Chapter Exam

Chapter 2: National Income — Online MCQ Test

Q: National income is commonly measured as the sum of all ______ income earned by factors of production in a country during a year.

Answer: B. factor — National income refers to the total factor income earned by residents of a country in a year. It includes wages, rent, interest, and profit.

Q: Which of the following is the correct full form of GDP?

Answer: A. Gross Domestic Product — GDP stands for Gross Domestic Product. It measures the total value of final goods and services produced within the domestic territory of a country.

Q: If GDP is measured at market prices, which of the following is added to obtain national income from Net Domestic Product at factor cost?

Answer: C. Net factor income from abroad — National income is obtained by adding net factor income from abroad to Net Domestic Product at factor cost. This gives NNP at factor cost, which is the same as national income.

Q: A country’s Gross National Product (GNP) is higher than its GDP when:

Answer: A. Net factor income from abroad is positive — GNP equals GDP plus net factor income from abroad. If income received from abroad exceeds income paid abroad, GNP becomes greater than GDP.

Q: Which of the following is NOT a problem in estimating national income?

Answer: D. Perfectly measurable underground economy — An underground economy is not perfectly measurable; in fact, it is one of the difficulties. The other options are genuine problems in national income estimation.

ECONOMICS · CLASS 12th · Tamil Nadu State Board

Practice Chapter 2: National Income with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 12th ECONOMICS. This chapter covers: Explains the key measures of a country's economic output such as GDP GNP NDP and NNP along with the three standard methods of calculating national income: product income and expend.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 2: National Income — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 12th ECONOMICS — Chapter 2: National Income, with answers and explanations. These are sample questions; the exam has its own separate question set.

National income is commonly measured as the sum of all ______ income earned by factors of production in a country during a year.

A. money
B. factor ✓
C. government
D. trade

Answer: B. factor
National income refers to the total factor income earned by residents of a country in a year. It includes wages, rent, interest, and profit.

Which of the following is the correct full form of GDP?

A. Gross Domestic Product ✓
B. General Domestic Product
C. Gross Development Product
D. Great Domestic Production

Answer: A. Gross Domestic Product
GDP stands for Gross Domestic Product. It measures the total value of final goods and services produced within the domestic territory of a country.

If GDP is measured at market prices, which of the following is added to obtain national income from Net Domestic Product at factor cost?

A. Indirect taxes
B. Depreciation
C. Net factor income from abroad ✓
D. Subsidies

Answer: C. Net factor income from abroad
National income is obtained by adding net factor income from abroad to Net Domestic Product at factor cost. This gives NNP at factor cost, which is the same as national income.

A country’s Gross National Product (GNP) is higher than its GDP when:

A. Net factor income from abroad is positive ✓
B. Net factor income from abroad is negative
C. Depreciation is zero
D. Indirect taxes are higher than subsidies

Answer: A. Net factor income from abroad is positive
GNP equals GDP plus net factor income from abroad. If income received from abroad exceeds income paid abroad, GNP becomes greater than GDP.

Which of the following is NOT a problem in estimating national income?

A. Non-availability of reliable data
B. Difficulty in valuing self-consumed output
C. Double counting
D. Perfectly measurable underground economy ✓

Answer: D. Perfectly measurable underground economy
An underground economy is not perfectly measurable; in fact, it is one of the difficulties. The other options are genuine problems in national income estimation.

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