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Questions and Answers
What is the total value of a country's final output of all new goods and services produced during the year?
What is the total value of a country's final output of all new goods and services produced during the year?
- Gross Domestic Product
- National Income (correct)
- Gross National Income
- Gross National Product
Which of the following statements is true?
Which of the following statements is true?
- Personal income refers to the income of individuals of a country.
- The income at their disposal after paying direct taxes is called disposable income.
- Both (a) and (b) (correct)
- None of the above
Which sector has the maximum share in National Income in India?
Which sector has the maximum share in National Income in India?
- Local Sector (correct)
- Public Sector
- Private Sector
- None of the above
Which of the following is not required while calculating Gross National Product (GNP)?
Which of the following is not required while calculating Gross National Product (GNP)?
Which of the following is associated with the term deflation in economy?
Which of the following is associated with the term deflation in economy?
The national output is measured at:
The national output is measured at:
Most important source of capital formation in India has been:
Most important source of capital formation in India has been:
Which of the following actions taken by the RBI is expansionary?
Which of the following actions taken by the RBI is expansionary?
The difference between total expenditure and total receipts except loans and other liabilities is called what?
The difference between total expenditure and total receipts except loans and other liabilities is called what?
Who is responsible for presenting the Union Budget before the Parliament?
Who is responsible for presenting the Union Budget before the Parliament?
During depression and unemployment, which type of budget is recommended?
During depression and unemployment, which type of budget is recommended?
Inflation relates to which of the following?
Inflation relates to which of the following?
When deficit financing increases, what actions will the RBI take on CRR and SLR?
When deficit financing increases, what actions will the RBI take on CRR and SLR?
The market in which loans of money can be obtained is called what?
The market in which loans of money can be obtained is called what?
Which of the following statements correctly define the meaning of reverse repo rate?
Which of the following statements correctly define the meaning of reverse repo rate?
Which of the following best describes the goal of Monetary Policy?
Which of the following best describes the goal of Monetary Policy?
Open market operations refer to what?
Open market operations refer to what?
The trough of a business cycle occurs when what hits its lowest point?
The trough of a business cycle occurs when what hits its lowest point?
The period of the business cycle in which real GDP is increasing is called what?
The period of the business cycle in which real GDP is increasing is called what?
During business cycles, the opposite of a trough is what?
During business cycles, the opposite of a trough is what?
What is the business cycle?
What is the business cycle?
Which of the following describes the phase of a business cycle that occurs after a trough and before a peak?
Which of the following describes the phase of a business cycle that occurs after a trough and before a peak?
A short-term variation in relation to calendar or time of a day is called what?
A short-term variation in relation to calendar or time of a day is called what?
Which among the following is a qualitative tool of monetary policy?
Which among the following is a qualitative tool of monetary policy?
In a free economy, inequalities of income are due to what?
In a free economy, inequalities of income are due to what?
What action should the government take on its overall expenditure to check inflationary forces?
What action should the government take on its overall expenditure to check inflationary forces?
A country's gross domestic product can be calculated using which formula?
A country's gross domestic product can be calculated using which formula?
Indian Economy is an example of what?
Indian Economy is an example of what?
Most pertinent problem while computing National Income is what?
Most pertinent problem while computing National Income is what?
If an economy is in equilibrium at the point where plans to save and to invest are equal, then Government expenditure must be what?
If an economy is in equilibrium at the point where plans to save and to invest are equal, then Government expenditure must be what?
If we compare GDP and GNP, then:
If we compare GDP and GNP, then:
The basis of fiscal policy is to maintain a balance between what?
The basis of fiscal policy is to maintain a balance between what?
The difference between fiscal deficit and interest payment during the year is called what?
The difference between fiscal deficit and interest payment during the year is called what?
Difference between revenue deficit and grants for creation of capital assets is called what?
Difference between revenue deficit and grants for creation of capital assets is called what?
As the level of interest rates in the economy falls, the demand for money, ceteris paribus:
As the level of interest rates in the economy falls, the demand for money, ceteris paribus:
The low point in the business cycle is referred to as the:
The low point in the business cycle is referred to as the:
Which of the following is a reason for inflation?
Which of the following is a reason for inflation?
Along with the Ministry of Finance, which other institution plays an important role in the monetary policy of India?
Along with the Ministry of Finance, which other institution plays an important role in the monetary policy of India?
Revenue equals expenditure in what kind of budget?
Revenue equals expenditure in what kind of budget?
The immediate effect of credit creation by banks is what?
The immediate effect of credit creation by banks is what?
What is the impact on a bank’s profitability when the RBI increases CRR and SLR rates?
What is the impact on a bank’s profitability when the RBI increases CRR and SLR rates?
If the RBI adopts an expansionist open market policy, this means it will:
If the RBI adopts an expansionist open market policy, this means it will:
Which of the following is the objective of Fiscal Policy?
Which of the following is the objective of Fiscal Policy?
If the economy is in an inflationary period, what action would Fiscal Policy most likely take?
If the economy is in an inflationary period, what action would Fiscal Policy most likely take?
Measurement of domestic savings occurs in which sector?
Measurement of domestic savings occurs in which sector?
To avoid double counting when GDP is estimated, economists do what?
To avoid double counting when GDP is estimated, economists do what?
Coincident indicators tend to reach their peaks and troughs at about the same time as what?
Coincident indicators tend to reach their peaks and troughs at about the same time as what?
Which of the following is the basis of determining National Income?
Which of the following is the basis of determining National Income?
State which is not included while computing National Income of India:
State which is not included while computing National Income of India:
State the largest contribution in Gross Domestic Savings:
State the largest contribution in Gross Domestic Savings:
Study Notes
National Income and Related Concepts
- National Income is the total value of a country’s final output of all new goods and services produced in a year.
- Personal income represents the income of individuals, while disposable income is what remains after direct taxes are paid.
- In India, the local sector holds the maximum share in National Income.
Calculating Gross National Product (GNP)
- GNP does not require per capita income of citizens for its calculation.
- Four elements are crucial for calculating GNP: private investments, net foreign investments, and purchase of goods and services.
Monetary Policy and Deflation
- Deflation is associated with a decrease in money supply in relation to available goods and services.
- Market prices are used to measure national output.
Budgeting and Fiscal Policies
- Government expenditure during periods of depression and unemployment should be in deficit to stimulate the economy.
- Revenue deficit is defined as the difference between total expenditure and total receipts, excluding loans. Fiscal deficit is more comprehensive, including the need for loans.
Business Cycles
- The trough of a business cycle occurs when aggregate economic activity hits its lowest point.
- Expansion occurs when real GDP is increasing, while the peak is the highest point of economic activity.
- Business cycles reflect the natural rise and fall of economic growth over time.
Tools of Monetary Policy
- Qualitative tools include credit rationing, while quantitative tools involve setting reserve requirements and interest rates.
- The money market is where loans can be obtained, while reverse repo rate is the rate at which the RBI borrows from commercial banks.
Inflation and Interest Rates
- Inflation refers to rising price levels and decreasing money value, typically caused by factors like deficit financing and structural deficiencies.
- Lower interest rates generally lead to increased demand for money within the economy.
Budget Definitions and Government Roles
- A balanced budget occurs when revenue equals expenditure; surplus and deficit budgets show gains and losses, respectively.
- The Finance Minister is responsible for presenting the Union Budget before the Parliament.
National Income Measurement
- India's gross domestic product (GDP) can be calculated using the formula GDP = C + G + I + NX, where C is consumption, G is government spending, I is investment, and NX is net exports.
- The household sector is the most significant contributor to domestic savings, while issues like non-monetized consumption can complicate national income calculations.
Indicators and Economic Stability
- Coincident indicators reflect economic performance and align with real GDP fluctuations.
- Fiscal policy aims to balance public spending with tax rates to achieve economic stability.
Key Contributions to Savings and Income Calculation
- The largest contributions to Gross Domestic Savings come from the household sector, while certain types of incomes, such as unemployment allowance, are excluded in national income calculations.
- Measurement of national income relies on production figures of goods and services, underlining its importance in economic health assessments.
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Test your knowledge on key concepts of national income with this quiz. Answer questions about gross domestic product, national income, and disposable income. Perfect for economics students looking to reinforce their understanding.
