Important Questions for CBSE Class 12 Economics Chapter 2 - National Income Accounting

This article contains the most important questions along with the answers for CBSEÂ Class 12 EconomicsÂ Chapter 2 â€“ National Income Accounting, which is curated by the expert Economics teachers from the latest version of CBSE (NCERT) books.

CBSE Class 12 Macroeconomics Chapter-2 Important Questions

Question 1

Select the meaning of non-market activities from the following options

a. Production

b. Non-marketable

c. Involuntary

d. Economic

Question 2

What is real flow?

Answer: Real flow is the flow of services and goods between different sectors of an economy. For instance, flow sector services flow from the household to the enterprise and then vice versa, i.e., from the enterprise to the household again.

Question 3

Differentiate between personal income and private income.

Answer: Mentioned below are the points of differences between personal income and private income:

 Personal income Private income It is the sum total of earned and transfer incomes received by the individuals from the income sources involved within and outside the nation. Personal income is calculated as follows: Personal income = Private income – Corporate tax – Corporate savings (undistributed profits) It can be contemplated as the factor and transfer of the income received from all the private sources within and outside the country.

Question 4

Calculate the net value added at the market price of a firm:

 Items Amount Sale Change in stock Depreciation Net indirect taxes Purchase of machinery Purchase of an intermediate product 400 -20 30 40 200 250

Value of output = Sale + Change in stock

= 400 + (-) 20

= 380

Gross value added at MP = Value of output – Purchase of an intermediate product

= 380 – 250 = 130/-

Net value added at MP = Gross value added at MP – Depreciation

= 130 – 30 = 100/-

Thus, the final answer = â‚¹ 100/-

Question 5

Nominal GNP is the same as,

a. GNP at constant prices

b. Real GNP

c. GNP at current prices

d. GNP less net factor income from abroad

Answer: c. GNP at current prices

Question 6

What must be added to the domestic factor income to avail national income?

Answer: Net factor income from abroad must be added to the domestic factor income to avail national income.

Question 7

Define real GNP.

Answer: Gross national product calculated at constant prices i.e., via base year price is known as real GNP in economics

Question 8

Which of the following is an example of transfer payment:

a. Free meals in the company canteen

b. Employersâ€™ contribution to social security

c. Retirement pension

d. Old-age pension

Question 9

Calculate the nominal income and private income from the following data.

 Contents â‚¹. (in crores) Net current transfers from the rest of the world 10 Private final consumption expenditure 600 National debt interest 15 Net exports -20 Current transfers from the government 5 Net domestic product at factor cost accruing to the government 25 Government final consumption expenditure 100 Net indirect tax 30 Net domestic capital formation 70 Net factor income from abroad 10

National income = [Private final consumption expenditure + Government final consumption expenditure + Net domestic capital formation + Net exports + Net factor income from abroad – Net indirect tax]

= 600 + 100 + 70 + (-20) + 10 – 30

= 780 – 50

= 730 crores

Private income = NNP – Net domestic product at factor cost accruing to government + Transfer payments + National debt interest

= 730 – 25 + (10+5) + 15

= 760 – 25

= 735 crores

Question 10

Providing the reason, explain whether the following are included in the domestic product of India.

• Profits earned by a branch of the foreign bank in India

Answer: Profits earned by a branch of the foreign bank in India will be included in the domestic income of India because the profits are earned within the domestic territory of India

 Important Topics in Economics:

Question 11

Providing the reason, explain whether the following will be included in the domestic product of India.

• Payment of salaries to its staff by an embassy located in New Delhi

Answer: Payment of salaries to its staff by an embassy located in New Delhi will not be involved in the domestic income of India as it is not a part of the domestic territory of India

Question 12

Providing the reason, explain whether the following will be included in the domestic product of India.

Answer: Interest received by an Indian resident from its abroad firms will not be included in the domestic income of India because it is the factor income from abroad.

Question 13

Microeconomics is different from macroeconomics because:

a. Microeconomics deals with economic behaviour

b. Microeconomics deals with individual behaviour

c. Microeconomics deals with prices only

d. Microeconomics deals with the government’s decisions

Answer: b. Microeconomics deals with individual behaviour

Question 14

Which of the following is an example of macroeconomics?

a. Price determination

b. Consumerâ€™s equilibrium

c. Producerâ€™s equilibrium

d. Inflation

Question 15

What is national disposable income?

Answer: National disposable income is the type of an income that is obtainable to the whole economy for the spending purpose or for disposition.

It is computed as, NNP + Net current transfers from abroad (NDI)

Also Check:Â Economics MCQs

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 Chapter wise Important Questions for CBSE Class 12 Macro Economics Chapter 1 â€“ Introduction to Macro Economics Chapter 5 â€“ Government Budget and the Economy Chapter 3 â€“ Money and Banking Chapter 6 â€“ Open Economy Macroeconomics Chapter 4 â€“ Determination of Income and Employment