National Income

national income
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national income

Important notes on national income

G.D.P(Gross Domestic Product) – It is defined as the total value of goods and services produced in the geographical area of the country in a given period of time.

G.N.P(Gross National Product) – Mathematically we calculated as
⇒ G.D.P + X-Y, where X and Y is defined as

X = Income earned by Indian residence/Company from outside India
Y = Income earned by Foreign residence/Company in India.

♦  N.N.P(Net National Profit) : G.N.P – Depreciation

⇒ National Income = N.N.P – Indirect Tax + Subsidiary

E.C.B(External Commerical Borrowing): Irepresentsnt cross-border financing ware in   Overseas financial institutions provide the loan to Indian Corporates.

Foreign Trade :

(i) The balance of payment – Difference between the Value of import and export of physical goods and invisible items. (services)

(ii) The balance of trade – Difference between the value of import and export of physical goods.

Stoke Exchanges: These are the financial intermediaries who provide an electronic platform to the buyer and seller of the services to execute their transactions.

♦  Important stoke exchange in India.

(1) B.S.E(Bombay Stock Exchange): It was established in 1875. Its head office is in Mumbai. This is the oldest exchange in Asia.

⇒  SENSEX(Sensitive Index): It is market indicator index of B.S.E. It consists of 30 good Companies of various Sectors.

(2) N.S.E(National Stoke Exchange): It is also located in Mumbai.

NIFTY(National Index Of Fifty): It is the market indicator of N.S.E. It consists of 50 Companies of a various sector.

DEMAT A/c (Dematerialized account number): The account where share transactions of investment are being maintained in electric form.

♦ Commodity Market: The market was open trading of the different commodity takes place is called commodity market.example: Food, grains, gold, Silver

There is two important commodity stoke exchange in India :

(i) M.C.X (Multi Commodity Exchange): It is a part of B.S.Exchange

(ii) N.M.C.E.X (National Multi Commodity Exchanges): It is a part of N.S.Exchange

♦  Authorised Capital: It is the maximum amount that the company can raise through subscription from the public.

Core Sector: Economy needs the basic infrastructure for development. Development of industries like Cement,
Iron and Steel, Petroleum, Heavy machine etc. It is known as core Sector.

Closed Economy: There is no import or export of goods and services is called closed economic.

♦  Mixed Economy: It refers to that economic system in which both Private and Public sector co-exist, Indian Economy is the mixed economy.

Brain Drain: The migration of people like Doctor, Scientist, technology experts from India to Foreign this migration is called brain drain.

♦  Bridge Loan: A loan made my bank for a short period to make up for a temporary Shortage of Cash.

♦  Blue Chip: It is Concerned with such equity shares whose purchase is extremely safe means it does not involve any type of risk of loss is called a blue chip.

Important Questions Related to national income


Q1.The term utility means—
(a) Usefulness of a commodity
(b) The satisfaction which a commodity yields
(c) The service which a commodity is capable of rendering
(d) None of these

Answer : (b) The satisfaction which a commodity yields

Q2.In an economy, the sectors are classified into public and private on the basis of:

(a)employment condition
(b)ownership of enterprises
(c)nature of economic activities
(d)use of raw materials
Answer : (b)ownership of enterprises

Q3.If the change in demand for a commodity is at a faster rate than change in the price of the commodity then the demand is—
(a) Perfectly inelastic
(b) Elastic
(c) Perfectly elastic
(d) Inelastic

Answer : (b) Elastic

Q4.’Equilibrium Price’ is that price which—
(a) Maximizes producers profit
(b) Equates consumers and producers surplus
(c) Maximize consumers satisfaction
(d) Equates supply and demand

Answer : (d) Equates supply and demand

Q5.Preparation of butter, ghee by household for their own use is a part of
(a) consumption
(b) own-account production
(c) household capital formation
(d) industrial production

Answer : (b) own-account production

Q6.Which of the following is not helpful in controlling money supply?
(a) Free market policy
(b) CRR
(c) Bank Rate
(d) Change in margin requirement

Answer : (a) Free market policy

Q7. An economy is in equilibrium when
A) Planned consumption exceeds planned saving
B) Planned consumption exceeds planned investment
C) Intended investment equals intended saving
D) Intended investment exceeds intended saving

Answer : C) Intended investment equals intended saving

Q8. Which of the following is correctly matched with regard to thermal power projects in India?

(a)Kawas – Gujarat
(b)Korba – Uttar Pradesh
(c)Ramagundam – Tamil Nadu
(d)Talchar – Andhra Pradesh

Answer : (a)Kawas – Gujarat

Q9. Which one of the following was the purpose for which Deepak Parekh Committee was constituted?

(a)To study the current socio-economic conditions of certain minority communities
(b)To suggest measures for financing the development of infrastructure
(c)To frame a policy on the production of genetically modified organisms
(d)To suggest measures to reduce the fiscal deficit in Union Budget

Answer : (b)To suggest measures for financing the development of infrastructure

Q10. The best Index to represent standard of living in a country
(a) Poverty Ratio
(b) National Income
(c) GDP
(d) Per capita Income

Answer : (d) Per capita Income

Q11.Net National Product (NNP) of a country is:
(a) GDP minus depreciation allowances
(b) GDP plus net income from abroad
(c) GNP minus net income from abroad
(d) GNP minus depreciation

Answer : (d) GNP minus depreciation

Q12. Which of the following can be called as a part of the Service Sector?
(a) Textile Mills
(b) Banking
(c) Coal Mines
(d) Agriculture

Answer : (b) Banking

Q13. Which sector of Indian Economy contributes largest to the Gross National Product?
(a) Primary Sector
(b) Secondary Sector
(c) Tertiary Sector
(d) Public Sector

Answer : (c) Tertiary Sector

Q14. Which of the following is definitely a major indication of the State of the economy of a country?
(a) Rate of GDP growth
(b) Rate of inflation
(c) Number of Banks in a country
(d) Stock of foodgrains in a country.

Answer : (a) Rate of GDP growth

Q15. National Income estimates in India are prepared by:
(a) Planning commission
(b) Reserve Bank of India
(c) Central Statistical Organisation
(d) Indian Statistical Institute

Answer : (c) Central Statistical Organisation

16. Which Ministry is responsible for calculating GDP in India?

(A) Ministry of Finance

(B) Ministry of Commerce and Industry

(C) Ministry of Central Statistical and Program Implementation

(D) Ministry of Consumer Affairs

Answer : (C) Ministry of Central Statistical and Program Implementation

Q17. Per Capita Income is obtained by dividing National Income by:

(a)Total population of the country
(b)Total working population
(c)Area of the country
(d)Volume of the capital used

Answer : (a)Total population of the country

18. If the contribution of the agricultural sector is decreasing in a country’s economy,
then what conclusion can be drawn?

(A) The country is growing in the direction of being a developed nation

(B) The country is moving towards becoming developing nation

(C) The country is moving towards becoming less developed nation

(D) The economic growth rate of the country has stopped

Answer : (A) The country is growing in the direction of being a developed nation

19. What percentage of Indians pays income tax?

(A) 15%

(B) 20%

(C) 9%

(D) 3%

Answer : (D) 3%

Q20. Who wrote the book describing the theory of economic drain of wealth from India during British rule?

(b)Mahatma Gandhi
(d)Jawaharlal Nehru
Answer : (c) DadabhaiNaoroji



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