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National Income: Concepts, Measurement and Pioneers
Practice national-income with 20 free MCQ questions covering economics. Detailed explanations in English and Hindi, perfect for UPSC, SSC, and competitive exam preparation.
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National Income: Concepts, Measurement and Pioneers20:00
national-income — Answer Key & Explanations (20 Questions)
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Attempt the quiz above first, then review every question with its correct answer and a short explanation below.
Q1.Gross Domestic Product (GDP) is the total value of:
- A.all goods ever produced in the country
- B.final goods and services produced within a country in a year✓ Correct Answer
- C.exports minus imports only
- D.goods produced by citizens abroad only
Explanation: GDP counts final output produced within the domestic territory, whoever produces it.
Q2.GNP is equal to GDP plus:
- A.net indirect taxes
- B.net factor income from abroad✓ Correct Answer
- C.depreciation
- D.subsidies
Explanation: GNP = GDP + net factor income from abroad.
Q3.Net National Product (NNP) is equal to GNP minus:
- A.subsidies
- B.net factor income from abroad
- C.indirect taxes
- D.depreciation✓ Correct Answer
Explanation: NNP = GNP minus depreciation (consumption of fixed capital).
Q4.Per capita income is obtained by dividing national income by the:
- A.number of workers
- B.number of households
- C.total population✓ Correct Answer
- D.number of taxpayers
Explanation: Per capita income = national income / population.
Q5.Which sector makes the largest contribution to India's GDP?
- A.services sector✓ Correct Answer
- B.agriculture sector
- C.manufacturing sector
- D.mining sector
Explanation: The services (tertiary) sector contributes more than half of India's GVA.
Q6.In India, national income statistics are compiled by the:
- A.Reserve Bank of India
- B.NITI Aayog
- C.National Statistical Office under the Ministry of Statistics and Programme Implementation✓ Correct Answer
- D.Finance Commission
Explanation: The NSO (formerly the CSO) publishes GDP estimates.
Q7.GDP at factor cost is obtained from GDP at market prices by subtracting:
- A.net indirect taxes (indirect taxes minus subsidies)✓ Correct Answer
- B.depreciation
- C.net factor income from abroad
- D.direct taxes
Explanation: Factor cost = market price minus net indirect taxes.
Q8.Gross Value Added (GVA) is obtained from GDP by subtracting:
- A.depreciation
- B.imports
- C.net taxes on products (taxes minus subsidies)✓ Correct Answer
- D.wages
Explanation: GVA at basic prices = GDP minus product taxes plus product subsidies.
Q9.Real GDP differs from nominal GDP because real GDP:
- A.is adjusted for changes in prices✓ Correct Answer
- B.includes only exports
- C.excludes services
- D.is measured in foreign currency
Explanation: Real GDP is valued at constant (base-year) prices, removing the effect of inflation.
Q10.The GDP deflator is calculated as:
- A.(real GDP / nominal GDP) × 100
- B.(nominal GDP / real GDP) × 100✓ Correct Answer
- C.nominal GDP minus real GDP
- D.real GDP × population
Explanation: The deflator measures the average price level of all goods and services in the economy.
Q11.Which of the following is NOT one of the three methods of estimating national income?
- A.Tax collection method✓ Correct Answer
- B.Product (value added) method
- C.Income method
- D.Expenditure method
Explanation: The three methods are the product (output), income and expenditure methods.
Q12.Double counting in national income is avoided by counting only:
- A.raw materials
- B.final goods or value added at each stage✓ Correct Answer
- C.intermediate goods
- D.imported goods
Explanation: Counting intermediate goods as well as final goods would count the same value twice.
Q13.Which of the following is included in national income?
- A.old-age pension (a transfer payment)
- B.sale of second-hand goods
- C.gifts received from relatives
- D.wages and salaries earned by workers✓ Correct Answer
Explanation: Factor incomes such as wages are counted; transfer payments and second-hand sales do not add new production.
Q14.National income at factor cost is equal to:
- A.GDP at market prices
- B.NNP at factor cost✓ Correct Answer
- C.GNP at market prices
- D.GVA at basic prices
Explanation: National income is defined as NNP at factor cost.
Q15.Which of the following is excluded from the calculation of GDP?
- A.the salary of a school teacher
- B.the wages of a paid driver
- C.rent paid for a house
- D.the unpaid household work of family members✓ Correct Answer
Explanation: Only goods and services exchanged for money are normally counted; unpaid household work is left out.
Q16.Nominal GDP is measured at:
- A.current prices✓ Correct Answer
- B.constant prices
- C.base-year prices
- D.international prices
Explanation: Nominal GDP uses the prices of the year in which output is produced.
Q17.Who made the first scientific estimate of India's national income in 1868?
- A.V. K. R. V. Rao
- B.P. C. Mahalanobis
- C.R. C. Dutt
- D.Dadabhai Naoroji✓ Correct Answer
Explanation: Dadabhai Naoroji estimated per capita income in "Poverty and Un-British Rule in India".
Q18.Who made the first estimate of India's national income using scientific methods in 1931?
- A.Dadabhai Naoroji
- B.Findlay Shirras
- C.V. K. R. V. Rao✓ Correct Answer
- D.Amartya Sen
Explanation: V. K. R. V. Rao's estimate for 1931-32 is regarded as the first scientific one.
Q19.The first National Income Committee of India (1949) was headed by:
- A.V. K. R. V. Rao
- B.D. R. Gadgil
- C.C. Rangarajan
- D.P. C. Mahalanobis✓ Correct Answer
Explanation: The committee under P. C. Mahalanobis produced the first official national income estimates.
Q20.Which economist is known as the father of national income accounting?
- A.John Maynard Keynes
- B.Adam Smith
- C.Simon Kuznets✓ Correct Answer
- D.Milton Friedman
Explanation: Simon Kuznets developed national income accounts and won the 1971 Nobel Prize in Economics.