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National Income and Economic Growth 01
Question
1
of 15
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Q1. If saving exceeds investment, the national income will
A.
fall
B.
fluctuate
C.
remain constant
D.
rise
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
In classical economic models
Q2. The data of estimation of India’s National income is issued by?
A.
Planning Commision
B.
National Data Center
C.
Central Statistical Organsation
D.
None of above
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
The Central Statistical Organisation (CSO) is responsible for coordinating statistical activities and preparing National Accounts.
Q3. In the short run, a producer continues his production as long he covers
A.
variable cost
B.
fixed cost
C.
average cost
D.
marginal cost
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
A
A firm will produce as long as it covers its Variable Costs; otherwise
Q4. One of the problems in calculating the national India correctly is
A.
under employment
B.
inflation
C.
non-nonetised consumption
D.
low saving
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
A
Under-employment in the informal sector makes it difficult to accurately estimate value addition.
Q5. If the price of an inferior good falls, its demand
A.
rises
B.
falls
C.
remains constant
D.
can be any of these
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
For typical inferior goods
Q6. If an economy is equilibrium where plans to save and to invest are equal, then government expenditure must be
A.
zero
B.
equal to government income
C.
larger than government income
D.
negative
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
This condition implies a balanced budget where the government spends exactly what it earns in revenue.
Q7. The base year for computation of National Income in India is- (Historical)
A.
1990-1991
B.
1993-1994
C.
1999-2000
D.
2000-2001
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
B
In the late 90s, the base year was 1993-94. Note: This base year is periodically updated by the CSO/NSO.
Q8. Per Capita Income is obtained by dividing National Income by:
A.
Total population of the country
B.
Total working population
C.
Area of the country
D.
Volume of the Capital used
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
A
Per Capita Income (PCI) measures the average income earned per person in a given area in a specified year.
Q9. The new GDP series released by the CSO in February 1999 used base price of:
A.
1991-1992
B.
1992-1993
C.
1993-1994
D.
1994-1995
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
The CSO shifted the base year from 1980-81 to 1993-94 during the February 1999 revision.
Q10. Highest per capita income is inversely co-related with population engaged in:
A.
service
B.
industry
C.
agriculture
D.
All of these
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
Generally, as an economy grows, the share of the population in low-income agriculture decreases while income rises.
Q11. In India, Hindu Rate of Growth is associated with which of the following?
A.
Birth Rate
B.
Population
C.
Per Capita Income
D.
National Income
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
Raj Krishna coined the term 'Hindu Rate of Growth' to describe the 3.5% slow growth of the Indian economy (1950s-1980s).
Q12. Per Capita Income Rs 20 in 1867-68 was first ascertained by:
A.
Dadabhai Naoroji
B.
R.C. Dutta
C.
M.G. Ranade
D.
W. Hunter
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
A
Dadabhai Naoroji (Grand Old Man of India) was the first to estimate national income in his book 'Poverty and Un-British Rule in India'.
Q13. Which of the following is used for measurement of distribution of income?
A.
Laffer Curve
B.
Engel’s Law
C.
Gini-Lorenz Curve
D.
Philip Curve
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
The Lorenz Curve and the Gini Coefficient are standard statistical measures of income or wealth inequality.
Q14. The most appropriate measure of a country’s economic growth is its:
A.
Gross Domestic Product
B.
Net Domestic Product
C.
Net National Product
D.
Per Capita Real Income
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
D
Real Per Capita Income accounts for both inflation and population growth, making it a better indicator of standard of living.
Q15. Which sector of Indian Economy shown remarkable expansion in the last decade?
A.
Primary Sector
B.
Secondary Sector
C.
Teritary Sector
D.
Mining Sector
ANSWER & SOLUTION
MARK FOR REVIEW
Correct Answer:
C
The Service (Tertiary) sector has consistently been the largest contributor to India's GDP growth.
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