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Questions and Answers
What type of good is milk purchased by households classified as?
What type of good is milk purchased by households classified as?
Which sector is primarily involved in the production of goods through agriculture?
Which sector is primarily involved in the production of goods through agriculture?
Which of the following methods is used to calculate National Income in India?
Which of the following methods is used to calculate National Income in India?
What does an increase in the production of final goods generally lead to?
What does an increase in the production of final goods generally lead to?
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Which of the following is an example of a derived demand?
Which of the following is an example of a derived demand?
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Among the following, which is not considered a factor payment?
Among the following, which is not considered a factor payment?
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Which of the following is an example of a flow variable?
Which of the following is an example of a flow variable?
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What does the Circular Flow model represent?
What does the Circular Flow model represent?
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Which of the following is included in real flow?
Which of the following is included in real flow?
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Which services are provided by families to a firm?
Which services are provided by families to a firm?
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The primary sector includes:
The primary sector includes:
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Which service is included in the Tertiary Sector?
Which service is included in the Tertiary Sector?
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Which of the following is not considered a flow?
Which of the following is not considered a flow?
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Which of the following is the employment theory related to?
Which of the following is the employment theory related to?
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Which of the following is the actual definition of transfer payments?
Which of the following is the actual definition of transfer payments?
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Assertion (A): The flour purchased by a baker is considered an intermediate good. Reason (R): The flour is used to produce bread, cakes, and biscuits to be sold to the consumer.
Assertion (A): The flour purchased by a baker is considered an intermediate good. Reason (R): The flour is used to produce bread, cakes, and biscuits to be sold to the consumer.
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Which of the following statements regarding exports is correct?
Which of the following statements regarding exports is correct?
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Which statement accurately describes the relationship between producer goods and consumer goods?
Which statement accurately describes the relationship between producer goods and consumer goods?
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Which of the following is considered an intermediate product?
Which of the following is considered an intermediate product?
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Which of the following is not classified as a final good?
Which of the following is not classified as a final good?
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Why are intermediate goods excluded from the measurement of National Income?
Why are intermediate goods excluded from the measurement of National Income?
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What is the primary focus of Macro Economics?
What is the primary focus of Macro Economics?
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What does the study of the General Price Level focus on?
What does the study of the General Price Level focus on?
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Which term describes an increase in the stock of capital?
Which term describes an increase in the stock of capital?
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Study Notes
Assertion and Reason
- Export is a flow variable; it's measured over a period of time, not at a specific point in time.
- The size of the population doesn't directly influence exports.
- Both the assertion and reason are false.
Statement I and II
- All producer goods are not necessarily capital goods. For example, raw materials used in production are producer goods but not capital goods.
- Only consumers are not the final users of final goods; businesses can also use final goods, like computers, as part of their operations.
- Both statements are false.
Intermediate Product
- Wheat used by a flour mill is an intermediate product; it's used in the production process to create a final good.
- The other options represent final goods consumed by individuals or businesses.
Final Good
- Chalk, dusters, etc. purchased by a school; fertilizers purchased by farmers, and wheat used by a flour mill are all intermediate goods.
- They're used to produce final goods, not consumed directly.
- All of the options represent intermediate goods.
National Income
- Intermediate goods are excluded from national income to avoid double counting.
- The value of intermediate goods is already included in the price of final goods.
Macro Economics
- Macroeconomics studies the overall economy and its behavior, including national income, employment, inflation, and economic growth.
General Price Level
- The general price level, or inflation, is a macroeconomic concept.
Employment Theory
- Employment theory is a macroeconomic concept, dealing with factors affecting employment levels and unemployment in the overall economy.
Stock of Capital
- An increase in the stock of capital is called capital formation.
Stock
- Wealth is a stock concept; it represents a quantity at a specific point in time.
Circular Flow
- The circular flow of income represents the flow of goods and services, and money, between different sectors of the economy.
Factors Affecting National Income
- Factor income is included in both factor and transfer income.
- Milk purchased by households is a final good, while milk purchased by a sweet shop is an intermediate good.
- Intermediate goods remain within the production boundary; they aren't final goods.
- National income only includes final goods; avoiding double counting.
- Circular flow shows the flow of goods and services between different sectors.
- The tertiary sector is also known as the service sector.
- A flow is an economic variable measured over a specific period.
- Agriculture belongs to the primary sector.
- National income calculation in India is done using the expenditure method.
- Increased production of final goods leads to higher economic welfare.
- The Human Development Index (HDI) measures a country's economic development.
True or False
- Intermediate goods have a derived demand: True
- Final goods have a direct demand: True
- Bread is always a consumer good: False
Multiple Choice Questions
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Inventory is a stock concept, representing a quantity at a specific point in time. Change in inventory is a flow concept, measured over a period.
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Capital is a stock concept. It represents the amount of assets, like machinery and buildings, at a specific point in time.
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A free uniform provided to defense personnel is not a factor payment; it's a non-monetary benefit.
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Goods purchased for satisfying wants or investment are final goods.
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Quantity of money, wealth, and quantity of wheat stored in a warehouse are all stock concepts.
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Consumption, investment, and income are all flow concepts, measured over a period.
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Both Goods and Services are included in real flow
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Families provide land, labor, capital, and enterprise to firms.
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The primary sector includes agriculture.
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Communication belongs to the tertiary sector.
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Capital is a stock concept, not a flow concept.
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Employment theory is related to macroeconomics.
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Transfer payments are payments made without any exchange of goods or services, such as social security benefits.
Assertion and Reason
- Flour used by a baker is an intermediate good, as it's used to produce final goods like bread, cakes, and biscuits.
- Both the assertion and reason are true, and the reason correctly explains the assertion.
- Intermediate goods are not included when calculating GDP because their value is already reflected in the value of final goods.
- Both the assertion and reason are true, and the reason correctly explains the assertion.
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