Economics Concepts and National Income

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Questions and Answers

What is the general goal of monetary policy?

To regulate the economy effectively (correct)

To increase direct taxation

To ensure full employment (correct)

To control interest rates

What is meant by the structural composition of the economy?

The total population engaged in agriculture

The level of government taxation

The efficiency of public service units

The contribution of different sectors to GDP (correct)

How does the export of mangoes by India relate to its national income measurement?

It does not affect any national income measurement

It affects direct tax generation

It influences the GDP calculation method (correct)

It impacts agricultural subsidy allocations

What is the basic difference between market prices and factor costs?

Market prices include taxes, while factor costs do not Signup and view all the answers

Which of the following is not a direct benefit attributed to a strong industrial sector?

Doubling farmers' income Signup and view all the answers

In the context of the economic environment assessment system, what is the focus of the analysis?

Interaction between economy and environment Signup and view all the answers

What indicator is most commonly used to measure overall economic performance?

Gross national product Signup and view all the answers

Which of the following items is subtracted from GNP during its calculation?

Depreciation of capital Signup and view all the answers

What does the term 'public expenditure' generally refer to?

Overall government spending activities Signup and view all the answers

What goal are labor policy measures typically aimed at achieving?

Increasing employment opportunities Signup and view all the answers

What does the net indirect tax amount to in the provided data?

$18,120 Signup and view all the answers

Which of the following statements about budget deficits is correct?

Deficits can lead to an increase in debt as a flow. Signup and view all the answers

What is a primary benefit of import substitution policy as mentioned?

It fosters national self-sufficiency. Signup and view all the answers

What is the correct description of the public sector enterprises' contributions to the government?

They generate significant non-tax revenue. Signup and view all the answers

Which of the following is NOT considered a negative impact of the urban-rural migration during economic transitions?

Increased rural labor availability. Signup and view all the answers

Which statement correctly identifies a characteristic of deficits?

Deficits manifest as expenses over a specific time frame. Signup and view all the answers

Which industry is considered part of the public sector based on the given data?

Bharat Electronics Limited (BEL). Signup and view all the answers

What is one of the key questions that needs an answer in every economy?

How is the exchange of goods conducted? Signup and view all the answers

Which of the following statements related to current taxation and borrowing is inaccurate?

Increased borrowing always improves national budgets. Signup and view all the answers

What is one possible adverse effect of economic reforms mentioned?

Greater disparity in income distribution. Signup and view all the answers

Which purpose arises from government property transferred to a legal heir?

Escheat Signup and view all the answers

The value of wheat in the dough is a part of which method of measuring national income?

Expenditure Method Signup and view all the answers

Which of the following is not a correctly stated component of the expenditure method for measuring national income?

Personal Income Tax Signup and view all the answers

Which sequence correctly represents the concepts from broad to narrow related to national income?

GNP - Factor Cost - NNP - Personal Income Signup and view all the answers

Which of the following options is responsible for a decrease in access to loans for the poor?

Lack of collateral support Signup and view all the answers

The correct order of concepts transitioning from broad to narrow for national income is which of the following?

GNP - GDP - NNP - Disposable Income Signup and view all the answers

Which method classifies the components of national income as derived from expenditure?

Expenditure Approach Signup and view all the answers

Which option does not represent a component of Gross National Product?

Foreign Investment Signup and view all the answers

What distinguishes net domestic product from gross domestic product?

Exclusion of depreciation Signup and view all the answers

What characterizes a liquidity trap?

The point where speculative demand for money is infinitely inelastic. Signup and view all the answers

Which of these factors is essential in determining the distribution of resources?

Government Policy Signup and view all the answers

Which statement is correct regarding the relationship of liquidity preference and speculative demand?

When speculative demand is infinitely inelastic, liquidity preference becomes perfectly elastic. Signup and view all the answers

In a liquidity trap, what happens to the liquidity preference curve?

It becomes perfectly elastic. Signup and view all the answers

What is an implication of speculative demand being infinitely elastic?

Even large amounts of cash have no demand. Signup and view all the answers

Which of the following correctly describes the liquidity preference concept?

It describes the relationship between interest rates and money demand. Signup and view all the answers

How does a liquidity trap influence monetary policy effectiveness?

Limits effectiveness as interest rates approach zero. Signup and view all the answers

Which statement reflects the behavior of money demand during a liquidity trap?

Demand remains unchanged regardless of interest rates. Signup and view all the answers

What does it indicate when a liquidity preference curve becomes perfectly inelastic?

There is no change in money demand despite changes in interest. Signup and view all the answers

What occurs at the point where both speculative demand and liquidity preference curve become elastic?

Normal monetary policies become ineffective. Signup and view all the answers

Which condition best describes the scenario when speculative demand for money is infinitely inelastic?

Cash is highly desired regardless of yield. Signup and view all the answers

What is the concept of 'transfer payments' as it relates to future generations?

Payments necessary to reduce generational burden Signup and view all the answers

Which of the following is a type of transfer payment specified for promoting well-being?

All of the above Signup and view all the answers

What percentage of India's population was estimated to be below the poverty line in 2011-12?

21.9% Signup and view all the answers

Which initiative is related to the National Rural Employment Guarantee Act?

Rural employment schemes Signup and view all the answers

In which economic concept are large outputs produced with minimal labor and capital inputs referred to?

Comprehensive farming Signup and view all the answers

What was the percentage of women working in India’s primary sector until 2011-2012?

62.8% Signup and view all the answers

What major goal does the National Rural Employment Guarantee Act aim to achieve?

Provide guaranteed employment in rural areas Signup and view all the answers

Which of the following is NOT considered a transfer payment?

Public housing Signup and view all the answers

What strategy is commonly used to enhance skill production through competition?

Skills incentives Signup and view all the answers

What is the primary focus of the 'LED' program initiated by NABARD?

Promotion of local entrepreneurship Signup and view all the answers

Study Notes

Liquidity Trap

It is when the speculative demand for money becomes infinitely inelastic and the liquidity preference curve becomes perfectly elastic.

Interest Rate and Speculative Demand for Money

When interest rates are at their maximum, speculative demand for money becomes zero.

NABARD's E-Shakti Project

Aim is to digitize financial and non-financial data of all Self Help Groups.
The project was launched in March 2015 by NABARD.

National Income

NNP is reduced by central assistance to states in the market value of goods and services during national income accounting.

Monetary Policy

The general objective of monetary policy is to ensure price stability in the economy.

The Structure of the Economy

The structural composition of the economy relates to the contribution of different sectors to the GDP.

National Income Accounting

Exports of mangoes by India are a part of the expenditure method of national income accounting.

Net Economic Welfare (NEW)

Congestion in urban living is deducted from GNP while calculating NEW.

Environmental Accounting System

The interlinkage between economy and environment is analyzed by UN Statistical Office in the environmental accounting system.

Objective of Government Budget

The government budget aims at increasing GDP, reallocating resources, and achieving balanced regional development.

Public Sector Reforms

The Public Sector Reforms were significantly impacted after the 9th Five-Year Plan, leading to a reduction in public sector dominance.

Real GDP

Real GDP measures the exact output of goods and services in an economy regardless of price changes.

National Income Measurement

Exports are not a correctly stated component of the expenditure method of national income measurement.

National Income Concepts: Order

The correct order of national income concepts from broadest to narrowest is: NNP at factor cost - NNP at market prices - Personal income - Disposable income.

National Income Concepts: Incorrect Order

The incorrect order of national income concepts from broadest to narrowest is: NNP at market prices - NNP at factor cost - Gross national income - Per capita income.

Debt Management

According to David Ricardo, taxation and borrowing are equally effective means of managing high deficits.

Public Sector Enterprises (PSUs)

The profit received by the government from Public Sector Enterprises (PSUs) is a source of non-tax revenue.

Budget Deficit

A budget deficit increases stock of debt. It is a flow that adds to the stock of debt.

Gross Domestic Product (GDP)

GDP minus depreciation is equal to Net Domestic Product (NDP).

Relations: Landlords and Agricultural Workers

Joan Robinson described the changing nature of the relationship between landlords, dominant class, and agricultural workers, as a shift from exploitation to protection.

Financial Year in India

The financial year in India runs from April 1st to March 31st.

Bond Price

Under competitive market conditions, the price of a bond should always equal its present value.

Green Revolution: Negative Impacts

Migration from urban to rural areas is not a negative impact of the Green Revolution.

Public Sector Industry

BHEL is a public sector industry in India.

Import Substitution Policy

Self-reliance is a major advantage of the import substitution policy.

Basic Questions for Economics

How to exchange goods? is not one of the fundamental questions that every economy must answer .

Transfer Payments

Unemployment allowance, student scholarships, and retirement pensions are all considered transfer payments.

Resident of India

Indians working in foreign embassies and Indian citizens residing abroad are both considered residents of India.

Extensive Farming

Farming that involves large tracts of land with minimal labor and capital input is referred to as extensive farming.

Women's Participation in the Primary Sector

In 2011-2012, 62.8% of working women in India were employed in the primary sector.

LEDP (Lakhpati Diwas Program)

The Lakhpati Diwas Programme was launched in 2015 by NABARD to encourage entrepreneurship.

Benefits of International Competition

Incentive to produce efficiently is a benefit of international competition.

Poverty in India

In 2011-12, it was estimated that 21.9% of the Indian population lived below the poverty line.

Objectives of Five-Year Plans

Security was not an objective of the Five-Year plans in India.

Government Revenue

Transfer payments are included in government revenue.

National Rural Employment Guarantee Act

The National Rural Employment Guarantee Act (NREGA), now known as the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA), guarantees 100 days of waged employment annually to rural households.

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Description

This quiz covers key concepts in economics such as liquidity traps, monetary policy, and national income accounting. Test your knowledge on the effects of interest rates, the structure of the economy, and initiatives like NABARD's E-Shakti project. Challenge yourself and deepen your understanding of how these elements interact in economic theory.