Solution: (a)
Per capita income or average income or income per person is a measure of mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population
In calculating National Income which of the following is included?
(a) Services of housewives
(b) Pensions
(c) Income of smugglers
(d) Income of watchmen
Solution: (d)
National Income is defined as the sum total of all the goods and services produced in a country, in a particular period of time. Normally this period con sists of one year duration, as a year is neither too short nor long a period. National product is usually used synonymous with National income. Alfred Marshall in his ‘Principle of Economics’ (1949) defines National income as “The labour and capital of a country, acting on its natural resources, produce annually a certain net aggregate of commodities, material and immaterial, including services of all kinds…..and net income due on account of foreign investments must be added in. This is the true net National income or Revenue of the country or the national dividend.” So the inocme of watchmen will be included while computing it.
Who propounded the ‘market law’?
(a) Adam Smith
(b) J.B. Say
(c) T.R. Malthus
(d) David Recardo
Solution: (b)
Say’s law, or the law of market, is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say (1767–1832), who stated that “products are paid for with products” and “a glut can take place only when there are too many means of production applied to one kind of product and not enough to another
Capital Output Ratio measures ______
(a) it’s per unit cost of production
(b) the amount of capital invested per unit of output
(c) the ratio of capital depreciation to the quantity of output
(d) the ratio of working capital employed to the quantity of output
Solution: (b)
Capital output ratio is the ratio of capital used to produce an output over a period of time. This ratio has a tendency to be high when capital is cheap as compared to other inputs. For instance, a country with abundant natural resources can use its resources in lieu of capital to boost its output; hence the resulting capital output ratio is low.
Which of the following is a better measurement of Economic Development?
(a) GDP
(b) Disposable income
(c) NNP
(d) Per capita income
Solution: (d)
Per capita income or average income or income per person is the mean income within an economic aggregate, such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross National Income) and dividing it by the total population. Measurement of personal income is the best measure of economic well-being of individuals and nation. Besides, it helps to show the level of inequality in a society or country.
Which of the statements is correct about India’s national income?
(a) Percentage share of agriculture is higher than services
(b) Percentage share of industry is higher than agriculture
(c) Percentage share of services is higher than the industry
(d) Percentage share of services is higher than agriculture and industry put together
Solution: (d)
The services sector has the largest share in the GDP, accounting for more than 50%. Industry accounts up to 28% of the GDP and employ 14% of the total workforce. Agriculture and allied sectors like forestry, logging and fishing accounted for 15% of the GDP.
Which of the following is not included in the National Income?
(a) Imputed rent of owner-occupied houses
(b) Government expenditure on making new bridges
(c) Winning a lottery
(d) Commission paid to an agent for the sale of the house
Solution: (c)
National income is the total value a country’s final output of all new goods and services produced in one year. Transfer payments are not a part of the national income so they are cut from national income to get n.n.p in order to arrive national income such payments are bad debts incurred by banks, payments of pensions, charity, scholarships etc. Privatesector transfers include charitable donations and prizes to lottery winners.
Who prepared the first estimate of National Income for the country?
(a) Central Statistical Organisation
(b) National Income Committee
(c) Dadabhai Naoroji
(d) National Sample Survey Organisation
Solution: (c)
Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural pro duction and then adding a certain percentage as no agricultural production. However, such method can only been called as a non-scientific method. The first person to adopt a scientific procedure in estimating the national income was Dr. VKRV Rao in 1931.
Which one of the following is not a method of measurement of National Income?
(a) Value-Added Method
(b) Income Method
(c) Investment Method
(d) Expenditure Method
Solution: (c)
Primarily there are three methods of measuring national income. The methods are product method, income method and expenditure method. Product method is given by Dr. Alfred Marshall, income method by A.C. Pigou and expenditure method by Dr. Irving Fisher. The ‘Investment Method’ is used for trading properties where evidence of rates is slight, such as hotels, cinema, car park and etc.
The Net National Product 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 allowances
Solution: (d)
Net national product (NNP) is the total market value of all final goods and services produced by residents in a country or other polity during a given time period (gross national product or GNP) minus depreciation. The net domestic product (NDP) is the equivalent application of NNP within macroeconomics, and NDP is equal to gross domestic product (GDP) minus depreciation: NDP = GDP – depreciation.
