List of top Economics Questions on National Income Accounting asked in CBSE CLASS XII

In an economy, exclusion of _______ may lead to under estimation of the value of Gross Domestic Product (GDP).

Read the following text carefully:
“A country’s total National Income (NI) at the end of the year is ₹ 80,000 crore. During the same year, the Gross Domestic Product (GDP) increased by ₹ 2,00,000 crore. Price index for capital goods at the end of year is ₹ 15 lakh crore. Additionally, country invested ₹ 8,000 crore in new capital goods industries.”
In the light of the above text, classify the items as ‘stock’ or ‘flow’ variables with valid arguments. OR The value of Nominal Gross National Product (GNP) of an economy was ₹ 2,500 crore in a particular year. The value of Gross National Product (GNP) of that country during the same year, estimated at the prices of base year was ₹ 3,000 crore.

[(i)] Estimate the Gross National Product (GNP) deflator (in percentage).
[(ii)] “The price level has risen between the base year and the year under consideration.” Defend or refute the statement with suitable argument.

Read the following statements carefully:
Statement 1: Brokerage earned by a dealer of second hand cars is included in the estimation of National Income.
Statement 2: Imputed value of production for self-consumption is included in National Income.

Evaluate the impact of `LPG Reforms' (1991) on the Indian Economy.

Identify the correct statement:

Purchase of a car by a household is an example of:

Meera and Shahid are two classmates, who were comparing India's economic growth over the years. Meera referred to the increase in Gross Domestic Product (GDP) at current prices prevailing in market, while Shahid insisted on considering GDP after adjusting for inflation. Their debate on which of the two measures gives a true picture of people’s well-being, remained inconclusive. Considering the above mentioned situation, elaborate with valid reason, which of the two variables is considered a better indicator of welfare and why?

Two friends, Devanshi and Harshit, were discussing whether prize money from lottery winnings, should be included in India's National income. Harshit was of the view that it should be included, while Devanshi did not agree with him. As their Economics teacher, guide them with correct treatment of the same with valid argument.

"Under the provisions stated in Section 20 and Section 21 of the Reserve Bank of India (RBI) Act, 1934, the RBI is mandated to handle the banking operations of the Government of India."
In the light of the given statement, elaborate the indicated function of the Reserve Bank of India.

Read the following statements carefully:
Statement 1: Depreciation of currency is an economic action undertaken by the government of a nation under the fixed exchange rate system.
Statement 2: Under the floating exchange rate system, authorities actively intervene in the foreign exchange market by way of maintaining foreign exchange reserves.

“In the Indian Banking System, the Statutory Liquidity Ratio (SLR) plays a vital role in controlling the credit creation capacity of the Commercial Banks, as it _______”

Calculate the value of Net Value Added at Factor Cost (NVA_FC):

S. No.	Particulars	Amount (in ₹ crore)
(i)	Operating Surplus	3,740
(ii)	Increase in unsold stock	600
(iii)	Sales	10,625
(iv)	Purchase of raw materials	2,625
(v)	Consumption of fixed capital	500
(vi)	Subsidies	400
(vii)	Indirect taxes	1,200

On the basis of the following data, estimate the value of National Income (NNP_FC):

S.No.	Items	Amount (in ₹ crore)
(i)	Household Consumption Expenditure	$ 800 $
(ii)	Gross Business Fixed Capital Formation	$ 150 $
(iii)	Gross Residential Construction Investment	$ 120 $
(iv)	Government Final Consumption Expenditure	$ 270 $
(v)	Excess of Imports over Exports	$ 20 $
(vi)	Inventory Investments	$ 50 $
(vii)	Gross Public Investments	$ 130 $
(viii)	Net Indirect Taxes	$ 20 $
(ix)	Net Factor Income from Abroad	$ -25 $
(x)	Consumption of Fixed Capital	$ 40 $

Calculate Net Domestic Product at Market Price (NDP_MP) from the data given below:

S. No.	Particulars	Amount (in ₹ lakh)
(i)	Gross Domestic Product at Factor Cost	2200
(ii)	Subsidies	50
(iii)	Indirect Taxes	70
(iv)	Net Factor Income from Abroad	100
(v)	Consumption of Fixed Capital	150
(vi)	Net Exports	40

Elaborate the likely impact of construction of two new Express Highways on the Gross Domestic Product (GDP) and Welfare in an economy.

Distinguish between Net Factor Income from Abroad (NFIA) and Net Exports (X -- M).

On the basis of the given data, estimate the value of National Income (NNP_FC):

S.No.	Items	Amount (in ₹ Crore)
(i)	Household Consumption Expenditure	1,800
(ii)	Gross Business Fixed Capital Formation	1,150
(iii)	Gross Residential Construction Expenditure	1,020
(iv)	Government Final Consumption Expenditure	2,170
(v)	Excess of Imports over Exports	720
(vi)	Inventory Investments	540
(vii)	Gross Public Investments	1,300
(viii)	Net Indirect Taxes	240
(ix)	Net Factor Income from Abroad	(-) 250
(x)	Consumption of Fixed Capital	440

Suppose there are only three firms in an imaginary economy, viz. X, Y and Z. During a year, the following transactions took place in the economy:
(I) Firm X sold goods worth ₹ 20,000 to Firm Y and ₹ 12,000 to Firm Z.
(II) Firm Y sold goods worth ₹ 11,000 to Firm X and ₹ 35,000 to Firm Z.
(III) Firm Z sold goods worth ₹ 57,000 to households for final consumption.
On the basis of the given transactions, calculate the value of Gross Domestic Product at Market Price (GDP\textsubscript{MP}) in the economy.

To arrive at the value of Net Value Added at Market Price (NVA$_{MP}$), ....... must be ....... to/from Gross Value Added at Market Price (GVA$_{MP}$). (Choose the correct option to fill in the blanks)

calculate the value of Net Value Added at Factor Cost (NVAFC):

S. No.	Particulars	Amount (In ₹ crore)
(i)	Operating Surplus	3,740
(ii)	Increase in unsold stock	600
(iii)	Sales	10,625
(iv)	Purchase of raw materials	2,625
(v)	Consumption of fixed capital	500
(vi)	Subsidies	400
(vii)	Indirect taxes	1,200

Suppose, there are only three firms in a hypothetical economy, viz. A, B and C. During a given period of time, the following transactions were undertaken by them: \[ \text{(I) Firm A sold goods worth ₹2,000 to Firm B and ₹1,200 to Firm C.} \\ \text{(II) Firm B sold goods worth ₹1,100 to Firm A and ₹3,500 to Firm C.} \\ \text{(III) Firm C sold to households for final consumption, goods worth ₹5,700.} \] Estimate the value of Net Domestic Product at Market Price (NDP_MP), assuming depreciation to be ₹120.

``All producer goods are essentially capital goods.''
Defend or refute the given statement, with the help of a suitable example.

S.No.	Items	Amount (in ₹ crore)
(i)	Household Consumption Expenditure	\( 800 \)
(ii)	Gross Business Fixed Capital Formation	\( 150 \)
(iii)	Gross Residential Construction Investment	\( 120 \)
(iv)	Government Final Consumption Expenditure	\( 270 \)
(v)	Excess of Imports over Exports	\( 20 \)
(vi)	Inventory Investments	\( 50 \)
(vii)	Gross Public Investments	\( 130 \)
(viii)	Net Indirect Taxes	\( 20 \)
(ix)	Net Factor Income from Abroad	\( -25 \)
(x)	Consumption of Fixed Capital	\( 40 \)