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JP IAS ACADEMY
A. 1, 2 and 4 only
B. 2, 3, 4 and 6 only
and 2 only D. 1, 2, 3 and 4 only
C. 1 and 2 only
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3. Indirect taxes and depreciation should be deducted and subsidies should be added to gross
national product at market prices to reach national income
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A. 1 and 3
3
C. 1
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C. 1 and 2
D. 1, 2 and
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With reference to national income accounting in India, which of the above statement(s) is/are correct?
A. 1 and 4 only
D. 1, 2, 3 and 4
B. 2 and 4 only
C. 1 and 2 only
B. 2 and 3 only
A. Deflation
B. Inflation
D. Hyperinflation
C. 1 and 2 only
C. Stagflation
1. Market prices
2. Factor costs
A. 1 only B. 2 only
ther 1 nor 2
B. iv, iii, i, ii
C. Both 1 and 2
D. Nei-
15. GDP can be determined in three ways, match the correct approach with the calculations
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B. 1, 3, 2
C. 2, 3, 1
D. 3, 1, 2
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11. For measuring output of domestic product, which 16. Value added means net contribution made by the firm
method is used
1. If we deduct depreciation in value added then we
obtain Gross Value Added
1. By multiplying the output of each sector by
their respective market price and adding them
2. If we include the value of depreciation from Gross
together
Value Added we obtain Net Value Added
2. By collecting data on gross sales and inventories
from the records of companies and adding them
together
A. 1 only B. 2 only
ther 1 nor 2
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A. 1 only B. 2 only
ther 1 nor 2
C. Both 1 and 2
C. Both 1 and 2
D. Nei-
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B. 2 and 3
C. 1 and 2
D. 1,2 and
2. The GDP adjusted for changes in money value 18. Gross domestic product (GDP) is called gross because its consumption does not exclude
in this way is called the real, or constant, GDP.
A. Depreciation of capital
B. Subsidies on con3. The factor used to convert GDP from current to
sumption
of
goods
C.
Earning
of foreign factors in
constant values in this way is called the GDP
host country D. Impact of price rise
deflator.
19. Which of the following is/are example(s) of intermediate goods?
B. 2 and 3
C. 1 and 2
D. 1, 2 and
1. Printing machine used by a publisher
2
C. Both 1 and 2
D. Nei-
A. 2 only
B. 1 and 2 only
D. All of the above
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1. Gross Domestic Product contributed by any sector of an economy is proportional to the number
of people involved in that sector
C. Both 1 and 2
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2. Gross National Product contributed by any sector of an economy is proportional to the number
of people involved in that sector
D. Nei-
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22. Select the statement which correctly defines the difference between Factor Cost and Market Price
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23. Select the statement which correctly defines the difference between Factor Cost and Basic Price
A. Factor cost is the manufacturing price of any
product, while the Basic Price includes the subsidies on the product and excludes indirect taxes such
as VAT
B. While Basic Price of a product includes the current rate of inflation, the Factor Cost does not
C. When the state taxes are added to the Factor
Cost it becomes Basic Price
D. None of the above
24. For the calculation of GDP, which among the following activity(s) is/are considered
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C. 2 and 3 only
6. Answer: (B)
7. Answer: (D)
1. Answer: (B)
Explanation: Sale of a new car is calculated in GDP
because it is a final good. Purchase of tyre by a car
manufacturer is an intermediate good for a car and
hence not included in GDP. Buying share of a car
company is a transaction in financial products without
any real capital or product formation. Hence, it is also
excluded from GDP calculation. Profits earned by a
foreign-owned car company is included in GDP as it is
within the domestic territory of an economy. Hence,
only 2 and 3 are excluded from GDP calculations.
8. Answer: (B)
Explanation: When ever there is an Economic
growth inflation will be there and it should be in a
gradual manner.
2. Answer: (B)
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Explanation: Remittance money is Net factor Income from Abroad (NFIA). GDP doesnt include 9. Answer: (B)
NFIA. GNP is sum of GDP and NFIA. It is basically
sum of values of final goods and services produced by 10. Answer: (A)
nationals of an economy whether within or outside the
Explanation: GDP estimates are commonly used to
economic territory of the country. National income is
measure the economic performance of a whole country
Net National Product at factor cost and hence it also
or region, but can also measure the relative contribuincludes NFIA.
tion of an industry sector. This is possible because
GDP is a measure of value added rather than sales;
3. Answer: (C)
it adds each firms value added (the value of its output
Explanation: Shares are basically ownership of a
minus the value of goods that are used up in produccompany. By purchasing a share one just buys owning it)
ership of a company and not any actual goods or services. So it wont be contributing in the final goods 11. Answer: (C)
and services.
12. Answer: (C)
4. Answer: (D)
Explanation: World GDP is calculated by prod-
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5. Answer: (B)
Explanation: Any tangible asset that an organization uses to produce goods or services such as office
buildings, equipment and machinery as capital goods.
Steel sheets used in a manufacturing plant are example of intermediate goods. Capital goods are final
goods. A television set is an example of consumer
15. Answer : (D)
durable goods. All other are capital goods.
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Explanation: Gross means without tax or other contributions having been deducted
19. Answer: (B)
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A
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