Macroeconomics: National Income Accounting

Topics in this chapter

• National Income Aggregates
• Aggregate Conversion Relationships
• National Income Measurement Methods
• Expenditure Components and Investment
• Nominal, Real GDP and Deflator
• Inclusions, Imputations and Exclusions
• GDP, Welfare and Distribution

Cheat sheet

Practice questions

1. Question 1Q-A628C5

   Which of the following transactions is included in the domestic product of the current year?

   1. A.Purchase of shares of a company in the stock market
   2. B.Sale of a second-hand car between two households
   3. C.Government payment of an old-age pension
   4. D.Payment made for current legal services by a household
   See the answer and solution
2. Question 2Q-44D2A7

   An economy has a GDP at market price of ₹1,200 crore, depreciation of ₹100 crore, indirect taxes of ₹80 crore, and subsidies of ₹20 crore. What is its NDP at factor cost?

   1. A.₹1,000 crore
   2. B.₹1,040 crore
   3. C.₹1,100 crore
   4. D.₹1,160 crore
   See the answer and solution
3. Question 3Q-9B1E8C

   A country's nominal GDP is ₹660 crore and its GDP deflator is 120, with the base year deflator equal to 100. What is the real GDP at base-year prices?

   1. A.₹528 crore
   2. B.₹550 crore
   3. C.₹660 crore
   4. D.₹792 crore
   See the answer and solution
4. Question 4Q-5789D3

   Why is GDP not considered a complete measure of the economic welfare of a country?

   See the answer and solution
5. Question 5Q-97BBAD

   In an economy, net factor income from abroad is positive. Compared with GDP, which statement is necessarily true, assuming both are measured at the same price basis?

   1. A.GNP exceeds GDP by the amount of net factor income from abroad.
   2. B.GDP exceeds GNP by the amount of net factor income from abroad.
   3. C.GNP and GDP must be equal.
   4. D.The relationship cannot be determined even when net factor income from abroad is known.
   See the answer and solution