List of top Economics Questions on Income and Expenditure Account

Refer the given text carefully: According to the Economic Survey 2024-25, the government budget’s projections for the fiscal year 2025-26 indicate that gross direct tax revenue will rise by 12.7%, while gross indirect tax collections are expected to grow by 8.3% relative to FY 2024-25. Direct taxes include income tax and corporate tax, reflecting earnings and profits of households and firms. It plays a key role in revenue growth of the government. Indirect taxes encompass Goods and Services Tax (GST), custom duties and other transaction-based levies. Higher growth rate projected for direct taxes suggests a push to enhance tax buoyancy through improved compliance and reforms. On the other hand, indirect taxes are expected to benefit from consumption trends and Goods and Services Tax (GST) administration improvements. The balance tax strategy aims to mobilize resources while supporting fiscal consolidation and sustainable economic growth. On the basis of the above passage and common understanding, answer the following questions: (i) Differentiate between the two types of taxes indicated in the above text, with suitable examples. (ii) Elaborate the likely consequences of the tax projections made by the government.

Michel, an entrepreneur of Country Zeta, borrowed \$5 million from an overseas bank to expand his textile business. During the same financial year, the Government of Country Zeta secured a loan of \$30 Billion from an International Financial Institution to manage the ongoing Balance of Payments. Samuel, an Economics student categorised both of these transactions as 'autonomous transactions' in the BoP account of the country. Do you agree with his classification? Justify your answer with valid reasons.

(I) Estimate the value of subsistence level of consumption expenditure from the following data, about an economy which is in equilibrium:

[(i)] National Income ($Y$) = ₹ 1,500 crore
[(ii)] Marginal Propensity to Consume ($MPC$) = 0.8
[(iii)] Investment Expenditure ($I$) = ₹ 150 crore

(II) “An economy facing unplanned accumulation of inventories would try to increase its Aggregate Demand.”
Defend or refute the given statement with valid arguments.
(III) Identify the monetary measure being referred to each of the following and discuss whether the tool would be used during a situation of excess demand or deficient demand:

[(i)] Buying government securities (G-Sec) from public.
[(ii)] Encouraging commercial banks to park their surplus funds with the Reserve Bank of India (RBI).

OR
(I) Complete the following table:

The Aggregate Demand (AD) curve lies parallel to consumption curve, indicating that both have _________.

Read the following flow chart carefully and choose the correct option:

Choose the correct consumption function from the options given below with reference to the illustrated diagram.

Compare the development experiences of India and China on the basis of GDP growth and Sectoral contribution.

Distinguish between `Revenue Receipts' and `Capital Receipts' in a Government Budget.

Assertion : $APC$ can be greater than 1.
Reason (R): At very low levels of income, consumption can exceed income.

If $MPC = 0.5$, what will be the value of the Investment Multiplier ($K$)?

In an economy, when __________ is insufficient to achieve the level of output corresponding to the full employment, the difference is termed a deflationary gap.

Calculate Domestic Income (NDP_FC) from the data given below:

S. No.	Particulars	Amount (in ₹ lakh)
(i)	Gross National Product at Market Price (GNP_MP)	2,500
(ii)	Consumption of Fixed Capital (Depreciation)	200
(iii)	Goods and Services Tax (Indirect Tax)	20
(iv)	Subsidies	50
(v)	Net Factor Income from Abroad (NFIA)	50
(vi)	Changes in Stocks	30
(vii)	Unexpected Loss of a Fixed Asset	500

Modernization is an important economic planning objective that focuses on ................ (Choose the correct option to fill in the blank) (i) Adoption of innovative technology
(ii) Bringing positive change in social outlook
(iii) Equal distribution of income and wealth
(iv) Abolition of intermediaries

“Problem of Double Counting leads to overestimation of output in an economy.”
Justify the given statement with the help of suitable example.

“Domestic income is always less than national income.”
Do you agree with the given statement? Support your answer with valid arguments.

State and explain any two precautions that must be taken while estimating national income by income method.

Aggregate expenditure in the economy during an accounting year is also known as ................
(Choose the correct option to fill in the blank)

Suppose, the consumption function is given as:
\[ C = 205 + 0.9Y \quad \text{(where C = Total Consumption and Y = National Income)} \]
The value of Investment Multiplier (K) would be ................
(Choose the correct option to fill in the blank)

Using the given information, complete the following table: (Choose the correct option)

Paradox of Thrift implies:

Value of MPS (Marginal Propensity to Save) is increased from 0.4 to 0.5. What would be the impact on Multiplier ?

A consumer wants to consume two goods X and Y. The price of the goods are ₹2 per unit and ₹5 per unit respectively and his income is ₹30. What will be the slope of the budget line?