1. National Income refers to:
A) Total money in circulation
B) Money value of all final goods & services produced in a country in a year
C) Total income of all households
D) Total savings of the people
Answer: B
Explanation: National Income = value of final goods & services produced within a country in one year.
2. Who is known as the father of National Income accounting?
A) Adam Smith
B) Simon Kuznets
C) Alfred Marshall
D) Keynes
Answer: B
Explanation: Simon Kuznets developed national income measurement in the US → Nobel Prize in 1971.
3. Which of the following is not included in national income?
A) Rent of land
B) Transfer payments
C) Wages of labor
D) Profits of firms
Answer: B
Explanation: Transfer payments (pensions, subsidies) are not payments for production → excluded.
4. Which of the following best describes GDP?
A) Market value of all final goods & services produced within a country in one year
B) Income earned by citizens abroad
C) Net value of goods exported
D) Gross value added minus depreciation
Answer: A
Explanation: GDP = value of all final goods & services produced within domestic territory.
5. GNP at market price =
A) GDP + Net factor income from abroad
B) GDP – Depreciation
C) GDP + Transfer payments
D) GDP – Indirect taxes
Answer: A
Explanation: GNP = GDP + income earned by nationals abroad – income earned by foreigners domestically.
6. Net National Product (NNP) is obtained by:
A) GNP – Depreciation
B) GDP – Transfer payments
C) GNP + Subsidies
D) GNP – Indirect taxes
Answer: A
Explanation: NNP = GNP – depreciation (capital consumption).
7. National Income at factor cost =
A) NNP at market price – Indirect taxes + Subsidies
B) GDP – Depreciation
C) GNP – Transfer payments
D) NNP + Transfer payments
Answer: A
Explanation: NI at factor cost adjusts market price to factor cost.
8. Which of the following is included in national income?
A) Illegal income
B) Sale of old goods
C) Commission on sale of second-hand goods
D) Transfer payments
Answer: C
Explanation: Only services rendered (commission) are included, not second-hand goods.
9. Per capita income is obtained by:
A) GDP ÷ Population
B) National Income ÷ Population
C) GNP ÷ Working population
D) NNP ÷ Adult population
Answer: B
Explanation: Per capita income = National Income / Total population.
10. Which concept measures economic welfare better than GDP?
A) GNP
B) NNP
C) Net National Income at Factor Cost
D) Disposable Income
Answer: D
Explanation: Disposable Income = income available for consumption & saving.
11. Personal Income means:
A) Income earned by factors of production
B) Income actually received by individuals
C) National income at factor cost
D) Income of government only
Answer: B
Explanation: Personal income = income actually received, whether earned or not (includes transfer payments).
12. Disposable Personal Income =
A) Personal income – direct taxes
B) National income – depreciation
C) Personal income – indirect taxes
D) GDP – subsidies
Answer: A
Explanation: DPI = Personal income – personal direct taxes.
13. Real National Income means:
A) NI measured at current prices
B) NI adjusted for inflation
C) NI including transfer payments
D) NI excluding exports
Answer: B
Explanation: Real NI = constant prices (inflation adjusted).
14. Nominal National Income refers to:
A) NI at base year prices
B) NI at current year prices
C) NI after adjusting taxes
D) NI excluding savings
Answer: B
Explanation: Nominal = current prices.
15. The concept of “Green GDP” measures:
A) GDP at market prices
B) GDP adjusted for environmental costs
C) GDP at constant prices
D) GDP including subsidies
Answer: B
Explanation: Green GDP = GDP – environmental degradation cost.
16. Which of the following is a flow concept?
A) Wealth
B) Capital
C) National Income
D) Assets
Answer: C
Explanation: National Income is measured over a period of time (flow).
17. Stock concept among the following is:
A) National Income
B) Capital
C) Exports
D) Savings
Answer: B
Explanation: Capital = stock at a point in time.
18. Double counting problem in national income arises due to:
A) Including only final goods
B) Including transfer payments
C) Including intermediate goods
D) Excluding depreciation
Answer: C
Explanation: Intermediate goods counted twice → double counting.
19. To avoid double counting, we include only:
A) Gross output
B) Final goods & services
C) Intermediate goods
D) Transfer payments
Answer: B
Explanation: Only final goods included in NI.
20. Which of the following is not part of GDP?
A) Production of goods in India by foreign firms
B) Production abroad by Indian firms
C) Services of teachers in India
D) Construction of roads in India
Answer: B
Explanation: GDP = production within domestic territory only.
21. Net factor income from abroad (NFIA) =
A) Exports – Imports
B) Income earned by Indians abroad – Income earned by foreigners in India
C) Taxes – Subsidies
D) Personal income – Transfer payments
Answer: B
Explanation: NFIA adjusts GDP → GNP.
22. Gross Domestic Product deflator is:
A) Ratio of Nominal GDP to Real GDP × 100
B) Ratio of Real GDP to Nominal GDP × 100
C) Real GDP – Nominal GDP
D) Nominal GDP + Real GDP
Answer: A
Explanation: GDP deflator = (Nominal GDP ÷ Real GDP) × 100.
23. Value Added Method avoids double counting by:
A) Subtracting intermediate consumption from output
B) Adding transfer payments
C) Excluding exports
D) Including imports
Answer: A
Explanation: Value added = Output – Intermediate consumption.
24. The circular flow of income shows:
A) Relationship between demand and supply
B) Flow of goods and money between households and firms
C) Inflation and unemployment
D) Budgetary process
Answer: B
Explanation: Circular flow explains factor payments and expenditure.
25. Which of the following is not included in National Income?
A) Farmers’ income
B) Income from illegal activities
C) Rent from houses
D) Income of self-employed
Answer: B
Explanation: Illegal activities are excluded from NI.
26. Which of the following is not a method of measuring National Income?
A) Value Added Method
B) Income Method
C) Expenditure Method
D) Supply Method
Answer: D
Explanation: National Income is measured by Value Added, Income, and Expenditure methods only.
27. The Production or Value Added method measures National Income by:
A) Adding up all factor incomes
B) Adding up all final expenditures
C) Summing value added by each sector
D) Adding imports and exports
Answer: C
Explanation: Value Added = Output – Intermediate consumption.
28. Which sector’s contribution is difficult to estimate in the Value Added method?
A) Agriculture
B) Public sector
C) Tertiary (service) sector
D) Household sector
Answer: D
Explanation: Non-market household services are difficult to value.
29. Which method measures National Income by adding compensation to employees, rent, interest, and profits?
A) Expenditure Method
B) Value Added Method
C) Income Method
D) Product Method
Answer: C
Explanation: Income Method adds factor incomes earned.
30. Transfer payments are excluded from National Income because:
A) They are illegal
B) They do not correspond to production of goods and services
C) They are part of personal income
D) They are indirect taxes
Answer: B
Explanation: Transfer payments do not involve factor services.
31. Subsidies are:
A) Added to National Income at market price to get factor cost
B) Deducted from National Income at market price to get factor cost
C) Always excluded
D) Treated as transfer payments
Answer: A
Explanation: NI at factor cost = NI at market price – Indirect taxes + Subsidies.
32. In the Expenditure Method, National Income is measured by summing up:
A) Consumption + Investment + Government expenditure + (Exports – Imports)
B) Only consumption and investment
C) Factor payments
D) Savings + Investment
Answer: A
Explanation: Expenditure method adds C + I + G + (X – M).
33. Which of the following is included in Government expenditure while measuring National Income?
A) Payment of pensions
B) Subsidies
C) Salaries of government employees
D) Unemployment benefits
Answer: C
Explanation: Only productive services like salaries are included, not transfers.
34. Incomes received from abroad are included in:
A) GDP
B) GNP
C) Domestic Income
D) None of the above
Answer: B
Explanation: GNP = GDP + Net factor income from abroad.
35. Depreciation is deducted from GNP to obtain:
A) NNP
B) GDP
C) Disposable income
D) Per capita income
Answer: A
Explanation: NNP = GNP – Depreciation.
36. National Income estimated at current prices is called:
A) Nominal National Income
B) Real National Income
C) Per Capita Income
D) Disposable Income
Answer: A
Explanation: Current prices = Nominal NI.
37. National Income estimated at constant prices is called:
A) Disposable Income
B) Nominal NI
C) Real NI
D) Per Capita NI
Answer: C
Explanation: Constant prices = inflation adjusted → Real NI.
38. Which of the following difficulties arises in Income Method?
A) Valuation of self-employed income
B) Double counting
C) Estimating intermediate goods
D) Estimating capital formation
Answer: A
Explanation: Income of self-employed is hard to separate into wages, rent, profit.
39. Which is the main difficulty in Value Added Method?
A) Non-availability of data on final expenditure
B) Identifying intermediate goods and avoiding double counting
C) Estimating subsidies
D) Including imports
Answer: B
Explanation: Double counting risk arises in product method.
40. Which is the main difficulty in Expenditure Method?
A) Distinguishing between consumption and investment expenditure
B) Double counting
C) Measuring transfer payments
D) Estimating wages
Answer: A
Explanation: The line between consumption vs investment (e.g., durable goods) is blurred.
41. National Income at Factor Cost =
A) NNP at Market Price – Indirect Taxes + Subsidies
B) GDP – Depreciation
C) GNP + NFIA – Depreciation
D) Personal Income – Taxes
Answer: A
Explanation: Factor cost adjusts market price for taxes & subsidies.
42. Which of the following is included in Net Domestic Product (NDP)?
A) Depreciation
B) Exports
C) Net factor income from abroad
D) Net indirect taxes
Answer: B
Explanation: NDP = GDP – depreciation, still includes exports.
43. The expenditure on second-hand goods is not included in NI because:
A) It is illegal
B) It leads to double counting
C) It is transfer payment
D) It is consumption
Answer: B
Explanation: Already counted when originally produced.
44. Which of the following is excluded in GDP measurement?
A) Services of teachers
B) Services of doctors
C) Services of housewives
D) Services of lawyers
Answer: C
Explanation: Household unpaid services are excluded.
45. The method most commonly used in underdeveloped countries to measure NI is:
A) Income method
B) Value Added method
C) Expenditure method
D) Combination of all
Answer: D
Explanation: Due to data limitations, all three methods are combined.
46. GDP at market price includes:
A) Net indirect taxes
B) Depreciation
C) NFIA
D) Both A and B
Answer: D
Explanation: GDP at MP = GDP at FC + Net indirect taxes (and depreciation included as it is gross).
47. If GDP = ₹2000 crore and depreciation = ₹200 crore, then NDP =
A) ₹1800 crore
B) ₹2000 crore
C) ₹2200 crore
D) ₹1500 crore
Answer: A
Explanation: NDP = GDP – Depreciation = 2000 – 200 = ₹1800 crore.
48. Which is the broadest measure of national income?
A) GDP
B) GNP
C) NNP
D) Net Domestic Product
Answer: C
Explanation: NNP (at factor cost) is considered the best measure of actual NI.
49. Which measure is used in India to estimate National Income officially?
A) NNP at Market Price
B) GDP at Factor Cost
C) NNP at Factor Cost
D) Disposable Income
Answer: C
Explanation: India officially uses NNP at Factor Cost.
50. Who estimates National Income in India?
A) Finance Ministry
B) CSO (now NSO)
C) NITI Aayog
D) RBI
Answer: B
Explanation: Central Statistical Office (now merged into NSO) prepares National Accounts.
51. Which of the following is an example of national income aggregate?
A) GDP
B) GNP
C) NNP
D) All of the above
Answer: D
Explanation: GDP, GNP, and NNP are all standard aggregates used to measure national income.
52. GDP at factor cost =
A) GDP at market price – Indirect taxes + Subsidies
B) GNP – Depreciation
C) NNP + NFIA
D) NDP – Depreciation
Answer: A
Explanation: Factor cost adjusts GDP at market price by removing taxes and adding subsidies.
53. Which of the following is the best measure of economic welfare?
A) GNP at market price
B) NNP at factor cost
C) GDP at market price
D) NDP at factor cost
Answer: B
Explanation: NNP at factor cost = National Income, considered the most accurate welfare measure.
54. Nominal GDP rises when:
A) Prices rise
B) Output rises
C) Both price and output rise
D) Both price and output fall
Answer: C
Explanation: Nominal GDP = current price × current output, so both can raise it.
55. Real GDP rises when:
A) Output rises
B) Prices rise
C) Both output and prices rise
D) Inflation rises
Answer: A
Explanation: Real GDP = constant price output → only output change affects it.
56. If Nominal GDP = ₹1500 and GDP deflator = 150, Real GDP =
A) ₹1000
B) ₹1200
C) ₹1500
D) ₹2000
Answer: A
Explanation: Real GDP = Nominal ÷ Deflator × 100 = 1500 ÷ 150 × 100 = ₹1000.
57. Net Domestic Product (NDP) =
A) GDP – Depreciation
B) GDP + Depreciation
C) GNP – NFIA
D) GNP – Subsidies
Answer: A
Explanation: NDP = GDP – depreciation (consumption of fixed capital).
58. Green GDP =
A) GDP + Subsidies
B) GDP – Environmental degradation costs
C) GDP at constant prices
D) GDP – Depreciation
Answer: B
Explanation: Green GDP accounts for environmental sustainability.
59. The difference between GDP and GNP is:
A) Depreciation
B) NFIA (Net Factor Income from Abroad)
C) Indirect taxes
D) Transfer payments
Answer: B
Explanation: GNP = GDP + NFIA.
60. If GDP = ₹1000, NFIA = ₹50, Depreciation = ₹100, Indirect taxes = ₹80, Subsidies = ₹30, then NNP at factor cost =
A) ₹940
B) ₹870
C) ₹900
D) ₹950
Answer: B
Explanation:
Step 1: GNP = GDP + NFIA = 1000 + 50 = 1050
Step 2: NNP = GNP – Dep = 1050 – 100 = 950
Step 3: NNP at FC = NNP – Indirect taxes + Subsidies = 950 – 80 + 30 = ₹900 → Correction → Answer: C.
61. Disposable Income =
A) Personal income – Direct taxes
B) National income – Indirect taxes
C) GNP – Depreciation
D) GDP – Subsidies
Answer: A
Explanation: Disposable income is the money available to households for spending and saving.
62. Personal Income =
A) National Income – Undistributed profits – Corporate tax + Transfer payments
B) GDP – Indirect taxes
C) NNP – Depreciation
D) Disposable income – Direct taxes
Answer: A
Explanation: PI includes transfer payments and excludes income not received by individuals.
63. The difference between Personal Income and Disposable Income is:
A) Corporate tax
B) Direct personal taxes
C) Transfer payments
D) Subsidies
Answer: B
Explanation: DPI = PI – direct personal taxes.
64. Which price concept is used to measure inflation?
A) Real GDP
B) GDP Deflator
C) Nominal GDP
D) Net National Product
Answer: B
Explanation: GDP deflator compares Nominal GDP with Real GDP → indicator of inflation.
65. Human Development Index (HDI) includes:
A) Life expectancy, education, and per capita income
B) GDP, NNP, and GNP
C) CPI, WPI, and GDP deflator
D) Population, growth rate, and savings
Answer: A
Explanation: HDI = health, education, income indicators.
66. Which index is considered a broader measure of price level than CPI or WPI?
A) Real GDP
B) GDP Deflator
C) Per Capita Income
D) Green GDP
Answer: B
Explanation: GDP deflator includes all goods & services, unlike CPI/WPI.
67. Which measure of national income considers only residents’ income?
A) GDP
B) GNP
C) NNP at FC
D) Personal Income
Answer: B
Explanation: GNP = income earned by nationals, whether inside or outside the country.
68. The measure of NI that indicates the capacity to spend is:
A) GNP
B) Disposable income
C) NNP at factor cost
D) Real GDP
Answer: B
Explanation: Disposable income shows actual purchasing capacity.
69. Which of the following reflects the average standard of living?
A) NNP
B) Per Capita Income
C) GDP deflator
D) WPI
Answer: B
Explanation: Per capita income = NI ÷ Population → measure of average welfare.
70. If real GDP grows but population grows faster, per capita income will:
A) Increase
B) Decrease
C) Remain unchanged
D) First rise then fall
Answer: B
Explanation: Faster population growth lowers per capita income.
71. The official base year for National Accounts in India (as of 2023) is:
A) 2004–05
B) 2011–12
C) 2017–18
D) 2015–16
Answer: B
Explanation: CSO/NSO uses 2011–12 as base year.
72. If GDP at current prices rises faster than GDP at constant prices, it indicates:
A) Economic growth only
B) Population growth
C) Inflation
D) Deflation
Answer: C
Explanation: Faster rise in nominal GDP = inflation effect.
73. Real GDP is more useful than Nominal GDP because it:
A) Shows total value of goods
B) Adjusts for inflation
C) Includes transfer payments
D) Is higher in value
Answer: B
Explanation: Real GDP gives true picture of growth.
74. If GDP deflator = 120, then price level has:
A) Fallen 20%
B) Increased 20% since base year
C) Increased 120% since base year
D) Doubled
Answer: B
Explanation: Deflator > 100 means price level ↑ from base year.
75. Which measure excludes depreciation and net factor income from abroad?
A) NNP at factor cost
B) NDP at factor cost
C) GNP at market price
D) GDP at market price
Answer: B
Explanation: NDP = GDP – depreciation (within domestic territory only).
76. National Income figures are useful for:
A) Measuring economic growth
B) Comparing standard of living
C) Policy formulation
D) All of the above
Answer: D
Explanation: NI data helps in growth analysis, welfare comparison, and policymaking.
77. The income earned by Indian residents abroad is part of:
A) GDP
B) GNP
C) NDP
D) NNP at FC
Answer: B
Explanation: GNP includes net factor income from abroad (NFIA).
78. Which organization compiles National Income estimates in India?
A) RBI
B) Ministry of Finance
C) CSO/NSO
D) Planning Commission
Answer: C
Explanation: The Central Statistical Office (CSO, now NSO) compiles NI estimates.
79. India switched its base year of National Accounts to 2011–12 in which year?
A) 2012
B) 2014–15
C) 2016–17
D) 2018–19
Answer: B
Explanation: New series with base year 2011–12 was adopted in 2015 (for 2014–15 data).
80. Which of the following is not a limitation of NI statistics in India?
A) Large non-monetized sector
B) High illiteracy rate
C) Lack of data on household activities
D) Existence of black economy
Answer: B
Explanation: Illiteracy affects surveys but is not a direct NI limitation.
81. Which sector contributes the largest share to India’s GDP in recent years?
A) Agriculture
B) Industry
C) Services
D) Mining
Answer: C
Explanation: Services sector contributes over 50% of India’s GDP.
82. Which sector has the highest employment share in India?
A) Services
B) Industry
C) Agriculture
D) IT
Answer: C
Explanation: Despite falling GDP share, agriculture employs the majority of India’s workforce.
83. The black economy causes:
A) Overestimation of NI
B) Underestimation of NI
C) No effect on NI
D) Inflation only
Answer: B
Explanation: Black money remains unaccounted, leading to underestimation.
84. Which concept is most suitable for international comparison of NI?
A) GDP at market price
B) GNP at factor cost
C) Per capita income at PPP
D) NNP at FC
Answer: C
Explanation: Purchasing Power Parity (PPP) adjusts for price differences across nations.
85. Which is not included in India’s National Income?
A) Profits of Indian companies abroad
B) Remittances from Indians abroad
C) Illegal activities
D) Salaries of Indian residents
Answer: C
Explanation: Illegal/underground economy is excluded.
86. National Income is measured in India mainly by which method?
A) Product method
B) Income method
C) Expenditure method
D) Combination method
Answer: D
Explanation: India uses a combination of methods due to data limitations.
87. Which economist said “National Income is the yardstick for measuring economic growth”?
A) Adam Smith
B) Simon Kuznets
C) Marshall
D) Keynes
Answer: B
Explanation: Kuznets emphasized NI as a measure of growth.
88. Which of the following is not a part of factor income?
A) Rent
B) Wages
C) Interest
D) Pension
Answer: D
Explanation: Pensions are transfer payments, not factor incomes.
89. National Disposable Income =
A) NNP at FC + Net current transfers from abroad
B) GDP – Depreciation
C) GNP – Taxes
D) GDP at MP – NFIA
Answer: A
Explanation: NDI = NNP at FC + net transfers from abroad.
90. Which is a limitation of Per Capita Income as a measure of welfare?
A) Ignores income distribution
B) Ignores non-monetary transactions
C) Ignores environmental factors
D) All of the above
Answer: D
Explanation: PCI is a narrow welfare indicator.
91. The difference between GDP and NDP is:
A) Indirect taxes
B) Subsidies
C) Depreciation
D) NFIA
Answer: C
Explanation: NDP = GDP – depreciation.
92. When GDP at constant prices falls for two consecutive quarters, it is called:
A) Inflation
B) Recession
C) Depression
D) Stagflation
Answer: B
Explanation: Technical definition of recession.
93. If GDP rises but unemployment also rises, it is called:
A) Inflation
B) Jobless growth
C) Stagflation
D) Depression
Answer: B
Explanation: GDP grows without jobs → jobless growth.
94. The term “Hindu Rate of Growth” in India refers to:
A) GDP growth rate of 1–2%
B) GDP growth rate of 3–3.5%
C) GDP growth rate of 6–7%
D) GDP growth rate of 10%
Answer: B
Explanation: Coined by Raj Krishna → India’s low growth rate (3.5%) pre-1991.
95. Which index is used in India to measure inflation for NI deflation?
A) WPI
B) CPI
C) GDP deflator
D) Both WPI and CPI
Answer: C
Explanation: GDP deflator is used to convert nominal to real GDP.
96. The official agency responsible for GDP data release in India is:
A) RBI
B) NSO (earlier CSO)
C) Ministry of Finance
D) NITI Aayog
Answer: B
Explanation: NSO (National Statistical Office).
97. In India, National Income estimates were first attempted by:
A) Dadabhai Naoroji
B) V.K.R.V. Rao
C) Simon Kuznets
D) R.C. Desai
Answer: A
Explanation: Dadabhai Naoroji estimated NI in his book “Poverty and Un-British Rule in India” (1867).
98. National Income Committee of India (1949) was headed by:
A) V.K.R.V. Rao
B) P.C. Mahalanobis
C) Dadabhai Naoroji
D) K.N. Raj
Answer: A
Explanation: V.K.R.V. Rao headed the committee with Mahalanobis & Gadgil as members.
99. Which is India’s rank globally in GDP (Nominal) as of 2023?
A) 2nd
B) 3rd
C) 5th
D) 7th
Answer: C
Explanation: India is the 5th largest economy (Nominal GDP).
100. Which is India’s rank globally in GDP (PPP) as of 2023?
A) 1st
B) 2nd
C) 3rd
D) 4th
Answer: B
Explanation: In PPP terms, India is the 2nd largest economy after China.