ECONOMICS WORKSHEETS XII

Unit 1, National Income and Its Aggregates

Q1. National income is calculated using _________

(a) Income method (b) Output Method
(c) Expenditure method (d) All of the given
Q2. Double counting leads to
(a) Under estimation of income (b) Over estimation of income
(c) Both (a) and (b) (d) None
Q3. Which of the following is not added in national income?
(a) Retirement pension (b) Old age pension
(c)Bonus (d) Dearness Allowance
Q4. Identify the correct statement
(a) Gross domestic capital formation is always greater than gross fixed capital formation.
(b) National income is always greater than domestic income
(c) Nominal GDP can be less than real GDP.
(d) Nominal GDP is the real indicator of growth.
Q5. Flow of goods and services between firms and household is ______
(a) Real Flow (b) Money Flow
(c) Flow of Capital (d) Flow of stock
Q6. ‘Income Method’ is also known as
(a) Saving Method (b) Disposal Method
(c) Distributive method (d) Expenditure method
Q7. If goods and services are valued at the prevailing price of the year, it will be a valuation at _______
(a) Constant price (b) Current price
(c) Cost price (d) extraordinary price
Q8. Corporate tax is
(a) Added in national income (b) An Indirect tax
(c) A part of profit (d) A Personal tax
Q9. Which of the following is not a part of gross domestic product at market price?
(a) Private final consumption expenditure
(b)Government purchase of goods and service
(c) Change in stock
(d)NFIA
Q10. NDPFC =
(a) GDPFC – NIT (b) GDPMP – NIT
(c) NDPMP – NIT (d) GDPMP – Dep

Q11. Fill in the blanks.

(a) _______________ are also called single use producer goods.
(b) Producer goods are of two types ________ and _____________.
(c) Two reasons of charging depreciation are ______________ and ____________________.
(d) __________ are withdrawals of money from circular flow of income.
(e) ___________ are additions of money to the circular flow of income.
(f) ________ and _______ are examples of stock variables.
(g) ________ and ________ are examples of flow variables.
(h) Flow of goods and services in the economy is termed as __________.
(i) Flow of money in the economy is termed as __________.
(j) ________ and _________ are factor incomes.
(k) ___________ and ___________ are transfer incomes.
(l) Depreciation is also termed as ________________ capital.
(m) ____________ is a better measure of welfare of people.
(n) Domestic Territory is also called ______________.

Q12. Match the following

1. Stock a. Domestic Territory
2. Flow b. Gift
3. Economic Territory c. Limitation of GNP as welfare
4. Transfer d. Capital
5. Externalities e. Losses

Q13. One word Answers/Very Short Answers.

(i) Name the process of increase in the stock of capital.
(ii) What is current replacement cost refer to?
(iii) Give the formula for calculating Nominal GDP.
(iv) Give the formula for calculating Real GDP.
(v) How do we calculate Net investment from Gross investment?
(vi) How do we calculate National Income from Domestic income?
(vii) How do we calculate Factor cost from Market price?
(viii) How do we calculate GDP deflator?
(ix) What does Gross Domestic Capital Formation include?
(x) How can a ‘person or an institution’ be a resident of a country?

Q14. Differentiate between intermediate goods and final goods.

Q15. Explain the problem of double counting using example.
Q16. Differentiate between Stock and Flow.
Q17. What is Domestic territory? Write its scope.
Q18. Who is a normal resident?
Q19. Explain the flow of income in a two sector economy.
Q20. Write 5 precautions while calculating national income using income method.
Q21. Differentiate between Real Income (National Income at constant prices) and Nominal Income
(National Income at current prices).
Q22. Which is a better indicator of economic development of a nation? Real income or nominal income.
Explain using an example.
Q23. Explain any 4 limitations of using GNP as an indicator of economic welfare.
Q24. Write a short note on the following
(a) Compensation of employees (b) Net factor income from abroad
(c) Operating surplus
Q25. Differentiate between
(a) Domestic income and national income
(b) Transfer income and factor income.
Q26. Classify the following as intermediate or final goods/Expenditure. (Give Reasons)
(a) Aluminium used by a car manufacturer.
(b) Milk purchased by a household.
(c) Chalk purchased by a school.
(d) Furniture purchased by a school.
(e) Cotton purchased by a mill
(f) Mobile phones purchased by a mobile dealer.
(g) Fertilizers used by a farmer
(h) Printer purchased by a company
(i) Engine oil used by a service centre.
(j) Purchase of a refrigerator by a General Store
Q27. Classify the following as stock or flow. (Give reasons)
(a) National Income (b) Wealth (c) Salary
(d) Capital (e) Profit (f) Money supply
(g) Depreciation (h) Foreign Debt (i) Exports
(j) Sales (k) Population (l) Interest
Q28. How will you treat the following while calculating Domestic income of India?
(a) Rent received by an Indian from his property in Nepal.
(b) Salaries received by a Korean from Indian embassy in Korea.
(c) Compensation of employees to the resident of India working in Australian Embassy in India.
(d) Profit earned by ICICI bank in China.
(e) Profit earned by Burger King in India.
(f) Profit earned by Tata motors in England.
(g) Rent paid to an Indian resident by the embassy of Ethiopia in India.
Q29. Who among the following are considered Normal residents of India?
(a) Indian officials working in Indian Embassy in China.
(b) American working in Indian Embassy in USA.
(c) Indian staying in New Zealand for psychiatric treatment.
(d) Australian fan staying in India to watch India-Australia Cricket Series.
(e) Indian Working in office of WHO in India.
Q30. How will you treat the following while calculating National Income of India?
(a) Payment of Profit tax.
(b) Payment of interest by an individual to the bank.
(c) Payment of interest by a bank on individual’s savings.
(d) Old age pension
(e) Interest received by a bank on a loan given to an MNC.
(f) Scholarship given by government.
(g) Earnings of an individual from sale of shares.
(h) Lottery prize
(i) Receipts from sale of a plot
(j) Net addition to stock
(k) Profit earned by a foreign bank in India.
(l) Profit earned by an Indian bank in Argentina.
(m) Payment of electricity bill by a school.
(n) Purchase of uniforms for Nurses by a hospital
(o) Transport expenses by a firm.
(p) Purchase of bonds by an Indian firm.
(q) Fees paid to a lawyer by a firm.
(r) Fees paid by a student.
(s) Commission received by a share broker.
(t) Money received from sale of second hand motorbike.
Q31. If real GDP is Rs.200 and price index (with base = 100) is 110, Calculate Nominal GDP.
Q32. If the Real GDP is Rs.400 and Nominal GDP is Rs.450, Calculate the price index (base = 100).
Q33. If nominal income is Rs.600 and price index is 100, find real income.
Q34. Find domestic income when GNPMP = Rs. 1,20,000, indirect taxes = Rs.20,000, consumption of fixed
capital = Rs.5,000 and factor income from rest of the world = Rs.3,000
Q35. Calculate Value Added by firm A and firm B, given the following information:
Items (Rs. In
Lakh)
(i) Purchases by firm A and from abroad 60
(ii) Sales by firm B 180
(iii) Purchases by firm A from firm B 100
(iv) Domestic sales by firm A 220
(v) Exports by firm A 60
(vi) Excess of opening stock over closing stock 20
of firm A
(vii) Excess of closing stock over opening stock 30
of firm B
(viii) Purchases by firm B from firm A 100

Q36. From the following information, Calculate Gross National Product at Factor Cost by (a) income
method, and (b) expenditure method:
Items (Rs. In
crore)
(i) Factor income from abroad 10
(ii) Compensation of employees 150
(iii) Net domestic capital formation 50
(iv) Private final consumption expenditure 220
(v) Factor income to abroad 15
(vi) Change in stock 15
10
 (vii) Employer’s contribution to social security
schemes 15
(viii) Consumption of fixed capital 40
(ix) Interest 20
(x) Exports 25
(xi) Imports 30
(xii) Indirect taxes 10
(xiii) Subsidies 40
(xiv) Rent 85
(xv) Government final consumption 100
expenditure
(xvi) Profit

Q37. Calculate ‘Sales’ from the following data:

Items (Rs. In lakh)
(i) Net value added at factor cost 300
(ii) Intermediate consumption 200
(iii) Indirect tax 20
(iv) Depreciation 30
(v) Change in stocks (-) 50

Q38. Calculate ‘Value of Output’ from the following data:

Items (Rs. In lakh)
(i) Net value added at factor cost 100
(ii) Intermediate consumption 75
(iii) Excise duty 20
(iv) Subsidy 5
(v) Depreciation 10

Q39. Find Net value Added at Factor Cost:

Items (Rs. In lakh)
(i) Durable use producer goods with a life span 10
of 10 years
(ii) Single use producer goods 5
(iii) Sales 20
(iv) Unsold output produced during the year 2
(v) Taxes on production 1

Q40. Calculate (a) Operating surplus, and (b) Domestic income:

Items (Rs. In crore)
(i) Compensation of employees 2,000
(ii) Rent and Interest 800
(iii) Indirect taxes 120
(iv) Corporation tax 460
(v) Consumption of fixed capital 100
(vi) subsidies 20
(vii) Dividend 940
(viii) Undistributed profits 300
(ix) Net factor income to abroad 150
(x) Mixed Income 200

Q41. Given the following data, find Net National Product at Market Price by (a) expenditure method,
and (b) income method:
Items (Rs. In lakh)
(i) Personal consumption expenditure 1,400
(ii) Wages and salaries 1,400
(iii) Employer’s contribution to social security 200
(iv) Contribution to provident fund by the 100
employees through the employer
(v) Gross business fixed capital formation 120
(vi) Gross residential construction investment 120
(vii) Gross Public expenditure 480
(viii) Rent 100
(ix) Inventory investment 40
(x) Dividend and corporate profit tax 120
(xi) Corporate saving 80
(xii) Excess of exports over imports 40
(xiii) Interest 80
(xiv) Mixed income of self-employed 200
(xv) Net factor income to abroad 20
(xvi) Depreciation (Depreciation = Gross 0
capital formation – Net Capital formation)
(xvii) Indirect taxes 40
(xviii) Subsidy 20