Section-A

INTRODUCTORY MACROECONOMICS
UNIT 1- NATIONAL INCOME AND RELATED AGGREGATES
WORK SHEET -1
Name of the Student Roll No.
Time: 30 Min. Max. Marks: 25

1. Due to „Covid 19‟ pandemic a lot of Indians sent back to India. As a result, NRIs have tocome back and
have been staying in India and working from home. Identify which statement regarding their status in
India is true? 1
a) They are treated as normal residents of India.
b) Their income will be treated as factor income from abroad.
c) Their income will be treated as factor income to abroad.
d) No effect on National income of India.
2. Statement-1: NDP at factor cost is the income earned by the factors in the form of wages,
profits, rent, interest, etc., within the domestic territory of a country or abroad.
Statement-2: If the country is not able to replace the capital stock lost through depreciation, then GDP
will fall. 1
(a) Both Statement 1 & 2 are True
(b) Both Statement 1 & 2 are False
(c) Statement-1 is True but Statement-2 is
False (d)Statement-2 is True but Statement-1 is
False
3. Picture based questions 1

BUSINESS FIXED INVESTMENT ON

GOVERNMENT
INVESTMENT RESIDENCIAL
FIXED
CONSTRUCTION
INVESTMENT
BY HOUSEHOLDS

On the basis of the above chart answer the following question:

(a) Gross domestic capital formation
(b) Gross domestic fixed capital formation
(c) Final consumption expenditure
(d) None of these
4. Journey of Bread:
A Farmer grows wheat of ◻10000 in his farm. The flour mill owner purchases this wheat and
produces the flour of ◻25000. The bakery shop purchases this flour to produce bread of ◻ 40000 and
sells these to the consumer. What is the total value added in the Journey of bread? 1
5. A firm produces ◻ Rs.100 worth of goods per year, ◻ 20 is the value of intermediate goods used by
it during the year and ◻ 10 is the value of capital consumption . The net value added will be:
1
(A) Rs. 70 (B) Rs. 80 (C ) Rs. 100 (D) Rs. 130

6. “Machine purchased is always a final good”, Do you agree? Give reasons for your answer? 3
 7. Classify the following as intermediate goods or final goods: 3
a) Paper purchased by a publisher
b) Milk purchased by a household
c) Computers installed in an office
8. Read the following news report and answer the questions that follow. 4
In India, flattening sequential recovery, accelerating inflation and a weak labour market will Continue to act
as an impediment to sustained economic revival. Capital goods and consumer durable goods have
witnessed negative growth rate in double digits. The government might also need to look at policies to
boost consumption by the poor, who have a much higher Marginal Propensity to Consume rather than
thinking about the relatively well off, such as government employees, who were the target of
expenditure boosting measures. Overall, the amount of demand stimulus is underwhelming and we view
the impact on both fiscal and growth as quite limited.
Source: Hindustan Times; October 13th, 2020 ...

(a) Refrigerator purchased by a confectionery shop is a good.

(i) capital
(ii) intermediate
(iii) non-durable
(iv) None of these

(b) Which of the following is/are non-durable good(s)?

(i) Milk
(ii) Bread
(iii) Both (i) and (ii)
(iv) None of these

(c) Real growth of an economy can only be measured through at Constant prices.
(i) per capita income
(ii) national income
(iii) nominal income
(iv) real income

(d) Goods purchased for the purpose of............are final goods.

(i) satisfaction of wants
(ii) investment in firm
(iii) Both (i) and (ii)
(iv) None of these

9. On the basis of the given data, estimate the value of Domestic Income 4
[Link] Items Amount (◻ in crore)
1 Private final consumption expenditure 600
2 Gross fixed capital formation 200
3 Change in stock 40
4 Government final consumption expenditure 400
5 Net exports (-)40
6 Net indirect taxes 120
7. Net factor income from abroad 20
8. Consumption of fixed capital 40

OR
A) Explain the circular flow of National Income of two sector economy with flow chart/diagram? 2
B) Differentiate between real flow and money flow? 2
10. Given the following data ,find the value of operating surplus. 6
[Link] Items Amount
(◻ in crore)
1 Royalty 50
2 Rent 750
3 Private final consumption expenditure 2200
4 Profits 450
5 Interest 300
6 Net domestic product at factor cost 4000
7 Dividends 200
8 Government final consumption expenditure 1300

B) Calculate Gross value added at Market Price (GVA1mp) from the following data:
[Link] Particulars Amount
(◻ in crore)
1 Depreciation 20
2 Domestic sales 200
3 Change in stock (-) 10
4 Exports 10
5 Single use producer goods 120
6 Net indirect taxes 20
 WORK SHEET -2

NATIONAL INCOME AND ITS AGGREGATES-

BASIC CONCEPTS OF NATIONAL INCOME
Name Of The Student Roll No.
Time: 30 Min. Max. Marks: 25
1. Real flow is the flow of - 1
A. Goods only
B. Money only
C. Services only
D. Goods and services.

2. Injections are the macroeconomic variables which lead to a rise in the level of output in the economy.
Leakages are the macroeconomic variables which lead to a fall in the level of output in the economy. -
The circular flow of income remains stable if are exactly equal to injections. (Fill in the
blank) 1
[Link] the following statements and choose the correct alternatives among those given below: 1
Statement 1: Gross investment includes only inventory investment.
Statement 2: Gross investment shows net addition to the existing capital stock.
Alternatives:
A. Both the statements are true
B. Both the statements are false
C. Statement 1 is true and statement 2 is false
D. Statement 2 is true and statement 1 is false
4. Water in a stream is a - 1
A. Stock concept
B. Non-economic concept
C. Flow concept
D. Hypothetical concept
5. As a result of double counting, national income is - 1
A. Over estimated
B. Under estimated
C. Correctly estimated
D. Not estimated for entire year of accounting
6. Sugar purchased by a sweet shop is good while it is a good when it is 1
purchased by a consumer.
A. capital, final
B. final, Intermediate
C. intermediate, final
D. final, producer
7. Change in stock is negative when: 1
A. Closing stock > opening stock
B. Closing stock < opening stock
C. Closing stock =0
D. Opening stock= 01
8. Assertion (A): The goods which are used either for resale or for further production in the same
year are intermediate goods. 1
Reason(R): Intermediate goods are included in National Income.
A. Both Assertion (A) and Reason(R) are true and Reason(R) is the correct explanation
of Assertion (A).
B. Both Assertion (A) and Reason(R) are true and Reason(R) is not the
correct explanation of Assertion (A).
C. Assertion (A) is true but Reason(R) is false.
D. Assertion (A) is false but Reason(R) is true..
9. Giving reasons, state whether the following are included or not in the domestic territory of India 3
(a) Branch of an American Bank in India.
(b)Russian embassy in India.
(c)Indian embassy in Japan
10. "Increase in domestic income always leads to an Increase in National income." Do you agree withthe
given statement? Support your answer with a valid example. 4
11. Read the following passage:
National Income of India constitutes total amount of income earned by the whole nationals of our
country and originated both within and outside its territory during a particular year. The National
Income Committee in its first report wrote „A national income estimate measures the volume of
commodities and services turned out during a given period, without duplication‟. The estimates of
National Income depict the clear picture about standard of living of the community. The national
income statistics diagnose the economic else of the country and at the same time suggest remedies.
The rate of savings and investment in an economy also depends on the national income of the
country.
Moreover, the national income measures the flow of all commodities and services produced in an
economy. Thus, the National Income is not stock but a flow. It measures the total productive power
of the community during given period. Further, The National Income Committee has rightly
observed,
„National Income statistics enable an overall view to be taken of the whole economy and of the relative
positions and inter-relations among its various parts‟. Thus, the computation of national income and
its analysis has been considering an important exercise on economic literature.
Answer the following Questions:-
(i). Which territory has been referred to in the first passage by the expert? 1
(ii). Differentiate between Stock and Flow? 2
(iii). The returns for the productive powers………………..income. (Transfer/Factor) 1
12. Giving reasons, classify the following into intermediate goods and final goods:
(i) Ceiling fan purchased by a tailor for his shop.
(ii) Chalks, dusters, etc., purchased by a school.
(iii) Purchase of uniforms for nurses by a hospital. 6
WORK SHEET -3

NATIONAL INCOME AND RELATED AGGREGATES

CALCULATION OF NATIONAL INCOME
Name Of The Student Roll No.
Time: 30 Min. Max. Marks: 25
1. Read the following statements Assertion (A) and Reason (R). Choose the correct alternativegiven
below: 1
Assertion(A): Gross Domestic Product (GDP) includes income earned by non- residents.
Reason(R): GDP includes income earned within the country's borders.
Alternatives:
(A) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of
Assertion (A).
(B) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of
Assertion (A).
(C) Assertion (A) is true, but Reason (R) is false.
(D) Assertion (A) is false, but Reason (R) is true.
2. Match the events given in Column I and Column II and choose the correct alternative: 1
Column I Column II
A. Gross National Product (GNP) I. Total value of goods and services
produced within the country.
B. Net National Product (NNP) II. Income earned by citizens, regardless of
where they reside |
C. Gross Domestic Product (GDP) III. Depreciation subtracted from GNP
D. National Income (NI) IV. Total income from all sources, minus
transfer payments
Alternatives:
a) A- I, B- II, C- III, D- IV
b) A- II, B- I, C- IV, D- III
c) A- II, B- III, C- I, D- IV
d) A- III, B- I, C- IV, D- II
3. Read the following statements carefully: 1
Statement 1: In estimating GNP, only the final products are taken into account Statement 2:
The sale and purchase of shares of existing companies are included in GNP In light of the
given statements, choose the correct option from the following:
A. Statement 1 is true and Statement 2 is false.
B. Statement 1 is false and Statement 2 is true.
C. Both Statements 1 and 2 are true.
D. Both Statements 1 and 2 are false.
4. Ravi‟s mother is a housewife. She also teaches Ravi. How will you treat this act of teaching
Ravi while calculating National Income and Domestic Income? 1
a. It will be included in the National Income but not in Domestic Income
b. It will not be included in the National Income but in Domestic Income
c. It will be included both in the National Income and Domestic Income
d. It will neither be included in the National Income and nor in Domestic Income
5. If in an economy, the value of Net Factor Income from Abroad is Rs. 500 crores and the value
of Factor Income to Abroad is Rs. 150 crores, identify the value of Factor Income from Abroad. 1
a. Rs. 250 crores b. Rs. (-)350 crores c. Rs. 360 crores d. Rs. 650 crores
6. If factor cost is equal to market price, then it means that: 1
a. Indirect Taxes is greater than Subsidies b. Indirect Taxes is equal to Subsidies
c. Indirect Taxes is less than Subsidies d. none of these
7. What is the formula for calculating Net National Product (NNP)? 1
a) NNP = GDP - Depreciation b) NNP = GNP - Depreciation
c) NNP = NI + Depreciation d) NNP = NI – Depreciation
8. Read the following statements carefully: 1
Statement 1: Gross Domestic Product (GDP) is the sum total of the gross market value of all the final
goods and services added by all the sectors in the economy during a fiscal year.
Statement 2: Gross Value Added at Market Price (GVAMP) is equal to the excess of value of output
over intermediate consumption.
In the light of the given statements, choose the correct alternative from the following:
(a) Statement 1 is true and Statement 2 is false.
(b) Statement 1 is false and Statement 2 is true.
(c) Both Statements 1 and 2 are true.
(d) Both Statements 1 and 2 are false.
9. Find Gross Value Added at Market Price. 3
Sl. No. Items Amount (Rs. In lakh)
1. Depreciation 20
2. Domestic Sales 200
3. Net Change in Stocks (-)10
4. Exports 10
5. Single Use Producer Goods 120
10. Identify the name of method of calculation of national income depicting in the given below
equation and Explain the precautions that are taken while estimating national income by this method.
1+3
COE + OS + MI = NDP FC
11. Ramesh is an economist working with the Government of India. He is tasked with calculating
the National Income of India for the year 2022-23. He collects the following data:
Calculate the Net National Product at factor cost (NNPfc) 4
Sl. No. Items Amount (◻ in crores)
1 Gross Domestic Product (GDP) at MP 150
2 Net Factor Income from Abroad (NFIA) (-)10
3 Depreciation 20
4 Indirect Taxes 5
5 Subsidies 1
12. (a) Define 'net factor income from abroad'. How is it different from 'net exports'? 3+3
(b) On the basis of the data given below for an imaginary economy, estimate the Net Domestic
Product at Factor Cost (NDPFC):
Sl. No. Items Amount (in crore)
1 Household Consumption Expenditure 3000
2 Government Final Consumption Expenditure 1000
3 Net Domestic Fixed Capital Formation 1000
4 Change in Stock 200
5 Exports 500
6 Indirect Taxes 350
7 Imports 300
8 Subsidies 50
 WORK SHEET -4

NATIONAL INCOME AND RELATED AGGREGATES-

AGGREGATES OF NATIONAL INCOME
Name Of The Student Roll No.
Time: 30 Min. Max. Marks: 25
1. Net National Product equals net domestic product when 1
A. factor income from abroad is greater than factor income to abroad
B. factor income from abroad is less than factor income to abroad
C. factor income from abroad is equal to factor income to abroad
D. None of these.
2. Net National Product at market price is greater than net National Product at factor cost when 1
A. indirect tax is greater than subsidies
B. indirect tax is less than subsidies
C. indirect tax is equal to subsidies
D. None of these.
3. Depreciation is associated with 1
A. fixed capital
B. human capital
C. working capital
D. none of these
4. Assertion (A): production of food grain for self-consumption is included in GDP
Reason (R): GDP is market value of final product produced within domestic Territory of a country in
a financial year 1
Assertion (A) and Reason (R) are true and R is correct explanation of A.
A. Assertion (A) and Reason (R) are true and R is not correct explanation of A.
B. Assertion (A) is false and Reason (R) is true
C. Assertion (A) is true and Reason (R) is false.
5. Match the following and choose the correct option 1

(I). car purchased by a travel agency (A). Consumption Good

(II). sugar purchased by household (B). Intermediate Good
(III) sugarcane purchased by sugar mill (C). Capital Good

A. I (A), II (B) And III(C)

B. I (C), II (A) And III(B)
C. I (A), II (C) And III(B)
D. I (B), II (C) And III(C)
6. Which of the following is included in national income 1
[Link] obtained from kitchen garden
ii.A teacher teaching his own son at his home
A. i only
B. ii only
C. Both I & ii
D. None of the above
7. Change in stock is a .............. variable (stock/flow). 1
8. Brokerages paid for sale of second-hand cars during a financial year............included in GDP.
(are/are not).
9. Car purchased by a car dealer for resale is an intermediate good. (True/False) 1
10. For a hypothetical economy Gross Domestic Product at market price is 6800 crores. Net National
Product at factor cost is 5500 crores. Net factor income paid to abroad is 500 crores. Find the value
of depreciation. 3

11. Real GDP of a country is 16000 crores GDP at current prices is 20000 crores calculate GDP
deflator. Interpret the value of GDP deflator. 3
12. "Many goods and services which may not contribute but are included in estimating gross domestic
product." Do you agree with the given statement? Give valid reasons and support of your
answer.4
13. How will you treat following while calculating national income. Give justification for your answer
i. Salary earned by an Indian working in Japanese Embassy. 2+2+2
ii. Income earned by American in Indian Embassy at Washington.
iii. Financial aid by America to flood victims in India.
WORK SHEET -5

NATIONAL INCOME AND RELATED AGGREGATES

GDP AND WELFARE, GDP DEFLATOR
Name Of The Student Roll No.
Time: 30 Min. Max. Marks: 25
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct
alternatives given below:
1. Assertion (A): Real GDP is a better measure to make a periodic comparison in the physicaloutput of
goods and services over different years as compared to Nominal GDP. 1
Reason (R): sometimes Nominal GDP is equal to Real GDP.
Alternatives:
a) Both Assertion and Reason are true and Reason (R) is the
correct explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the
correct explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True
2. Assertion (A): Real GDP shows the change in the level of economic activity and facilitates
inter- regional and international comparison. 1
Reason (R): It is an inflation-adjusted index and accounts for an increase in the level of production in
response to the price changes.
Alternatives:
a) Both Assertion and Reason are true and Reason (R) is the
correct explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the
correct explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True.
3. When Nominal Gross Domestic product ◻1020 Cr. and price index is 125, then the Real Gross
Domestic Product will be……………………………… 1
(a) 1275 (b) 816 (c) 815 (d) 1270
4. Read the following statement and identify the correct alternative: 1
Statement 1: Nominal Gross Domestic Product is always greater than Real Gross Domestic Product.
Statements 2: When inflation rate is negative in an economy, Real Gross Domestic Product is
greater than Nominal Gross Domestic Product.
(a) Statement 1 is true and Statement 2 is false.
(b) Statement 1 is false and Statement 2 is true.
(c) Both Statements 1 and 2 are true.
(d) Both Statements 1 and 2 are false.
 5. Read the following statements and identify the correct alternative: 1
Statement 1: If the GDP of the country is rising, the welfare may not rise as a consequence, if the rise in
GDP may be concentrated in the hands of few individuals of firms.
Statements 2: Non-Monetary exchange like domestic service women perform at home etc. are
registered as part of economics activity.
(a) Statement 1 is true and Statement 2 is false.
(b) Statement 1 is false and Statement 2 is true.
(c) Both Statements 1 and 2 are true.
(d) Both Statements 1 and 2 are false.
6. Increase in Real Gross Domestic Product implies a/an....................................................in the
economy. 1
(a) Increase in the level of income (b) increase in the general price level.
(c) Increase in flow of goods and services (d) decrease in aggregate demand.
7. Identify the picture and select the best alternative related to GDP and welfare. 1

(a) Positive externalities Through production (b) Negative externalities caused by the pollution.
(c) both (A) and (B) (d) None of these
8. Increase in Real GDP is the indicator of: 1
(a) Increase in volume of Final Goods & Services (b) Increase in price of good & Servi
(c) Decrease in volume of Final Goods & Services (d) none of these.
9. Identify the issue from the picture given below associated with GDP and welfare. Explain with
the help of valid example. 3
 10. If in your locality, a new hospital is constructed and operational by the state government, it will
have externalities, both positive and negative. State one example each of both types of externalities with
reason. 4
11. Observe the given picture and explain the impact on: 4

(i)Gross Domestic Product. (ii)Welfare.

12. (a) Many goods & Services which may contribute welfare, but are not included in estimation of
GDP.” Do you agree with given statement? Give valid reason in support of your answer. 3
(b) Use the following information of an imaginary country: 3
YEAR 2021-22 2022-23 2023-24
Nominal GDP adjusted with base year price 6.5 8.0 8.8
GDP Deflator 100 140 132
(i) Calculate Nominal GDP for the F.Y 2023-24.
(ii) Calculate Nominal GDP for the F.Y 2022-23.