both in real and nominal terms.
“Private Final Consumption Expenditure is an important factor determining Gross Domestic Product at Market Price.” Justify the given statement.
Discuss briefly the three components of ‘operating surplus’.
Discuss briefly, the concept of ‘Mixed Income of Self-Employed’ under the Income Method.
Justify the following statement:
“Depreciation is a fall in the value of an asset due to expected obsolescence.”
Defend or refute the following statement, with valid argument:
“Depreciation is a fall in the value of an asset due to unexpected obsolescence.”
Suppose, the Gross Domestic Product (GDP) at market price of a country in a particular year was ₹ 1,100 crore. Net Factor Income from abroad was ₹ 100 crore. The value of Net Indirect Taxes was ₹ 150 crore and the National Income was ₹ 850 crore. Calculate the value of depreciation for the economy.
“Machine purchased by a firm is always a capital good.”
Do you agree with the given statement? Give valid reasons for your answer.
Define the following:
(i) Net Exports
(ii) Externalities
(iii) Problem of Double Counting.
Suppose, the Gross Domestic Product (GDP) at market price of a country in a particular year was ₹ 1,200 crore. Net Factor Income from abroad was ₹ 120 crore. The value of Net Indirect Taxes was ₹ 130 crore and the National Income was ₹ 950 crore. Calculate the value of depreciation for the economy.
State the meaning of:
(a) Economic territory
(b) Mixed income of self-employed
(c) Compensation of employees
Suppose, the Gross Domestic Product (GDP) at market price of a country in a particular year was 1,500 crore. Net Factor Income from abroad was 100 crore. The value of Net Indirect Taxes was 180 crore and the National Income was 1,050 crore.
Calculate the value of depreciation for the economy.
State the meaning of:
(a) Problem of Double Counting
(b) Operating Surplus
(c) Compensation of Employees
Suppose only one Good ‘X’ is produced in the country. Output of Good X during year 2018 and 2019 were 100 units and 110 units respectively. The market price of the product during the two years was ₹ 50 and ₹ 55 per unit respectively.
Calculate the percentage change in Real Gross Domestic Product (GDP) in year 2019 using 2018 as the base year.
How should the following be treated in estimating National Income of a Country? Give valid reasons.
(i) Profits earned by Foreign Banks in India.
(ii) Expenditure on upgradation of fixed asset by a firm.
“While estimating Gross Domestic Product (GDP) by expenditure method, entire focus is on expenditures incurred by the residents of the country.”
Do you agree with the given statement? Give valid reason in support of your answer.
Using a suitable example, distinguish between positive externalities and negative externalities.
Using a suitable example, distinguish between stock variables and flow variables.
Estimate the value of Nominal Gross Domestic Product (GDP) for a hypothetical economy. The values of Real Gross Domestic Product (GDP) and Price Index are given as ₹ 500 crore and 125 respectively.
Giving valid reasons explain, which of the following will not be included in the estimation of National Income of India?
(i) Purchase of shares of Sethi Ltd. by an investor in the Bombay Stock Exchange.
(ii) Salaries paid by Indian Embassy situated at Japan, to the local workers.
(iii) Depreciation on capital assets charged by firms.
Calculate the value of Nominal Gross Domestic Product (GDP) for a hypothetical economy. The values of Real Gross Domestic Product (GDP) and Price Index are given as ₹ 1,000 crores and 250 respectively.
Giving valid reasons, explain which of the following will not be included in the estimation of National Income of India?
(i) Purchase of shares by an investor in the Bombay Stock Exchange.
(ii) Salaries paid to Russian working in Indian Embassy in Russia.
(iii) Imputed rent of self -occupied houses.
Distinguish between Rent and Royalty.
State any two precautions to be adopted while estimating National Income by Income Method.
Discuss briefly the problem of Double Counting, using a suitable example.
Distinguish between Real Gross Domestic Product and Nominal Gross Domestic Product, using a suitable numerical example.
State any two precautions to be adopted while estimating National Income by expenditure method.
Distinguish between ‘Final goods’ and ‘Intermediate goods’.
State any two precautions to be adopted while estimating National Income by Value Added Method.
When does Net Factor Income from Abroad (NFIA) show Negative Value?
State the meaning of retained earnings.
Giving valid reasons, explain how the following would be treated while estimating National income:
(a) Payment of indirect taxes by a firm.
(b) Purchase of goods by foreign tourists.
Why there is a need to make distinction between final and intermediate goods?
(i) Discuss briefly the concept of Externalities’, with suitable example.
(ii) Export are not a part of ‘Net Factor Income from abroad’.
Elaborate the reason behind the given statement.
State any two precautions that are taken while estimating National Income by Expenditure Method.
Distinguish between Gross Domestic Product at Market Price and Net Domestic Product at Market Price.
Distinguish between depreciation and capital loss.
Distinguish between Consumption goods and Capital goods.
b)Giving valid reasons, classify the following into stock and flow variables:
(i) Population of India as on 31st March, 2021
(ii) Domestic Income of Indian Economy during the fiscal year 2020-21
Briefly explain the different phases of circular flow of income.
In an economy, if the Real Gross Domestic Product (GDP) is ₹ 300 crore and Price Index (with base = 100) is 110, calculate the Nominal Gross Domestic Product.
State and discuss briefly the three main components of Net Factor Income from Abroad.
If the Real Gross Domestic Product is ₹ 16,000 crores and Gross Domestic Product at current prices is ₹ 20,000 crores, calculate the value of price index.
(b) Giving valid reasons, classify the following into stock and flow variables:
(i) Production of wheat during the year 2020-21
(ii) National Income of Indian Economy during financial year 2020-21
If the Gross Domestic Product at current prices is ₹ 6,600 crore and GDP deflator is 110, calculate the Real Gross Domestic Product.
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