Chapter-1 National Income and Related Aggregates — Online MCQ Test
ECONOMICS · Grade 12 · CBSE(NCERT)
Practice Chapter-1 National Income and Related Aggregates with a free chapter-wise online MCQ test.
This chapter covers: circular flow of income - GDP - NDP - GNP - NNP - value added method - income method - expenditure method.
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Chapter-1 National Income and Related Aggregates — Important Questions & Answers
What is GDP (Gross Domestic Product)?
- A. Total value of goods and services produced within a country's borders in a year
- B. Total value of goods and services produced by citizens abroad
- C. Total value of final goods only, excluding services
- D. Total income earned by all residents regardless of location
Answer: A. Total value of goods and services produced within a country's borders in a year
GDP measures the monetary value of all finished goods and services produced within a country's borders during a specific period.
GDP measures the monetary value of all finished goods and services produced within a country's borders during a specific period.
Which of the following is included in NDP (Net Domestic Product)?
- A. GDP minus depreciation of capital assets
- B. GDP plus net income from abroad
- C. GDP minus indirect taxes
- D. GDP plus government subsidies
Answer: A. GDP minus depreciation of capital assets
NDP = GDP - Depreciation. It accounts for the wear and tear of capital assets during production.
NDP = GDP - Depreciation. It accounts for the wear and tear of capital assets during production.
Which sector's income is NOT directly included in the income method of calculating national income?
- A. Wages and salaries
- B. Profits of firms
- C. Rent from property
- D. Value of goods stolen
Answer: D. Value of goods stolen
Only legitimate incomes earned through production are included. Stolen goods represent illegal transfers, not income from productive activities.
Only legitimate incomes earned through production are included. Stolen goods represent illegal transfers, not income from productive activities.
How does net income from abroad affect the relationship between GDP and GNP?
- A. GNP = GDP + Net income from abroad
- B. GNP = GDP - Net income from abroad
- C. GNP = GDP × Net income from abroad
- D. GNP = GDP ÷ Net income from abroad
Answer: A. GNP = GDP + Net income from abroad
GNP = GDP + Net income from abroad, where net income from abroad = income earned by nationals abroad minus income earned by foreigners domestically.
GNP = GDP + Net income from abroad, where net income from abroad = income earned by nationals abroad minus income earned by foreigners domestically.
Which scenario represents a situation where national income could increase while material welfare might decrease?
- A. Increased production of goods with higher prices due to inflation
- B. Higher real wages across all sectors of the economy
- C. Increased production of eco-friendly and sustainable goods
- D. Growth in healthcare and education services
Answer: A. Increased production of goods with higher prices due to inflation
If nominal national income increases primarily due to inflation while real output remains stagnant, people's actual purchasing power and material welfare may decrease despite higher nominal income figures.
If nominal national income increases primarily due to inflation while real output remains stagnant, people's actual purchasing power and material welfare may decrease despite higher nominal income figures.