Practice Test – National Income and Indian Economy
Try solving a: Practice Test – National Income and Indian Economy. At the end of this post, you can download the PDF of the practice test for self-practice.
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Note; This practice test contains 15 questions of 1 mark each and Question 16 is 4 marks and Question 17 and 18 is 6 marks.
1. Which of the following is an example of transfer payment:
a. Free meals in the company canteen
b. Employers’ contribution to social security
c. Retirement pension
d. Old-age pension
Answer. d. Old-age pension.
Reason: The pension is income for those who receive it, however, no new income is generated in the economy, hence it is a transfer payment.
Retirement pensions are like a deferred wage. These are relevant to factor services rendered earlier by the recipients and are included in the estimation of national income. Old-age pensions are unilateral payments and are not included in the estimation of national income.
A transfer payment is a one-way payment to a person or organization which has given or exchanged no goods or services for it. This contrasts with a simple “payment,” which in economics refers to a transfer of money in exchange for a product or service.
2. Providing the reason, explain whether the following are included in the domestic product of India.
Profits earned by a branch of the foreign bank in India
Answer. Yes, Profit earned by foreign companies in India will be included in the domestic product of India as they lie within the country’s domestic territory.
3. Providing the reason, explain whether the following will be included in the domestic product of India.
Payment of salaries to its staff by an embassy located in New Delhi
Not included. Payment of salaries to its staff by an Embassy located in New Delhi will not be included in the domestic income of India, as it is the domestic territory of the country whose embassy it is.
4. Nominal GNP is the same as,
a. GNP at constant prices
b. Real GNP.
c. GNP at current prices
d. GNP less net factor income from abroad
Answer. c. GNP at current prices
5. Giving reasons classify the following into intermediate products and final products
Furniture purchased by a school.
Answer. Furniture purchased by a school is a final product because the school is the final user of the furniture and no value is added to the furniture.
6. How will you treat the following in estimating national income of India? Give reasons for your answer.
Value of bonus shares received by shareholders of a company.
Answer. The value of bonus shares received by shareholders of a company is not included in the estimation of the National Income of India because these are just financial transactions, not contributing to the flow of goods and services in the economy.
7. How will you treat the following in estimating national income of India? Give reasons for your answer.
Interest received on loan given to a foreign company in India.
Answer. Interest received on a loan given to a foreign company in India is included in estimating the National Income of India as a part of Net Factor Income from Abroad.
8. Giving reasons classify the following into intermediate products and final products
Chalk, duster, etc, purchased by a school.
Answer. Intermediate goods refer to those Goods and services which are purchased for resale, for further production, and completely used up during the same year. Because chalks, dusters, etc. purchased by a school are intermediate goods as these are used up in the process the value -addition during the year.
9. In how many sectors is the occupational structure of India is divided?
(A) One (B) Two (C) Three (D) Four
Answer. C) Three. Primary, secondary and tertiary sectors.
10. What is the tax or duty on imports called?
(A) Tariff (B) Quota (C) Export (D) None of these
Answer. D) None of these. Customs duty refers to the tax imposed on goods when they are transported across international borders. In simple terms, it is the tax that is levied on the import and export of goods. The government uses this duty to raise its revenues, safeguard domestic industries, and regulate the movement of goods.
Duties imposed on the import of goods is known as customs duty. Duty on goods manufactured domestically and part of an intrastate transaction is known as excise duty. Tariffs are imposed on goods imported or exported by the manufactures of a country to an international country.
11. The country’s growth of aggregate real output was less than ______ during the first half of the twentieth century.
12. ______ of agriculture increased the burden of revenue on farmers.
Answer. Commercialization. Commercialization of agriculture is a phenomenon where agriculture is governed by commercial consideration i.e. certain specialized crops began to be grown not for consumption in the village but sale in national and even in the international market. The commercialization of agriculture in India began during British rule.
13. The second stage of demographic transition began after _____ in India.
Answer. After 1921 with a high birth rate, low death rate leading to a population explosion.
14. Indian economy served as a source of _______ for the British industry and a market for its finished goods.
Answer. Raw material. Deindustrialization was imposed by the Britishers.
15. India’s first official census was undertaken in _______
16. Solve the following:
17. Solve the following:
18. Solve the following question:
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I hope it is understandable to you all.
You can read more posts by me on national income:
- Real and nominal GDP
- National income
- National income formula list
- Value-added method
- Income method
- Expenditure method
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