DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A.

FOUNDATION : – 1 –

CHAPTER – 6
DETERMINATION OF NATIONAL INCOME
UNIT 1 : NATIONAL INCOME ACCOUNTING

Introduction (b) Economy Accounting

1. National Income is a Concept of __________ (c) National Inflow Accounting

(a) Macro-Economics (d) Net Income Accounting

(b) Micro-Economics 6. National Income Statistics provide a _______

basis for macro economic modelling and
(c) Both (a) and (b)
analysis.

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(d) None of above
(a) Quantitative

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2. Which of the following Ministry is responsible
(b) Qualitative
in India for he compilation of National Ac-

H Y
counts Statistics ? (c) Descriptive

A A
(a) Minisry of Commerce & Industry (d) Analytical

R HY
(b) Ministry of Social Affairs
(c) Ministry of Finance Different Concepts of National Income

D
(d) Ministry of entral Statistical and program 7. Gross domestic Product at market Price
Implementation. (GDPMP) refers to the Gross Market Value of
3.

A
National Income accounting was pioneered by
_____________

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all __________ goods and services produced
with in the domestic territory of a country

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during a given period.
(a) Simon Kuznets
(a) intermediate
(b) Simon Kuznets and Richard Stone
(b) final
(c) Simon Kuznets, richard Stoneand Adam
Smith (c) work in progress

(d) None of these (d) None of the above

4. National income accounts are extremely use- 8. “Market Price” in GDP MP signifies that
ful: ____________.

(a) For analyzing and evaluating the perfor- (a) It Includes amount of indirect taxes paid.
mance of an economy (b) It excludes amount of subsidy received.
(b) For knowing the composition and structure (c) The Net Indirect Taxes (NIT) have been in-
of the national income,income disribution cluded.
and economic forecasting. (d) All of the above
(c) For choosing economic policies and evalu- 9. “Gross” in GDP MP Signifies that ________.
ating them
(a) No provision has been made for deprecia-
(d) All of the above. tion.
5. __________ is a government bookkeeping sys- (b) Only final goods and services have to be
tem that measures a country’s economic ac- included.
tivity offering in sight into how an economy is
(c) Only domestic teritory has been considered
performing.
for goods Services
(a) National Income Accounting
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 2 –
(d) Net Indirect Taxes have been included. (c) GDP Velocity
10. __________ refers to net market value of all (d) GDP Accelerator
the final goods and services produced within 15. The formula for computing Real GDP is
the domestic teritory of the county during a _______.
period of one year.
(a) GDP for the Current years× Base Year (100)
(a) GDPMP
(b) GDP for the Base year × current year Index
(b) GNPMP
GDP for the Current year ×
(c) NDPMP
(c) Base year (100)
(d) NNPMP
Current Year Index
11. What is the relationship between GDPMP and
NDPMP ? GDP for the Current year ×
(a) NDPMP=GDPMP-Depreciation (d) Current year Index

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BaseYear (100)
(b) NDPMP=GDPMP+Depreciation

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(c) NDPMP=GDPMP-Net Indirect Taxes 16. GDP at Current Prices means ___________.
(a) Nominal GDP

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(d) NDPMP=GDPMP+Net Indirect Taxes

H A
12. The concept or ‘resident unit’ involved in the
definition of GDP denotes.

A
(b) Real GDP

R HY
(c) GDP at constant prices
(a) A business enterprise which be longs to a (d) None of these
citizen of India with production units solely 17. Whih one of the following is the correct for-

D
situated in India. mula for computation of GDP Deflator ?
(b) The unit having predominant economic in-

A
Nominal GDP
terest in the economic territory of the coun- (a)  100

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Re al GDP
try for one year or more irrespective of the

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nationality or legal status. Real GDP
(b)  100
(c) A citizen household which had been living Nominal GDP
in India during the accounting year and one
Nominal GDP× Real GDP
whose economic interests are solely in In- (c)
100
dia.
(d) Nominal GDP-Real GDP×100
(d) Households and business enterprises com-
18. GDP Deflator is a price index used to
posed of citizens of India alone living in In-
convert___________.
dia during he accounting year.
(a) Nominal GDP to Real GDP
13. GDPMP may be regarded as ____________.
(b) Nominal GDP to National GDP
(a) National GDP
(c) Real GDP to National GDP
(b) Nominal GDP
(d) Nominal GDP into percentage.
(c) Real GDP
19. The GDP deflator measures the _________
(d) Aggregate GDP
level of prices relative to the level of prices in
14. _________ is a price index which is calculated the __________ year.
by dividing the nominal GDP in a given year
(a) base, current
by the real GDP for the same year and multi-
plying it by 100? (b) current, base

(a) GDP Deflator (c) base, base

(b) GDP Inflator (d) current, current

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 3 –
20. What is Real GDP if Nominal GDP is 1150 26. What is the price index of the current Year if
Units and GDP Deflator is 143.75? Nominal and Real GDP for Current Year are
(a) 800 540 and 450 respectively?

(b) 1,653.125 (a) 100

(c) 12.5 (b) 120

(d) None of these (c) 83.33

21. Since nominal GDP and real GDP must be the (d) None of these
same in base year, he deflator for the base year Instruction for Questions (27 to 34)
is _____________. Consider the following data and answer the ques-
(a) Always Zero tions 27-31.
(b) Always 100 Year 2019 2020 2021 2022 2023
(c) Always Equal to Nominal GDP GDP 100 119.15 141.08 135.71 29.75

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Deflation
(d) Always Equal to Real GDP

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27. Which Year is the base Year ?
22. If the GDP deflator is greaer tha 100, then____
(a) 2019

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(a) Nominal GDP= Real GDP
(b) 2020

A
(b) Nominal GDP  Real GDP

A
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(c) Nominal GDP < Real GDP
(d) Nominal GDP  Real GDP
23. The GDP Deflator is calculated of 78.49. What
(c) 2021
(d) None of the above
28. In which year the Nominal GDP is greater than

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Real GDP?
conclusion can be drawn regarding level of

A
prices of the year in comparison with the base (a) 2020

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year ? (b) 2020-22

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(a) Price leel has fallen (c) 2020-22
(b) Price level has increase (d) 2020-23
(c) Price level remained constant 29. In which year the Nominal GDP and Real GDP
(d) No Conclusion can be drawn are the same?

24. Find nominal GDP if real GDP is 475 ad price (a) 2019
index is 118. (b) 2020
(a) 402.34 (c) 2021
(b) 560.5 (d) None of these
(c) 24.84 30. From year 2020 to 2023, the price levels are
(d) None of these higher than that of the base year 2019. In which
year, it is highest?
25. The nominal GDP of a Country in the base year
is given at ˆ600 crores. In the Current year, (a) 2019
the nominal GDP increases to ˆ1200 crores (b) 2020
and price index rises to 110. what will be GDP (c) 2021
Deflator in Current Year ?
(d) 2020
(a) 100
31. In which year, the price level has fallen ?
(b) 110
(a) 2022
(c) 120
(b) 2022-2023
(d) None of these

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 4 –
(c) 2020 (b) GNP MP=GDP MP–Net factor Income from
(d) 2020-2021 abroad

32. While computing variousbasic aggregates of (c) GNPMP=GDPMP– Depreciation

national income, the basis of distinction be- (d) GNP MP=GDP MP–Net Factor Income from
tween “Gross” and “Net” is : abroad
(a) Depreciation 39. Which is the distinction between “National”
(b) Consumption of fixed capital and “Domestic”?

(c) Both (a) and (b) (a) National+Domestic+Net factor Income from
abroad.
(d) None of the above
(b) National=Domestic–Net factor Income from
33. Gross Domestic Product (GDP) of any nation.
abroad.
(a) excludes capital consumption and interme-
(c) Domestic=National+Net factor Income from
diate consumption
abroad.

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(b) is inclusive of capital consumption of de-
(d) None of the above

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preciation
40. Which of the following is correct?

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(c) is inclusive of indirect taxes but excludes

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subsides. (a) NNPMP=GNPMP–Depreciation.

(d) None f the abov

A
R HY A
34. Gross National Product at market prices
GNPMP is :
(b) NNP MP=NDP MP=Net factor Income from
abroad.
(c) NNP MP=GDP MP+Net factor Income from
abroad–Depreciation.

D
(a) GDPMP+ Net Factor Income from Abroad.
(d) All of the above

A
(b) GDPMP+Net Factor Income from Abroad
41. What is the basis of distinction between mar-

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(c) GDPMP-Depreciation
ket price and factor cost?

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(d) None of these
(a) Market Price = Factor Cost + Indirect Taxes–
36. Choose the correct statement. Subsidies
(a) GNP includes earnings of Indian corpora- (b) Market price-Factor Cost+Net Indirect
tions overseas and Indian residents working Taxes–Subsidies
overseas, but GDP does not inlude these
(c) Market Price=Factor Cost–Net Indirect
(b) NNPPC+National Income + FID (factor in- Taxes
come earned in domestic territory) - NFIA.
(d) None of the above
(c) Capital goods and inventory investment are
42. The basis of distinction between market price
excluded from computation of GDP.
and factor cost is :
(d) NDPMP=GDPMP+Depreciation.
(a) Net factor income from abroad
37. If Net factor income from abroad is positive,
(b) Net indirect taxes (i.e. indirect taxes +
then ___________.
Subsidies)
(a) GNPMP= GDPMP
(c) Net indirect taxes (i.e. Indirect taxes +
(b) GNPMP > GDPMP Subsidies)
(c) GNPMP< GDPMP (d) Depreciation (consumption of fixed capital
(d) None of the above 43. Mixed income of the self-employed means:
38. Which of the following formula is correct for (a) Net profits received by self-employed people
computation of GNP at market price ?
(b) Outside wages received by self-employed
(a) GNPMP=GDPMP+ Depreciation people

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 5 –
(c) Combined factor payments which are not (a) Gross Value added at Factor Cost- Compen-
distinguishable. sation of Employees Depreciation
(d) Wages due to non-economic activities (b) Goss Value Added at Factor Cost +Compen-
44. If net factor income from abroad is positive, sation of Employees+ Depreciation
then: (c) Gross Value Added at Market Price+Price +
(a) national income will be greater than domes- Compensation of Employees
tic factor incomes (d) Gross Value Added at Factor Cost + Com-
(b) national income will be less than domestic pensation of Employees+Depreciation
factor incomes. 50. The formula to compute GDP at Factor Cost
(c) net exports will be negative is :

(d) domestic factor incomes will be greater than (a) GDP at Factor Cost - Indirect Taxes - Subsi-
national income dies
(b) GDP at Market Price - Indirect Taxes

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45. The formula to calculate Net Domestic
Product is : (c) GDP at Market Price -Indirect

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(a) Gross National product/Depreciation

H Y
(b) Gross domestic product-Depreciation
Taxes+Subsidies
(d) GDP at Factor Cost+Indirect

A A
Taxes+Subsidies.
(c) Gross domestic product+Depreciation

R HY
51. Which of the following needs to be deducted
(d) Gros National product+Depreciation
to derive NDP from GDP?
46. Which of the following is alternatively known
(a) Net Sales

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as the National Income?
(b) Depreciation
(a) Gross National Product at factor Cost

A
(c) Net Profit

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(b) Net National Product at Market Price
(d) Net Loss
(c) Gross National Product at Market Price

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52. Normally, NNP at market prices is higher than
(d) Net National Product at Factor Cost
NNP at factor cost because_________.
47. _________ is Gross Domestic Product (GDP)
(a) Indirect taxes exceed government subsidies.
plus net factor income from abroad.
(b) Government subsidies exceed Indirect taxes
(a) Net domestic product
(c) Indirect taxes equal to government subsidies
(b) Gross national product
(d) Depreciation is always Nil.
(c) Net national product
53. In a particular year, the value of nominal GNP
(d) Gross domestic product
of an economy was ˆ9,000 crores. The value
48. Consider the following statements of GNP of that economy during the same year,
(i) NNP (at market price)=GNP (at market evaluated at the price of the base year, was
price) Depreciation ˆ10,000 crores. The value of GNP deflator for
(ii) NNP (at factor cost) = NNP (at market that year in percentage terms was:
price)+indirect taxes subjects. (a) 110%
Which of the following is CORRECT? (b) 111%
(a) Both (i) and (ii) ae TRUE (c) 90%
(b) (i) is TRUE and (ii) is FALSE (d) 10%
(c) (i) is FALSE and (ii) is TRUE 54. The value of NDP at FC will be __________, if
(d) Both (i) and (ii) are FALSE the following information is given:-
49. What is the formula to compute Operatng Sur-
plus?
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 6 –
GNP at MP : ˆ15,000 (a) Compensation of Employees
Depreciation : ˆ1,000 (b) Interest
NFIA : ˆ800 (c) Royalty
Net Indirect Taxes : ˆ1,500 (d) Rent
(a) ˆ11,700 60. what is the formula to compute Operating Sur-
(b) ˆ16,000 plus?

(c) ˆ16,800 (a) Gross Value Added at Factor Cost Compen-

sation of Employees+Depreciation
(d) None of these
(b) Gross Value Added at Factor Cost + Com-
55. Which of the following formula to be used for
pensation of Employees+Depreciation
deriving GNP at Market Prices?
(c) Gross Value added at Factor Cost - Com-
(a) NNP at MarketPrices+Depreciation
pensation of Employees-Depreciation
(b) NNP at Market Prices-Depreciaion

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(d) Gross Value Added at Market Price Com-
(c) NNP at Factor Cost+Depreciation pensation of Employees.

H U
(d) GNP at Factor Cost-Depreciation

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56. Which of the following is the correct formula?
61. The ratio [(Nominal GDP)/(Real GDP)] is
known as:

A A
(a) Net Domestic Product (at factor cost) = (a) Wholesale Price Index

R HY
Gross Domestic Product (at Market Price) (b) GMP deflator
+ Depreciation
(c) Consumer price index
(b) Net Domestic Product (at market Prices) =

D
(d) GDP deflator
Gross Domestic Product (at market Price)-

A
Depreciation 62. Which of the following is not included in Do-

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mestic Income?
(c) Net Domestic Product (at Market Prices) =
(a) Wage & Salaries

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Gross Domestic Product (at Market
Prices)+Depreciation (b) Interest & Dividends
(d) Gross Domestic Product (at factor cost) = (c) Income earned from abroad
Net Domestic Product for factor costs) - (d) None f the above
Depreciation.
63. Which of the following will give Personal In-
57. Which of the following represents National In- come?
come?
(a) Private Income-Undistributed Corporate
(a) NNP at MP Profits-Profits Taxes
(b) NNP at FC (b) Private Income+Undistributed Corporate
(c) GNP at MP Profits-Profits Taxes
(d) GNP at FC (c) Private Income+Undistributed Corporate
58. In which type of economy domestic income is Profits+Profits Taxes
equal to national income? (d) Private Income-Undistributed Corporate
(a) Flexible Economy Profits-All Taxes

(b) Rigid Economy 64.

(c) Open Economy Private Income : ˆ 10,000

(d) Closed Economy Undistributed : ˆ 2,000

Corporate Profits
59. Which of the following is not a component of
operating surplus? Profit taxes : ˆ 500

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 7 –
What is Personal Income? (c) DI=PI-Personal Income Taxes-Non-Tax
(a) ˆ7,500 Payments

(b) ˆ8,000 (d) None of the above

(c) ˆ8,500 70. Consider the following date:

(d) ˆ10,000 Particulars ˆin crores

65. When imports exceed exports, which of the fol- GNP at MP 9,500
lowing is incorrect? Depreciation 540
(a) Net income earned from abroad is negative Net Factor income 410
(b) Domestic income will be defferent from na- from abroad
tional income Net indirect Taxes 830
(c) Domestic income is greaer than national in-
Calculate NDP at FC.
come

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(a) 7,920
(d) National income is more than domestic
(b) 8,550

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income
(c) 8,960

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66. The GDP per Capita is
(a)

H A
a measrure of a country’s economic output
per person

A
(d) None of these
71. The net domestic product at market price of

R HY
(b) actual current income receipts of persons an economy is ˆ6,400 crores. The Capital Stock
is worth ˆ6,000 crores and it depreciates at
(c) national income divided by population
the rate of 10% p.a. Indirect Taxes amounted

D
(d) (a) and (c) above to ˆ290 Crores. Subsidies amounted in ˆ30

A
67. Which of the following is an example of trans- Crores. factor income from the rest of the

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fer payment? world is ˆ500 crores & to rest of the world is
ˆ650 Crores. What will be GNPFC?

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(a) Old age pensions and family pensions
(b) Scholarships given as deserving diligent stu- (a) ˆ7,190 Crores
dents (b) ˆ6,500 Crores
(c) Compensation given for loss of property due (c) ˆ6,330 Crores
to floods (d) ˆ6,180 Crores
(d) all of the above 72. Consider the following information.
68. Which of the following is added to national in- Particulars ˆin crores
come while calculating personal income?
GNPFC 35,600
(a) Transfer payments in individuals
Consumption of fixed 3,900
(b) Undistributed profits of corporate
capital
(c) Transfer payments made to foreigners.
Indirect Taxes 210
(d) Mixed income of self employed
Factor Income from 600
69. What is the relationship of Disposable Personal abroad
Income (DI) and Personal Income (PI)?
NDP NP 32,000
(b) O
Factor Income to Abroad 750
(a) DI=PI+Personal Income Taxes+Non -Tax
Payments
73. Calculate the amount of subsidies.
(b) DI=PI-Personal Income Taxes+Non-Tax
(a) ˆ40 crores
Payments
(b) ˆ50 crores
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 8 –
(c) ˆ60 crores (c) ˆ335 crores & ˆ189 crores
(d) None of these (d) ˆ189 crores & ˆ335 crores
73. Calculate consumption of Fixed Capital from 76. The GDP at market price of a country in a par-
the following data: ticular year was ˆ1,900 crores. The National
Paticulars ˆin crores Income and Net factor Income from abroad
were ˆ1671 crores and ˆ107 Crores. If the
NNP at factor Cost 6,250
Value of Net Indirect Taxes was ˆ210 Crores.
GDP at Market Price 7,000 What is aggregate value of Depreciation?
Net Indirect Taxes 250 (a) ˆ126 Crores
Net Factor income 150 (b) ˆ142 Crores
from Abroad
(c) ˆ336 Crores
(a) ˆ450 Crores
(d) None of these
(b) 550Crores

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77. NNPMP= ˆ2,850 Crores
(c) 650 Crores
Indirect Taxes = ˆ209 Crores

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(d) None of these
Subsidies = ˆ32 Crores

H Y
74. Consider the following data:
Net Indirect Taxes = ˆ177 Crores.

A A
Particulars ˆ in Crores
Saving of Private Corporate Sector = ˆ28 Crores

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Compensation of Employees 1,200
Personal Income = 2,215 crores
Operating Surplus 2,400
What is the amount of National Income?
Consumption of fixed 480

D
(a) 3,059 Crores
capital

A
(b) 2,673 Crores
Mixed income of Self 1,320

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employed (c) 2,645 Crores

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Net Indirect Tax 540 (d) None of these

Rent 660 78. GNPMP = ˆ58,350 Crores.

Profit 960 Depreciation= ˆ1,625 Crores.

Net factor Income from Subsidies = ˆ1,540 Crores.

abroad -60 Indirect Tax = 2,590 Crores
Net factor Income from abroad= ˆ240 Crores
Which of the following is incorrect?
Calculate Domestic Income
(a) GDPat MP =ˆ5,940 Crores.
(a) ˆ58,580 Crores
(b) GNP at MP=ˆ5,880 Crores
(b) ˆ56,965 Crores
(c) NNP at MP = ˆ5,400 Crores
(c) ˆ55,915 Crores
(d) NNP at FC=ˆ5,940 Crores.
(d) None of these
75. NNPMP= 15,053 Crores
79. GNPFC is equal to NNP FC When :
Indirect Taxes= ˆ335 Crores
(a) Net factor income from abroad is zero
NNPFC=14,980 Crores
(b) Net Indirect tax is zero
What will be the emount of subsidies and Net
Indirect Taxes? (c) Consumption of Fixed Capital is zero

(a) ˆ262 crores & ˆ73 crores (d) None of the above

(b) ˆ73 crores & ˆ262 crores

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 9 –
Circular flow of Income 86. Which of the following is correct about Money
Flow?
80. Which of the following is a phase of circular
flow of income? (a) It is the flow of money between firms and
households.
(a) Generation Phase
(b) It involves exchange of money
(b) Distribution Phase
(c) It is also known as Nominal flow
(c) Disposition Phase
(d) All of the above
(d) All of the above
87. Real flow refers to the flow of factor services
81. Which one of the following Statement is false
from ___________.
as regards the concept of flow?
(a) firms to households
(a) Flow variable refers to that variable, which
is measured over a period of time (b) households to firms

(b) Flow has a time dimension as its magnitude (c) firms to Government

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can be measured over a period of time. (d) Household in Government

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(c) Flow is a static concept 88. Which one of the following is a Stock?

H Y
(d) All of the above (a) Wealth

A
81. There are 3 different phases in circular flow (b) Profits

A
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of income. Which one of the following phase is
relation with generation of income?
(a) Production Phase
(c) Exports
(d) Saving
89. Which one of the following is NOTa flow?

D
(b) Income Phase
(a) Income

A
(c) Expenditure Phase
(b) Depreciation

P
(d) Any of the above
(c) Capital

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83. The expenditure phase of circular flow of in-
(d) Investment
come is related with_________.
90. Which of the following is included in Real
(a) Generation of Income
Flow?
(b) Distribution of Income
(a) Flow of Services
(c) Disposition of Income
(b) Flow of Goods
(d) Production of Income
(c) Both (a) and (b)
84. “Distribution of income” is related with which
(d) Neither (a) not (b)
of the following phase of circular flow of in-
come? 91. Which of the following is considered as a part
of nominal flow in the circular flow of income?
(a) Production Phase
(a) Flow of factor Payments from firms of
(b) Income Phase
household
(c) Expenditure Phase
(b) Flow of goods and Services from firms to
(d) Noneof the above households.
85. __________ is the flow of goods and services (c) Flow of factor Services from household to
between firms and households. firms.
(a) Real Flow (d) All of these
(b) Money Flow
(c) Consumption Flow
(d) Generation Flow
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 10 –
Methods of Measurement of National 97. __________ if any, must be deducted from the
Income in India value added while calculating national income
92. Under which of the following methods of com- as per the Product Method, as it does not re-
puting national income, the production value sult into real increase in output.
of following sectors are added up. Agriculture. (a) Stock Appreciation
Manufacturing, Construction, transport and (b) Stock Depreciation
Communication, Banking, Administration and
(c) Stock Loss due to theft
Defence.
(d) Stock Insured
(a) Income Method
98. While adding up the value of output of vari-
(b) Expenditure Method
ous sectors for calculation of National Income
(c) Value Added Method under Product Method, care should be exer-
(d) Profit Method cised to avoid the problem of _________.
(a) single Counting

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93. Which of the following is one of the three com-
monly accepted methods for calculating a (b) triple Counting

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country’s national Income?
(c) quadruple Counting

H Y
(a) Market Realisation method
(d) double Counting

A A
(b) Value Added Method
99. The production of goods for self-consumption

R HY
(c) Import Substitution is valued at ________while calculating national
(d) Inflation Adjustment method income through Product Method.
94. The ________ method of national income mea- (a) Historical Prices

AD
sures the contribution of each producing en-
terprise in the domestic territory of the coun-
(b) Prevailing Market Prices
(c) Prevailing Cost Prices

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try.
(d) None of the above

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(a) Income
100. The production value of transport and com-
(b) Expenditure
munication is aken into consideration for com-
(c) Product putation of National Income under which of
(d) Turnover the following methods?
95. Which of the following is not the method of (a) Income Method
measuring national income? (b) Profit Method
(a) Product Method (c) Expenditure Method
(b) Income Mehod (d) Product Method
(c) Profit Method 101. The formula to compute Net National Prod-
(d) Expenditure Method uct at Market Prices is :
96. ‘Estimating net value added by each produc- (a) GDP at Market Prices-Depreciaion
ing enterprise as well as each industrial sector (b) GNP at Market Prices+Depreciation
and adding up the net value added by all the
(c) GNP at Market Prices-Depreciation
sectors’, is a step considered for calculating
National Income under which of the following (d) None of these
mehods? 102. The production value of transport and com-
(a) Profit Method munication is taken into consideration for com-
putation of National Income under which of
(b) Income Method
the following methods?
(c) Expenditure Method
(a) Income Method
(d) Value Added Method
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 11 –
(b) Expenditure Method (d) Nominal Expense Method
(c) Product Method 110. __________ refers to the addition of value to
(d) Profit Method the raw material (intermediate goods) by a
firm, by virtue of its productive activities.
103. “Identifying the producing enterprice and clas-
sifying them into individual sectors according (a) Value Added
to their activities”, is a step followed in which (b) Income Added
of the following methods of computing national (c) Inclusive Approach
income?
(d) Exclusive Approach
(a) Profit Method
111. Value Added is calculated as the difference be-
(b) Product Method tween the value of output and__________
(c) Income Method (a) Value of input
(d) Expenditure Method (b) Intermediate consumption

L
105. Which of the following is not a method of mea- (c) Final consumption

U
surement of National Income?
(d) Basic consumption
(a) Value Added Method

H Y
112. Value added by each producing enterprise is
(b) Income Method

A
also known as _________.

A
(c) Entermediate Consumption Method

R HY
(a) GVA at market price
(d) Expenditure method (b) GVA at factor price
106. Which of the following method gives highest (c) GDP at market price

D
value of National Income?
(d) GDP at factor price

A
(a) Value Added Method
113. From the following information calculate GDP

P
(b) Expenditure Method at Market Price:

U
(c) Income Method GDP at Factor Cost = IN 200 Crore
(d) All the three methods given the same value Indirect Tax = INR 200 Crore
107. Who is entrusted with the task of estimating Subsidies = INR 20 Crore
national income?
(a) INR 500 Crore
(a) CSO
(b) INR 230 Crore
(b) CSIR
(c) INR 330 Crore
(c) MOP
(d) INR 130 Crore
(d) NSDC
114. The expenditure incured by a production unit
108. Value Added Method is also known as _______. on purchasing those goods and services from
(a) Product Method other production units, which are meant for
(b) Inventory Method or Net Output Method resale or for using up completely is known as
__________.
(c) Industrial Origin Method
(a) Final Consumption
(d) All of the above
(b) Intermediate Consumption
109. Which of the following is one of the three ac-
cepted methods calculate a country’s national (c) Basic consumption
income? (d) None of these
(a) Value Added Method 115. The expenditure on goods and services which
(b) Inflation Adjustment Method is meant fr final consumption and investment
is called as ___________.
(c) Import Substitution Method
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 12 –
(a) Final Consumption 121. Under Value Added Method, the sum total of
(b) Intermediate Consumption Gross Value Added at market price of each
sector is called as :
(c) Basic consumption
(a) GVAMP GVA_MP=Value of OutputIntermediate
(d) None of these Consumption
(b) GDP MP
116. If purchase of raw material from domestic GDP_MP=GVA_MP (all sectors)
from is given at 158 crore and imports are 8 (c) GVAFC
crore, what will be the amount of intermedi- (d) GDP FC
ate consumption under value added method? 122. As per Value Added method, the net domestic
(a) ˆ8 crore product at Factor Cost (NDPFC) is calculated
(b) ˆ150 crore as per which of the following equation?

(c) ˆ158 crore (a) GDPMP-Depreciation+Net Indirect Taxes

(d) ˆ166 crore (b) GDPMP-Depreciation-Net Indirect Taxes

L
117. What is the value of output on the basis of fol- (c) GDPMP+Depreciation- Net Indirect Taxes

U
lowing information? (d) GDPMP+Depreciation-Net Indirect Taxes

Y
Sales : 40,000 Lakhs 123. Consider the following information:
Closing Stock
Opening
:
:

AH
2,000 Lakhs

A
500 Lakhs
GDPMP 8,000 crore

R HY
Depreciation 400 crore
Stock
Net Indirect 300 crore
(a) ˆ42,500 Lakhs
Taxes

D
(b) ˆ42,000 Lakhs
GVAMP (Primary : ˆ4,000 crore
(c) ˆ41,50 Lakhs

A
Sector)
(d) ˆ38,500 Lakhs

P
GVAMP (Second- : ˆ1,200 crore
118. Which of the following is not a part of Pri- ary Sector)
mary Sector?
(a) Farming
(b) Fishing
(c) Transport
U GVAMP (Tertiary
Sector)
: ˆ2,800 crore

What is the value of NDP at Factor Cost?

(a) ˆ7,300 crore
(d) Mining (b) ˆ8,400 crore
119. Which of the following is not a part of Ter- (c ˆ8,700 crore
tiary Sector? (d) ˆ16,400 crore
(a) Transport 124. Which of the following equation is true ?
(b) Education (a) NNPFC=NDPFC+NFIA
(c) Finance (b) NNPFC=NDPMP+NFIA
(d) Animal Husbandry (c) NNPFC=NDPFC-NFIA
120. The industrial classification of producing (d) NNPFC=NDPMP-NFIA
enterprises does not include which of the fol-
125. Under value added method, which of the fol-
lowing?
lowing will be included while computing Na-
(a) Primary Sector tional Income?
(b) Secondary sector (a) Sale and purchase of second hand goods
(c) Mixed Sector (b) Intermediate goods
(d) Tertiary Sector

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 13 –
(c) Production of goods for self consumption (c) ˆ89,000
(d) Production of services for self consumption (d) None of these
126. For computation of National Income using
value added method, which of the following Income Method
shall not be included?
129. Wages, Rents, Interest and Profits are
(a) Change in store of goods
variables considered for computing national
(b) Imputed value of owner-occupied house income under which of the following methods?
(c) Production of goods for self-consumption (a) Product Method
(d) Intermediate goods (b) Expenditure Method
127. Consider the following data: (c) Income Method
Sales : 20,00,000 (d) Turnover Method
Closing Stock : 40,000 130. If GDP at Market Prices is INR 200 Cr. and
Opening Stock
Opening Stock
:
:

U L
40,000
10,000
Net Income from Abroad is INR 100 Cr. then
what will be the value of GNP at Market

Y
Prices?

H
Indirect Taxes : 1,00,000

A
(a) INR 100 Cr.

A
Depreciation : 60,000

R HY
(b) INR 400 Cr
Intermediate : 3,20,000
(c) INR 300 Cr.
Consumption
(d) INR 500 Cr.
Purchase of Raw : 1,35,000
Material
Rent :

AD
25,000
131. Consider the following information:
A. NDP at market price 77,000

P
B. Net Factor Income from abroad (-) 700
The amount of Net value added at market price

U
is __________ C. Depreciation 1,700

(a) 16,30,000 D. Subsidies 6,600

(b) 16,50,000 E. Indirect Taxes 7,700

(c) 16,80,000 The value of National Income is :

(d) 16,90,000 (a) 75,000

128. What is the value of output in respect of fol- (b) 75,200

lowing data? (c) 75,400
Amount (d) 75,500
(ˆ) 132. Which of the following is not covered under
Net value Added at : 70,000 Income Method of computing Gross National
Factor Cost Product?

Intermediate : 30,000 (a) Rents

consumption (b) Private consumption expenditure
Goods and : 25,000 (c) Wages and salaries
Services Tax (d) Interest
Subsidy : 4,000 133. Windfall gains like, prizes won, lotteries, etc.
Depreciation : 10,000 should not be included in the estimation of
(a) ˆ1,10,000 national income is the precaution to be

(b) ˆ1,01,000
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 14 –
followed under which of the following (c) Personal Income-Direct Taxes
methods of computing national income? (d) Personal Income+Direct Taxes
(a) Profit Method 138. What is the formula to calculate GDP at Mar-
(b) Product Method ket Prices?
(c) Expenditure Method (a) GNP at market Prices+Net Indirect Taxes
(d) Income Method (b) GNP at Market Prices+Net Income from
134. _________ is the total measure of the flow of Abroad
goods and services at market value resulting (c) GNP at Market Prices-Net Income from
from current production during a year in a Abroad.
country, including net income from abroad. (d) GNP at Market Prices-Net Indirect Taxes
(a) Gross Domestic Product 139. Transfer payments such as gifts, donations,
(b) Gross National Product scholarships etc. should not be included in the

L
(c) Net Domestic Product estimation of national income is the
precaution to be followed under which of the

U
(d) None of the above
following methods of computing national

Y
135. The formula to compute GNP at Market Prices

H
income?
is:

A A
(a) Expenditure Method
(a) GNP at Market Prices=GDP at Market

R HY
(b) Income Method
Prices+Depreciation
(c) Profit Method
(b) GNP at Market Prices=GDP at Market
(d) Product Method

D
Prices-Net Income from Abroad
(c) GNP at Market Prices = GDP at Market 140. Which of the following is not the component

A
Prices+Net Income from Abroad of calculating national income through expen-

P
diture method?
(d) GNP at Market Prices=GNP at Market

U
Prices+Depreciation (a) Government expenditure

136. The formula to calculatePersonal Income is: (b) Production for self consumption

(a) National Income-Undistributed Corporate (c) Investment expenditure

Profits+Profit Taxes - Social Security Con- (d) Consumption expenditure
tribution-Interest on Public Debt 141. The sum total of all the factor incomes earned
(b) National Income+Undistributed Corporate within the domestic territory of a country is
Profits+Profit Taxes+ Social Security Con- known as :
tribution (a) NNPFC
(c) National Income-Undistributed Corporate (b) NDPFC
Profits+Profit Taxes-Social Security
(c) NNPMP
Contribution+Transfer Payments+Interest
on Public Debt (d) NDPMP

(d) National Income-Undistributed Corporate 142. Which one of the following is component of
Profits+Profit Taxes -Social Security Con- Income Method ?
tribution-Transfer Payments (a) Compensation of Employees
137. Which of the following formula would be used (b) Rent and Royalty
to calculate Disposable Income? (c) Profit and Interest
(a) Private Income-Direct Taxes (d) All of the above
(b) Private Income+Direct Taxes

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 15 –
143. The reward to the entrepreneur for his contri- 148. Which as the following is included white esti-
bution to the production of goods and services mating National Income under Income
is called as _________. Method?
(a) Corporate Tax (a) Income from sale of second-hand goods
(b) Dividend (b) Income from sale of shares bonds and de-
(c) Retained Earnings bentures

(d) Profit (c) Windfall gains like income from loteries,

horse race, etc.
144. Which of the following is not considered for
computation of national income under Income (d) Imputed value of services provided by own-
Method ? ers of production units.

(a) Interests 149. While estimating national income by income

method, transfer incomes are not included as
(b) Wages
there are not connected with any productive

L
(c) Government Expenditure activity and there is no value addition, which

U
(d) Rents of the followingis included in “Transfer In-
come”?

Y
145. A methodof national income according is based

AH
on the principal that revenues earned by all

A
the firms put rogether must be distributed
(a) Scholarship

R HY
(b) Donations & charity
among the factors of production as salaries,
(c) Old age Pensions
wages, profits, rent and interest.
(d) All of the above
The method is known as :

D
150. Which of the following is not covered under
(a) Expenditure method

A
Income Method of compting Gross National
(b) Product method

P
Product?
(c) Income method (a) Rents
(d) Consumption method

U
146. When factor incomes of all the sectors are
summed up, the result is called as _______
(a) NNPFC
(b) Private consumption expenditure
(c) wages and salaries
(d) Interest
151. What is the value of NDPat factor Cost?
(b) NDPFC
Rent: : ˆ9,000
(c) NDPMP
Royalty : ˆ4,000
(d) None of these
Mixed Income : ˆ3,500
147. Which method of calculating GDP of a coun-
Interest : 11,000
try gives the following?
Profit : 8,700
If these N firms in the economy, each assigned
with a serial number from Compensation : 20,000
of Employees
I to N, The GDP = GVA, where i varies from I
to N. (a) 52,700

(a) Estimation Method (b) 56,200

(b) Income Method (c) 59,700

(c) Product Method (d) None of these

(d) Expenditure 152. Consider the following data:

Value of output : ˆ2,50,000
Purchase of Raw : ˆ58,000
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 16 –
Material : 157. ABC limited incurred capital expenditure of
Wages and Salaries : ˆ65,000 INR 100 Crores in setting up of a new plant.
The mentioned capital expenditure will be con-
Net Indirect Tax : ˆ15,000
sidered for computation of national income
The value of operating surplus is __________ under which of the following methods?
(a) 1,12,00 (a) Product Method
(b) 1,27,000 (b) Expenditure Method
(c) 1,92000 (c) Income Method
(d) None of these (d) Turnover Method
153. What is the formula to compute Operating 158. From the following information calculate na-
Surplus? tional income.
(a) Gross Value Added at Factor Cost-Compen- Consumption expenditure = INR 1000 Crore
sation of Employees+Depreciation.

L
Investment Expenditure = INR 800 Crore
(b) Gross Value added at Factor Cost + Com-

U
Investment Expenditure = INR 1200 Crore
pensation of Employees+ Depreciation
Government Expenditure = INR 1200 Crore

H Y
(c) Gross Value added at Factor Cost-Compen-
Net Exports = INR 400 Crore

A
sation of Employees-Depreciation

A
(a) INR 2200 Crore

R HY
(d) Gross Value Added at Market Price-Com-
pensation of Employees. (b) INR 1800 Crore
154. Which of the following method measures na- (c) INR 3000 Crore

D
tional income as the sum of all incomes, wages, (d) INR 3400 Crore
rents, interst and profit paid in the four fac-

A
159. From the following information, compute
tors of production?

P
Gross National Product (GNP) according to
(a) Value Added Method the Expenditure Method.
(b) Expenditure Method
(c) Income Method
(d) Product Method U Private Consumption Expenditure = INR 200
Crores
Gross Domestic Private Investment = INR 80
Crores

Expenditure Method Net Foreign Investment = INR 20 Crores

155. The ________ measures national income as Rent = INR 60 Crores

total spending on final goods and services pro- Wages = INR 100 Crores
duced within nation during a year. Mixed Income = INR 25 Crores
(a) Turnover Method Government Expenditure on Goods and Ser-
(b) Product Method vices = INR 60 Crores
(c) Income Method (a) INR 360 Crores
(d) Expenditure Method (b) INR 200 Crores
156. Under _________ comes the expenditure in- (c) INR 185 Crores
curred by private enterprise on new invest- (d) INR 270 Crores
ment and on replacement of old capital.
160. From the following information, compute
(a) Gross Domestic Private Investment Gross National Product (GNP) according to
(b) Net Domestic Private Investment the Expenditure Method.
(c) Total Domestic Private Investment Private consumption expenditure a INR 100
(d) Accumulated Domestic Private Investment. Crores
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 17 –
Gross Domestic Private Investment = INR 80 (b) Consumption Expenditure
Crores (c) Net Exports and Consumption Expenditure
Net Foreign Investment = INR 20 Crores (d) Government Expenditure Investment Expen-
Rent = INR 60 Crores diture and Net Exports.
Mixed = INR 100 Crores 165. Which of the following is not the component
Mixed Income - INR 25 Crores of calculating national income through expen-
diture method?
Government Expenditure on Goods and Ser-
vices = INR 70 Crores (a) Government expenditure

(a) INR 360 Crores (b) Production for self consumption

(b) INR 200 Crores (c) Consumption expenditure

(c) INR 385 Crores (d) Investment expenditure

(d) INR 270 Crores 166. ___________ is the largest component of na-

L
tional income under expenditure method.
161. Gifts, donations and scholarships are which

U
form of payments ? (a) Investment expenditure

Y
(b) Consumption expenditure

H
(a) Factor Payments

A
(b) Explicit Payments (c) Government Expenditure

(c) Implicit Payments

(d) Transfer Payments
A
R HY
162. “The expenditure on second hand goods should
(d) None of the above
167. The formula to compute Net National Prod-
uct at Factor Cost is :

D
not be included as they do not contribute to (a) NNP at market Prices + Indirect Taxes +

A
the current year’s production of goods”, is a Subsidies

P
precaution suggested under which of the fol- (b) NNP at Market Prices - Indirect Taxes - Sub-
lowing methods of computing national in- sidies
come?
(a) Profit Method
(b) Product Method
(c) Expenditure Method
U (c) NNP at Market Prices-Indirect Taxes + Sub-
sidies
(d) NNP at Market Prices - Subsidies
168. In India, ________ is the apex banking
(d) Income Method institution that regulates the monetary policy
in the country.
163. ___________ is expenditure incurred on by
business firms on (a) new plants, (b) adding to (a) State Bank of India
the stock of inventories and (c) on newly con- (b) Canara Bank
structed houses. (c) Reserve Bank of India
(a) Net exports (d) Oriental Bank of Commerce
(b) Investment expenditure 169. Which of the following is not considered for
(c) Consumption expenditure computation of national income under Income
(d) None of the above Method?

164. Which of the following is/are considered for (a) Government Expenditure
calculating National Income according to the (b) Rents
Expenditure Method? (c) Wages
(a) Consumption Expenditure Investment Ex- (d) Interests
penditure; Government Expenditure and Net
Exports
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 18 –
170. Which of the following elements are consid- (c) Interest on public debt
ered for computing national income accord- (d) All of the above
ing to Expenditure Method?
175. Under expenditure method, the sum total of
(a) Consumption Expenditure and Net Exports final expenditures incurred by huseholds, busi-
(b) Consumption Expenditure; Investment Ex- ness firms, government and foreigner is called
penditure and Government Expenditure is __________.
(c) Consumption Expenditure and Investment (a) National Income
Expenditure (b) GDP at market price
(d) Consumption Expenditure; Investment Ex- (c) GDP at factor cost
penditure; Government expenditure and Net
(d) NNP at factor cost
Exports
176. If Net Value Added at Factor Cost=INR 2 Cr.
171. Which of the following is not covered under
and Depreciation is INR 1 Cr. then GDP at
Income Method of computing Gross National

L
Factor Cost will be:
Product?
(a) INR 3 Cr.

U
(a) Interest
(b) INR 1 Cr.

H Y
(b) Wages and salaries
(c) INR 4 Cr.

A A
(c) Private consumption expenditure
(d) INR 5 Cr.

R HY
(d) Rents
177. The formula to compute GDP at Factor Cost
172. The formula for calculating Private Final Con-
is :
sumption Expenditure (PFCE) is :

D
(a) GDP at Factor Cost+Indirect Taxes-Subsi-
(a) Household final consumption expenditure/
dies

A
private non-profit institutions serving house-

P
holds final consumption expenditure (b) GDP at Market Price - Indirect Taxes
(c) GDP at Factor Cost - Indirect Taxes-Subsi-

U
(b) Household final consumption expenditure X
private non-profit institutions serving house- dies
holds final consumption expenditure. (d) GDP at Market Price - Indirect
(c) Household final consumption expenditure + Taxes+Subsidies
private non-profit institution serving house- 178. Which of the following elements are consid-
holds final consumption expenditure ered for computing national income accord-
(d) Household final consumption expenditure- ing to Expenditure Method?
private private non-profit institution serving (a) Consumption expenditure; Investment Ex-
households final consumption expenditure. penditure and Government Expenditure
173. Under expenditure method, expenditure of (b) Consumption expenditure and Investment
which of the following sector is included for expenditure
computing national income? (c) Consumption expenditure and Net Exports
(a) Households (d) Consumption Expenditure; Investment Ex-
(b) Government and firms penditure; Government Expenditure and Net
(c) Foreign Sector exports.

(d) All of the above 179. “Private final consumption expenditure” re-
fers to expenditure incurred by households and
174. Which one of the following is part of expendi-
private non-profit institutions serving house-
ture on transfer payments by government:
holds on all types of consumer goods. Which
(a) Unemployment benefit of the following is not included in such com-
(b) Old age pension putation?
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 19 –
(a) Durable goods (c) GDP at Factor Cost=Net Value
(b) Semi-durable goods Added+Depreciation

(c) Non-durable goods and services (d) GDP at Factor Cost=Net Value Added-
Depeciation
(d) Construction of owner-occupier houses
184. Which of the following is not the component
180. Under expenditure method, the expenditure on
of calculating national income through expen-
purchase of old shares and bonds is not in-
diture method?
cluded as __________.
(a) Government expenditure
(a) These are not incurred in cash
(b) Production for self-consumption
(b) These do not represent as currently produced
goods and services. (c) Consumption expenditure

(c) These represent current production (d) Investment expenditure

(d) None of these 185. Read the following statements.

L
181. Which of the following is included in the na- I. ‘Value added’ refers to the difference be-

U
tional income ? tween value of output and purchase of in-
termediate goods.

Y
(a) Expenditure an intermediate goods

H
II. ‘Value added’ represents the contribution

A
(b) Transfer Payments

A
of labour and capital to the production

R HY
(c) Expenditure on own account production process.
(d) Purchases of financial assets (a) Statements I and II are incorrect
182. In respect of following data given in ˆ. What (b) Statements I and I are correct

D
will be national income using expenditure
(c) Statement I is correct and II is incorrect

A
method?
(d) Statement II is correct and I is incorrect

P
Particulars ˆ
186. Non-economic activities are:

U
Private final consumption 25,000
(a) those activities whose value is excluded from
Government final consumption 12,000
national income calculation as it will involve
Net Domestic capital formation 6,500 double counting
Net Export 5,000 (b) those which produce goods and service, but
Net factor income 1,000 since these are not exchanged in a market
from Abroad transaction they do not command any mar-
Net Indirect Taxes 1,500 ket value.
(a) ˆ49,500 (c) those which do not involve production of
goods and services as they are meant to pro-
(b) ˆ48,000
vide hobbies and leisure time activities
(c) ˆ47,000
(d) those which result in production for self con-
(d) ˆ45,500
sumption and therefore not included in na-
183. The formula to calculate GDP at Factor Cost tional income calculation
is :
187. Which one of the following is a component of
(b) O Triple Identity ?
(a) GDP at Factor Cost = Net Value (a) National Product
Added×Depreciation
(b) National Income
(b) GDP at Factor Cost = Net Value Added/De-
(c) National Expenditure
preciation
(d) All of the above

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 20 –
188. Which of the following enters into the calcula- 191. Which of the following is not used when Na-
tion of national income? tional Income is calculated using expenditure
(a) The value of the services that acompany the method?
sale (a) Operating Surplus
(b) Additions to inventory stocks of final goods (b) Private Final Consumption Expenditure
and materials (c) Net Export
(c) Stocks and bonds sold during the current (d) Net Domestic Capital Formation
year
192. Calculate National Income with the help of Ex-
(d) (a) and (b) above penditure Method with the help of following
189. Consider the following data: data.
Particulars ˆ Particulars ˆ
In Crores in crores

L
Sales 1,030 Net factor income from Abroad 15
Opening Stock 750 Net Indirect Taxes 90
Intermediate Consumption
Closing Stock

H U Y
525
600
Private final Consumption
Expenditure
1,500

Depreciation
Excise Tax A
Net factor income from Abroad

R HY A 45
225
165
Net Domestic Capital Formation
Consumption of Fixed Capital
Net Export
572
98
22

D
Subsidies 75 Govt. Final Consumption
Expenditure 825

A
What is the amount of National Income by value

P
Added method?
(a) ˆ900 Crores (a) 1,139 Crores

(b) ˆ375 Crores

(c) ˆ105 Crores
(d) None of these
U
190 The following data is available (In ˆ Crores):
(b) 1,237 Crores
(c) 2,039 Crores
(d) 3,022 Crores
Particulars ˆ in Crores

Purchase of Materials ˆ 170 Private Final Consumption 45

Subsidies ˆ 30 Expenditure

Intermediate ˆ 400 Gross Domestic Fixed Capital 1,575

Formation
Sales ˆ 900
Subsidy 450
Depreciation ˆ 60
Net Import 90
Excise Tax ˆ 90
Change in Stock 135
Opening stock ˆ 80
Net acquisition of Valuables 45
Closing Stock ˆ 60
Public Final Consumption 22
Calculate Net Value Added by Factor Cost.
Expenditure
(a) 480 Crores
Income Paid to abroad 90
(b) 420 Crores Depreciation 135
(c) 360 Crores What is the value of NNP FC (by expenditure
(d) None of above method)?

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 21 –
(a) 1,957 Crores The System of Regional Accounts in
(b) 1,507 Crores India
(c) 1,462 Crores 197. At present ___________ compute State Income
estimates and district level estimates.
(d) None of these
(a) All the states only
194. The following data is available:
(b) All Union territories only
Particulars ˆ
(c) All The States and Union territories of India
in Crores
(d) Central Government
Compensation of Employees 2,250
198. ____________ is a measure in monetary terms
Interest 675
of the volume of all goods and services pro-
GNP at Factor Cost 46.125 duced in the State within a given period of time
Profit 975 acounted without duplication

L
Net Domestic Capital Formation 600 (a) Net State Domesti Product
Gross Domestic Capital Formation 675 (b) Net Stae Disposition Product
Net Exports
Particulars

H U Y
(-) 38
ˆ in Crores
(c) Net State Generated Product
(d) None of the above
Rent
Factor Income to abroad
Net Indirect Taxes A
R HY A 600
675
225
199. What is the formula to calculate Per Capital
State Income?
(a) State Income×Money Multiplier

D
What are GDPFC and GDPMP? State Income  Money Multiplier
(b)

A
(a) ˆ4,800 Crores & ˆ4,575 Crores Year end State Population

P
(b) ˆ4,575 Crores & ˆ4,800 Crores State Income
(c)

U
(c) ˆ6,7500 Crores & ˆ6,825 Crores Year end State Population
(d) ˆ6,825 Crores & ˆ6,750
State Income
195. Read the following statements and answer the
(d) Mid year projected Population of
following question.
of the State
I. Intermediate consumption consists of the
200. The State level estimates are prepared by the
value of the goods and services consumed
State Income Unit of the respective state
as inputs by a process of production.
__________
II. Intermediate consumption excludes fixed
(a) Directorates of Commerce Wing
assets whose consumption is recorded as
consumption of fixed capital. (b) Directorates of Economic Affairs
(a) Only I is true (c) Directorates of Economic and Statistics
(b) Both I and II are true (d) Diectorates of CSO
(c) Only II is true 201. In the preparation of State Income estimates,
certain activities cut across State boundaries
(d) Neither I nor II is true
and thus their economic contribution cannot
196. Which of the following does not enter into the
be assigned to any one State directly. these sec-
calculation of national income?
tors of the economy are known as __________.
(a) Exchange of previously produced goods
(a) Super regional sectors
(b) Exchange of second hand goods
(b) Supra regional sectors
(c) Exchange of stocks and bonds
(d) All of the above
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 22 –
(c) State balancing sectors John Maynard Kenes. What is the name of that
(d) Regional sectors masterpiece?
(a) General Theory of Government Spending
GDP and Welfare
(b) General Theory of Employment, Interest and
206. Which of the following aspects are excluded Money
in GDP measures?
(c) General Theory of reducing unemployment
(a) Income Distributions
(d) None of these.
(b) Quality Improvement in Systems
[Link] one of the following is not the model of
(c) Productions hidden from government Keynesian theory of income determination?
authorities
(a) The one-sector model
(d) All of the above
(b) The two-sector model
(c) The three-sector model

L
Limitations and Challenges of National
(d) The four-sector model
Income Computation

U
212. Which of the followng is not a part of “The
207. Which of the following is an example of con-

Y
Three-sector model” of Keynesian theory of

H
ceptual difficulties elated to measurementof income determination?

A A
National Income ?
(a) Household

R HY
(a) Issue of Transfer Payments
(b) Business
(b) Valuation of Government Services
(c) Government
(c) Lack of an agreed definition of National In-

D
(d) Foreign
come.

A
213. The two-sector model consists of _________
(d) All of the above.

P
sectors.

U
(a) Household and Business
UNIT 2: (THE KEYNESIAN THEORY
OF DETERMINATION AT NATIONAL (b) Household and Government
INCOME (c) Business and Government

Introduction (d) Government and Foreign

208. In 1936, who published the maserpiece. “The

General Theory of Employment, Interes and Circular Flow in a simple Two-Sector
Money”? Model
(a) John Maynard Keynes 214. Which of the following Statements about Cir-
(b) John Malton Reynes cular Flow is incorrect?

(c) Jean Maynard Keytes (a) The circular Flow model demonstrates how
money moves through society
(d) Jean Milton Keynes
(b) An economy is an endless circular flow of
209. In which year, the western word had
money
experienced the Great Depression ?
(c) Money flows from producers to workers as
(a) 1928
wages and flows back in producers as pay-
(b) 1929 ment for products.
(c) 1930 (d) All the Statements are correct
(d) None of these 215. The two-sector model breaks the economy
210. The hisory of modern microeconomics was down into two primary players
revolutionised in 1936 with the publication by namely_________.
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 23 –
(a) Households and corporations (c) AD = I + G
(b) Corporation and Business (d) AD = C + I + G + (X - M)
(c) Business and Government 221. In a closed economy, AD is a function of Con-
(d) Government and Foreign sumption Expenditure (C) and Investement
Expenditure (I) of the two components, which
216. In two sector model, __________ own all fac-
accounts for the highest proportion of the
tors of production and ________ sell their fac-
GDP?
tor services to earn factor incomes.
(a) Consumption Expenditure
(a) Households, Households
(b) Investment Expenditure
(b) Households, Corporations
(c) Both have equal proportion
(c) Corporation, Households
(d) None of the above
(d) Corporations, Corporations
222. Which of the following is the correct expres-
217. In two sector model, what is the relationship

L
sion of the Short-run aggregate demand func-
between total Income produced (y) that ac-
tion?

U
crues to the Households and the disposable
personal income (Yd) of households? (a) AD = C+ I

(a) Y> Yd
(b) Y< Yd

AH AY (b) AD = C + I
(c) AD = C + I

R HY
(c) Y = Yd (d) Ad = C + I
(d) Either (a) or (b) 223. Which of the following is NOT TRUE about

D
AD in a two-sector economy?
218. Which of the following is true is “Circular
(a) AD = Consumption + Saving

A
Flow in a two sector Economy”?
(b) AD = Consumption+Investment

P
(a) Factor Payment = Household Income
(c) AD = Curve has a positive Slope

U
(b) Household Income=Household Expenditure
(d) AD = Curve Starts from same point about
(c) Total Receipts of Firms=Value of Output origin.
(d) All of the above 224. In the Keynesian model, equilibrium aggregate
219. As regards “circular Flw in a Two Sector output is determined by
Economy”,____________ refer to the flow of (a) aggregate demand
the actual goods or Services while _________
(b) consumption function
refer to the payment for the Services (wages)
or consumption payments. (c) the national demand for labour

(a) Real Flows, Money Flows (d) the price level

(b) Money Flows, Real Flows 225. Keynes believed that an economy may attain
equilibrium level of output
(c) Real Flows, Circular Flows
(a) only at the employment level of output
(d) Circular Flows, Money Flows.
(b) below the full-employment level of output
(c) only if prices were inflexible
Basic Concepts and Functions
(d) (a) and (c) above
220. In a simple two-sector economy, the ex ante
[Link] function expresses the functional rela-
aggregate demand (AD) for final goods or ag-
tionship between aggregate consumption ex-
gregate expenditure can be calculated as
penditure and aggregate consumption expen-
________
diture and aggregate disposable income?
(a) AD = C + I
(b) AD= C + G
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 24 –
(a) Saving Function (a) b = 0
(b) Consumption Function (b) b = I
(c) Disposable Income Function (c) b > I
(d) None of these (d) 0 < b < I
227. The consumption function is expressed as C = 232. __________ refers to the ratio of consumption
F(y), where Y is disposable income. As per this expenditure to the corresponding level of
function, when income is low, consumption, total income.
when income is low, consumption expenditure (a) Average propensity of consume
of household will __________ their disposable
(b) Marginal propensity of consume
income and households __________ to pur-
chase consumption goods. (c) Overall propensity of consume

(a) exceed, save (d) Moderate propensity of consume

(b) exceed, dissave 233. If 30% of income is not spent on consumption,

L
then what will be the Average propensity to
(c) be less than, save

U
consume?
(d) be less than, dissave

Y
(a) 30%

H
228. As per consumption function, if the disposable

A
(b) 70%

A
income increases, consumers will _________

R HY
their planned expenditure but only by (c) 130%
________ than the increase in income. (d) None of these
(a) increase, less 234. The ratio of change in consumption expendi-

D
(b) increase, more ture to change in total income is refered to as

A
_____
(c) decrease, less

P
(a) APC
(d) decrease, more

U
(b) MPC
229. Which of the following is the specific from of
consumption-Income relationship (termed as (c) Consumption function
consumption Function) as proposed by (d) None of these
Keynes? 235. Which of the formula is correct to measure
(a) C = a + by Marginal Propensity to consume (MPC)?
(b) C = a - by C
(a)
(c) C = a + bI I
(d) C = a - bI C
(b)
230. The Keynesian assumption is that consump- Y
tion increase with an increase in disposable C
income. If the increas in disposable income is (c)
I
30%, then what may be the increase in con-
sumption? C
(d)
Y
(a) Less than 30%
236. What is the graph of saving function called?
(b) Equal to 30%
(a) Average Propensity to Save
(c) More than 30%
(b) Marginal Propensity in Save
(d) Any of the above
(c) Unitary Propensity to Save
231. In the Keynesian Consumption function C =
a+by, what may be the value of b? (d) None of the above

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 25 –
237. Identify which one of the following is Correct? (a) autonomous consumer expenditure
(a) MPC + MPS = I (b) the marginal propensity to consume
(b) MPC- MPS = I (c) the consumption income relationship
(c) MPS- MPC = I (d) Non-linear consumption function
(d) MPS+MPS = 0 244. If the consumption function is C = 20 + 0.5 Yd,
238. What will be the value of Average Propensity then an increase in disposable income by ˆ100
to Save (APS) when C = 300 at Y = 1,000 ? will result in an increase in consumer expen-
diture by ˆ___________.
(a) 0.3
(a) 25
(b) 0.7
(b) 70
(c) 1.3
(c) 50
(d) 3.1
(d) 100
239. If APS and Y are 0.375 and 1800, then what

L
will be the value of C? 245. ___________ is the total supply of goods and

U
services which firms in a national economy
(a) 375
plan on selling during a psecific time period.

H Y
(b) 675
(a) Ex ante Aggregae Supply

A A
(c) 1,125
(b) Planned Aggregate Supply

R HY
(d) 1,425
(c) Projected Aggregae Supply
240. According to Keynes, consumption expendi-
(d) Both (a) and (b)
ture to determined by

D
246. Which of the following is corect about aggre-
(a) the level of interest rates

A
gate Supply (AS) ?
(b) extent of government taxes and subsidies

P
(a) AS = C + S
(c) disposable income

U
(b) AS = C - s
(d) antonomous investment expenditure
(c) AS = C + I + G
241. The Marginal Propensity to consume (MPC)
(d) AS = C - I + G
can be defined as :
247. When income rises from ˆ1,000 to ˆ1,100, sav-
(a) a change in spending due to a change in in-
ing rises by ˆ40 . What are MPS and MPC?
come
(a) 0.40 and 0.60
(b) a change in income that is saved after con-
sumption (b) 0.60 and 0.40

(c) part of income that is spent on consumption (c) 1.40 and 1.60

(d) part of income that is not saved (d) 1.60 and 1.40

242. If the consumption function is expressed as C 248. The consumption expenditure and investment
= a + bY then represents: demand are ˆ800 Crores and ˆ350 Crores re-
spectively, when income is ˆ 1,250 Crores.
(a) autonomous consumer expenditure when
What will be the value of AD. AS and Saving?
income is zero
(a) ˆ1,250, ˆ1150 and ˆ450
(b) the marginal propensity to consume
(b) ˆ1,150, ˆ1250 and ˆ450
(c) the expenditure multiplier when consump-
tion is increased (c) ˆ1,700, ˆ2,050 and ˆ350

(d) part of disposable income (d) None of these

243. If the consumption function is expressed as C 249. The Saving curve of an economy makes a nega-
= a + bY then a represents tive intercept of ˆ60 Crores and 30% of addi-

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 26 –
tional income is saved. As regards this data, (a) level of full employment income
which of the following is correct? (b) less than full employment level of income
(a) C = - 60 + 0.3 (y) (c) equilibrium level of income which may or
(b) C = 60 + 0.7 (y) may not be full employment level of income
(c) S = 60 + 0.3 (y) (d) autonomous level of income which may not
(d) None of the above be full employment level of income.

250. If S = -30 + 0.25(y), then what will be the Con- 255. In a closed economy, aggregate demand is the
sumption Function (c)? sum of

(a) C = 30 + 0.25 (y) (a) consumer expenditure, demand for exports

and government spending
(b) C= -30 + 0.75 (y)
(b) consumer expenditure, planned investment
(c) C = 30 + 0.75 (y)
spending and government spending.
(d) C = - 30 + 0.25 (y)

L
(c) consumer expenditure, actual investment
251. If MPC is one third of MPS and consumption spending, government spending and net ex-

U
at zero level of national income is ˆ38 Crores ports.

Y
then which of the following option is correct?

H
256. Under equation c = a+by, b = 0.8, what is the

A
(a) C = 36 + 0.25 (y)

A
value of 2 sector expenditure multiplier?

R HY
(b) C = 38 + 0.75 (y) (a) 4
(c) S = 38 + 0.25 (y) (b) 2
(d) S = 38 + 0.75 (y) (c) 5

AD
The two-Sector Model of National In-
(d) 1
257. In determination of equilibrium income un-

P
come Determination der two sector model the aggregate demand

U
252. Which of the following reflects the equilibrium curve is linear and positively sloped indicat-
level of income and output in the Keynesian ing that as the level of national income
frame work (under two secor model)? _________ the aggregate demand (or aggregate
spending) in the economy _________.
(a) Aggregate Demand = Aggregate Supply
(a) rises, falls
(b) C + I = C + S
(b) falls, rises
(c) I = S
(c) rises, also rises
(d) All of the above
(d) falls remains constant.
253. If the autonomous consumption equals ˆ2,000
and the marginal propensity to consume equals 258. According to Keynes, aggregate demand will
0.8. If disposable income equals ˆ10,000 then not always be equal to aggregate supply. Ag-
oal consumption will be?__________ gregate demand depends on ________ whereas
Aggregate supplydepends on _________.
(a) 8,000
(a) Household’s plan to consume and to save,
(b) 6,000
producer’s plan to produce goods and ser-
(c) 10,000
vices
(d) None of the above
(b) Households plan to produce producer’s plan
254. In the Keynesian cross diagram, the point at to consume.
which the aggregate demand function crosses
(c) Producer’s Plan to produce good and ser-
the 45-degree line indicates the
vices; Household’s plan to consume and to
(b) a change save

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 27 –
(d) Producer’s plan to consume Household’s times the equilibrium _________ increass as a
plan to produce. result of _________.
259. As per Keynesian model of macro economy, if (a) aggregate expenditure; an increase in au-
the aggregate demand is for an amount of out- tonomous investment
put less than the full employment level of out- (b) aggregate income an increase in Autono-
put, then we say there is deficient demand. this mous investment
deficient demand gives rise to ___________
(c) aggregate expenditure; a decrease in invest-
(a) Deflationary Gap ment
(b) Recessionary Gap (d) aggregate income; a decrease in investment.
(c) Contractionary Gap 264. The process behind the investment multiplier
(d) All of the above can be comparedto the ______ the water.
260. Under Keynesian Theory,__________ is the (a) Triple effect

L
amount by which actual aggregate demand (b) Ripple effect
exceeds the level of aggregate demand required
(c) Intial effect

U
to establish the full employment equilibrium.
(d) Double effect

H Y
(a) Inflationary Gap
265. Which of the following is the determinant of

A A
(b) Deflationary Gap
the value of the investment multiplier?

R HY
(c) Contractionary Gap
(a) MPC
(d) None of these
(b) APC
261. Consider the following data relating to an

D
(c) TPC
economy in equilibrium :

A
(d) None of these
Autonomous Consumption = 500

P
266. Higher the ________ more will be the value of
MPS = 0.3
multiplier, whereas, higher the ________,

U
Investment Expenditure = lower will be the value of multiplier.
1000
(a) MPS, MPC
What is national income ?
(b) MPC, MPS
(a) 1,500
(c) APS, APC
(b) 5,000
(d) APC, APS
(c) 150
267. The value of investment multiplier is the
(d) 5,650 reciprocal of _________.
262. Given the empirical consumption function C (a) APC
= 100 + 0.75Y and I = 1000, what will be the
(b) APS
equilibrium leel of national income and also
the consumption expenditure at this equilib- (c) MPS
rium level of national income? (d) MPC
(a) 4400 ; 3400 268. In an economy investment expenditure is in-
(b) 1100 ; 850 creased by ˆ600 crores and Marginal Propen-
sity to Consume (MPC) is 0.8. What will be
(c) 3300 ; 2150
the total increase in saving?
(d) None of these
(a) 3000
(b) 4000
The Investment Multiplier
(c) 600
263. The Investment multiplier explains how many
(d) 500
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 28 –
270. An increae in inestment by ˆ1000 Crores leads 275. Consider the following data relating to an
to increase in national income by ˆ2500 Crore. economy:
What will be Marginal Propensity to Consume (a) increase in investment in income is spent
(MPC) ? on consumption.
(a) 2.5 (b) 80% of the increase in income is spent on
(b) 0.6 consumption
(c) 0.4 What will be the total increase in income?
(d) None of these (a) 2,800
271. Which of the following formula can be used to (b) 7,000
find the value of Multiplier (K)? (c) 17,500
Y (d) None of these
(a) K
I

L
K
I Determinion of equilibrium Income:
(b)

U
I  MPS Three Sector Model

H Y
I 276. According to the Keynesian theory, the equi-
(c) K
MPS

A
librium level of income in an economy is de-

A
(d) Any of the above termined when:

R HY
272. In an economy, income generated is four times (a) Aggregate Demand - Agregate Supply
the increase in investment expenditure. the val- (b) Saving + Investment

D
ues of MPC and MPS are ___________ and
(c) Both (a) and (b)
_________ respectively.

A
(d) None of these
(a) 0.75; 0.25

P
277. Which of the following is not considered in hree
(b) 0.25; 0.75

U
sector model of chosed economy?
(c) 0.75; 1.25
(a) Household Consumption
(d) None of the above
(b) Desired Business Investment Demand
273. In an economy, the entire in crease it income
(c) Government Sector’s Demand for goods and
is spen on consumpion. what will be the value
Services.
of multiplier?
(d) Foreign Trade
(a) 0
278. In three sector model, there is n foreign trade,
(b) 1
which of the following option is correct in this
(c) Infinity (  ) regard?
(d) –1 (a) GDP = National Income
274. In n economy, the actual level of income is ˆ500 (b) GDP > National Income
crores, whereas, the full employment level of
(c) GDP < National Income
income is ˆ800 crores If one-forth additional
income is save, what should be increase in in- (d) None of these
vestment required to achieve full employment 279. Which of the following is correct as regards
level of income. the determination of equilibrium national in-
(a) 0.25 come

(b) ˆ300 crores (a) AD = AS

(c) ˆ75 crores (b) AD =Y= AS

(d) None of these. (c) C +I + G = C + S + T

(d) All are correct
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 29 –
280. C = 25 + 0.75Yd when C is consumption and Investment (I) = 750
Yd is disposable income. What is the size of the Government Expenditure (G) = 380
multiplier?
Tax (T) = 84 + 0.2Y
(a) 5
Antonomous Transfer Payment (TR) = 200
(b) 4
What is the equilibrium level of income?
(c) 2
(a) 4002.50
(d) Cannot be determined
(b) 4042.50
281. Consider the following data about a simple
(c) 4152.50
economy:
(d) 4582.50
C = 50 + 0.8Yd
I = 250 (Investment)
Determination of NationalIncome : Four
G = 100(Government - Expenditture)
Sector Model

L
T = 100 (Tax)
284. In the four sector model, which of the follow-

U
What will be the equilibrium level of National
ing additional flow is considered as compared

Y
Income ?

H
with three sector model?

A
(a) 1200

A
(a) Exports

R HY
(b) 1400
(b) Imports
(c) 1600
(c) Net Capital Inflow
(d) None of these
(d) All of the above

AD
282. The followng Information is available regard-
ing structure model of an economy:
285. Which of the following indicates the aggregate
demand or the total planned expenditure of

P
C = 40 + 0.8Y consumers, investors, governments and for-

U
I = 80 eigners (Net exports) at each income level?
G = T = 40 (a) C - Y + G + (X+M)
TR = 15 (b) C+ I + Tax + TR
Where C = Consumption function (c) C + I + G + (X –M)
I = Investment (d) None of these
G = Government Expenditure 286. In the determination of equilibrium level of
T = Lump Sum Tax national income, which of the following is cor-
rect?
TR = Autonomous Transfer Payment.
(a) Y = C + I + G + (X–M)
What will be the equilibrium level of income?
(b) C = a + b (Y–T)
(a) 700
(c) M = M + mY
(b) 610
(d) All of the above
(c) 175
287. In four sector model, which of the following
(d) None of these
formula is used to calculate Foreign Trade
283. In an economy, the tax has been levied as a Multiplier, if b and m refer to marginal pro-
function of income with Government expen- pensity to consume and Marginal propensity
diture and transfer payments. The following to import?
data is available:
I
Consumption function (C) = 400+ 0.75 (Y – T (a)
Ibm
+ TR)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 30 –
I 289. What will be the equilibrium level of income?
(b)
Ibm (a) 800 crores

I (b) 603 crores

(c)
Ibm (c) 545 crores

I (d) None of these

(d)
Ibm 290. Equilibrium income (Y) + 600
288. Consider the following : Exports (×) = 20
Consumption function (C) = 40 + 0.8Yd Imports (M) = 10 + 0.05 Y
T = 0.1Y Calculate Trade Balance.
T = 60 crores (a) Surplus (20)
G = 40 Crores (b) Deficit (20)

L
N = 58 (c) Surplus (30)
M = 0.05 Y (d) Deficit (30)

H U Y
A
R HY A
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BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 31 –

ANSWERS
1 (a) 2 (d) 3 (b) 4 (d) 5 (a) 6 (a) 7 (b) 8 (d) 9. (a)

10 (c) 11. (a) 12. (b) 13. (b) 14. (a) 15 (c) 16 (a) 17 (a) 18. (a)

19. (b) 20. (a) 21. (b) 22. (b) 23. (a) 24. (b) 25. (b) 26. (b) 27. (a)

28. (d) 29. (a) 30. (b) 31. (b) 32. (c) 33. (b) 34. (a) 35. (a) 36. (a)

37. (b) 38. (b) 39. (a) 40. (d) 41. (a) 42. (b) 43. (c) 44 (a) 45. (b)

46. (d) 47. (b) 48. (a) 49. (a) 50. (c) 51. (b) 52. (a) 53. (c) 54. (a)

55. (a) 56. (a) 57. (b)

U L
58. (d) 59. (a) 60. (c) 61. (d) 62. (c) 63. (a)

H Y
64. (a) 65. (d) 66. (d) 67. (d) 68. (a) 69. (c) 70. (a) 71. (b) 72. (c)

73. (c)

82. (a)
74.

83.
(d)

(c)
75.

84.
A
(a)

R HY
(b)
76.

85.A (a)

(a)
77.

86.
(b)

(d)
78.

87.
(c)

(b)
79.

88.
(c)

(a)
80.

89.
(d)

(c)
81.

90.
(c)

(c)

D
91. (a) 92. (c) 93. (b) 94. (c) 95. (c) 96. (d) 97. (a) 98. (d) 99. (b)

100. (d) 101. (c) 102. (c)

P A 103. (a) 104. (b) 105. (a) 106. (d) 107. (a) 108. (d)

U
109. (a) 110 (a) 111. (d) 112. (a) 113. (b) 114. (b) 115. (a) 116. (d) 117. (c)

118. (c) 119. (d) 120. (c) 121. (b) 122. (b) 123 (a) 124 (a) 125. (c) 126. (d)

127. (b) 128. (c) 129. (c) 130. (c) 131. (b) 132. (b) 133. (d)

134. (b) 135. (c) 136. (c) 137. (c) 138 (b) 139. (b) 140. (b) 141. (b) 142. (d)

143. (d) 144. (c) 145. (c) 146. (b) 147. (b) 148. (d) 149. (d) 150. (b) 151. (b)

152. (a) 153. (c) 154. (c) 155. (d) 156. (a) 157. (b) 158. (d) 159. (a) 160. (d)

161. (d) 162. (d) 163. (b) 164. (a) 165. (b) 166. (b) 167. (c) 168. (c) 169. (a)

170. (d) 171 (c) 172. (c) 173. (d) 174. (d) 175. (b) 176. (a) 177. (b) 178 (d)

179. (d) 180. (b) 181. (c) 182. (b) 183. (c) 184. (b) 185. (b) 186. (b) 187. (d)

188. (d) 189. (c) 190. (c) 191. (a) 192. (c) 193. (a) 194. (b) 195. (b) 196. (d)

197. (c) 198. (a) 199. (d) 200. (c) 201. (d) 202. (d) 203. (d) 204. (b) 205. (b)

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

DETERMINATION OF NATIONAL INCOME BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 32 –

206. (d) 207. (d) 208. (a) 209. (c) 210. (b) 211. (a) 212. (d) 213. (a) 214. (d)

215 (a) 216. (a) 217. (c) 218. (d) 219. (a) 220. (a) 221. (a) 222. (c) 223. (a)

224. (a) 225. (b) 226. (b) 227. (b) 228. (a) 229. (a) 230. (a) 231. (d) 232. (a)

233. (b) 234. (b) 235. (d) 236. (d) 237. (a) 238. (b) 239. (c) 240. (a) 241. (a)

242. (b) 243. (a) 244. (c) 245. (d) 246. (a) 247. (a) 248. (b) 249. (b) 250. (c)

251. (a) 252. (d) 253. (c) 254. (c) 255 (b) 256. (c) 257. (c) 258. (a) 259. (d)

260. (a) 261. (b) 262. (a) 263. (b) 264. (b) 265. (a) 266. (b) 267. (c) 268. (c)

269. (d) 270. (b) 271. (d)

U L
272. (a) 273. (c) 274. (c) 275. (c) 276. (c) 277. (d)

H Y
278. (a) 279. (d) 280. (b) 281. (c) 282. (a) 283. (b) 284 (d) 285 (c) 286 (d)

287 (c) 288 (b) 289

A
R HY
(c) 290

A (b)

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BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY