Market Distortions

Q.

National income $NN{P}_{FC}$ is equal to:

1. $GN{P}_{FC}$ - Depreciation

2. $NN{P}_{MP}$-Net Indirect taxes

3. $GN{P}_{FC}$ + Depreciation

4. Both B and C

Q.

There is no difference between GDP at market price and GDP at factor cost in a two sector economy including household sector and producer sector.

1. True

2. False

Q.

(a) Why is demand curve of foreign exchange negatively sloped?

(b) Why is supply curve of foreign exchange positively sloped?

Q.

Why should the aggregate final expenditure of an economy be equal to the aggregate factor payments? Explain.

Q.

National income at market price is always greater than national income at factor cost.

1. False

2. True

Q.

Market price includes the impact of indirect taxes, but not of subsidies.

1. False

2. True

Q.

To adjust GDP from market prices to factor cost

1. Add indirect taxes

2. Subtract subsidies

3. Deduct indirect taxes and deduct subsidies

4. Deduct indirect taxes and add subsidies

Q.

Market price of the final goods and services including depreciation produced within the domestic territory of a country during an accounting year is called

1. GDP at market price

2. GNP at market price

3. GDP at factor cost

4. GNP at factor cost

Q.

Why are subsidies considered to be revenue expenditures?

Q. Excise Duty, Customs Duty, Service Tax, Sales Tax, Purchase Tax, Entry Tax, etc. are examples of ______________.

1. direct taxes
2. indirect taxes
3. both (a) and (b)
4. neither (a) nor (b)

Q.

State any two factors that explain expansion of demand for a foreign currency in response to a fall in its price (in terms of the domestic currency).

Q.

Basis of the difference between the concepts of Market Price and Factor Cost is:

1. Direct taxes

2. Indirect taxes

3. Subsidies

4. Net Indirect taxes

Q.

Increase in price of commodities due to increase in taxes assumes relevance in the estimation of $NN{P}_{MP}$ because:

1. taxes are transfer payments

2. taxes are compulsory payments

3. taxes are paid out of the income of the households

4. taxes cause a rise in market price of the commodities which otherwise would have been sold at a lower price

Q. Answer in details :

State and explain the law of Diminishing Marginal Utility. Explain its assumptions.

Q.

Which one leads to Factor Cost?

1. Market price - Indirect taxes

2. Market price - Net Indirect tax

3. Market price +Indirect taxes

4. Market price + Net Indirect tax

Q.

The value of national output produced by residents located within the country, before depreciation and including the influence of taxes and subsidies, is known as:

1. NNP at factor cost

2. GDP at factor cost

3. GDP at market price

4. GNP at market price

Q. Write short notes:

1. Giffen's paradox

2. Types of demand

3. Concept of demand

Q. Define supply. State the law of supply.

Q.

Explain how the gross domestic product has its limitations as a measure of economic welfare.

Q.

Why are subsidies treated as revenue expenditure?

Q. Discuss the assumptions of the law of diminishing marginal utility.

Q.

Which one includes depreciation?

1. NNP at market price

2. None of the above

3. NNP at factor cost

4. GNP at market price

Q.

National income is often estimated as:

1. NDP at FC

2. NNP at MP

3. NDP at MP

4. NNP at FC

Q. Distinguish between monopoly and monopolistic competition.

Q. Match List-I with List-II and select the correct answer using the code given the lists.

List-I (Type of budget deficit)	List-II (Measurement of deficit)
A. Revenue Deficit	$1$. Gap between total expenditure and total receipts
B. Fiscal Deficit	$2$. Excess of revenue expenditure over revenue receipts
C. Primary Deficit	$3$. Fiscal deficit less interest payments
D. Budgetary Deficit	$4$. Difference between revenue receipts plus certain non-debt capital receipts and the total expenditure including loans, net of repayments

1. A-$2$, B-$3$, C-$4$, D-$1$
2. A-$2$, B-$4$, C-$3$, D-$1$
3. A-$1$, B-$2$, C-$3$, D-$4$
4. A-$1$, B-$4$, C-$3$, D-$2$

Q. Give reason or explain the following statements:

1) Income from second hand sale of goods is excluded from national income.
2) National income at factor cost includes subsidy.
3) National income estimates are accurate in India.
4) Old age pension is transfer income.
5) Paid services are included in national income.

Q. State and explain the law of supply. What are the assumption of law?

Q. Which type of demand is the most important?

1. Income demand
2. Cross demand
3. Price demand
4. All of these

Q. Which of these is not a Direct Tax item?

1. Customs Duty
2. All of the above
3. Income Tax
4. Wealth Tax

Q. a. What is demand? Explain how quantity demanded of a commodity X will be affected by
i. An increase in the price of its substitutes
ii. Consumer credit facility
iii. Government policy.