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CBSE Questions for Class 12 Commerce Economics National Income Accounting Quiz 7 - MCQExams.com
CBSE
Class 12 Commerce Economics
National Income Accounting
Quiz 7
Net national product at factor cost (NNPFC) is also known as __________.
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net domestic product
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gross national product
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national income
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personal income.
Which of the following will directly increase the GDP?
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A rise in the market price.
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A surplus in budget.
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An increase in investment.
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A deficit in budget.
Disposable Income = gross additional of saving and:
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Investment
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Consumption
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Taxes
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Miscellaneous receipts
Explanation
Disposable income = Personal income – Personal current taxes.
Personal income = Consumption + Saving
Hence disposable Income is the gross addition of savings and consumption.
So option b is the correct answer.
Which of the following is /are NOT included in the national income estimation by income method?
(i) Mixed income
(ii) Royalty
(iii) Rent
(iv) Profit
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Only (i)
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Only (i) and (ii)
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Only (ii) and (iv)
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None of the above
The three methods of calculating national income measure __________.
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the same thing from different angle
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different thing from different angle
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different thing at the same angle
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the same thing from the same angle
In which sector, expenditure method is used in India for calculating national income?
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Agriculture sector
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Mining sector
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Construction sector
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Transportation sector
Inter linked phases of product method is also known as:
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Net output method
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Net outflow method
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Gross outflow method
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None of the above
Explanation
Product method is also known as output method or value added method. In this method, we calculate the national income in terms of final goods and services produced in an economy during a particular period of time.
Hence option A is the correct answer.
Cost of Physical Stock Rs.2,30,000
Goods purchases for Rs.10,000 received but omitted to be recorded
Goods costing Rs.20,000 were sold & delivered but omitted to be recorded
Goods costing Rs.5,000 were returned by customers but omitted to be recorded.
Goods costing Rs.3,000 were returned to suppliers but omitted to be recorded.
The cost of stock as per books is ____________.
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Rs.2,40,000
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Rs.2,38,000
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Rs.2,36,000
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None of these
Explanation
Cost of physical stock 2,30,000
Less
:- purchases recorded but omitted to be recorded (10,000)
Add;- Goods sold, not recorded 20,000
Less:
- Goods returned by customers (5,000)
Add:- Goods returned to suppliers 3,000
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Cost of stock as per books 2,38,000
Bread can either be a consumer good or an intermediate good.
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True
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False
Explanation
The goods which are consumed by a consumer to satisfy his want is known as consumer goods, while goods used in a production process are intermediate goods. Hence, bread can either be a consumer good or an intermediate good based on its use.
The following statements true or false? Give reasons.
A good can be an intermediary good in one case and a final good in another case.
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True
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False
Explanation
A good can be an intermediate good as well as a final good, depending upon its nature of use.
For example, a car purchased by a household is a final good, whereas, It will be an intermediate good if it is purchased by a car dealer.
The following statements true or false? Give reasons
Intermediate goods have a derived demand, while final goods have direct demand.
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True
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False
Explanation
Intermediate goods have a derived demand as their demand depends on demand for final goods.
On the other hand, final goods have a direct demand as they satisfy the wants directly.
Capital formation is a flow concept.
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True
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False
Explanation
Capital formation is measured over a period of time hence it is a flow concept.
The concept of normal resident applies to individuals only.
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True
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False
Explanation
A person is treated as resident of a country in the country in which his interest actually lies. It can be an individual living in the same country or in another country. If a person lives in foreign country he should live in other country for less than a year. It not only involves individuals but also involves institutions. Hence, the concept of normal residents applies not only to individuals but also to institutions.
Stock variable is defined as a variable which is __________________.
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Measured over a period of time
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Measured at a particular point of time
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Cannot be measured
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None of these
Explanation
Stock variable is defined as a variable which is measured at a particular point of time. Stock is not time dimensional. It influences the flow. Example: wealth, capital, etc.
Depreciation means ___________________.
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Destruction of a plant in a fire accident
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Loss of fixed assets overtime due to wear and tear
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Loss of fixed assets in an earthquake
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Closure of the plant due to lockout
Explanation
Depreciation means loss of fixed assets overtime due to wear and tear. Depreciation is also called consumption of fixed capital. Loss of fixed assets happen on account of normal wear and tear, normal rate of accidental damages and expected obsolescence.
The following statement is true or false? Give reasons.
Final goods include only those goods which are consumed by the households.
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True
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False
Explanation
Final goods include those goods which are either consumed by the households or purchased by the producers for investment purposes.
Which one of the following is an intermediate product?
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Purchase of pulses by consumers
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Machine purchased by a firm
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Wheat used by a flour mill
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Wheat used by households
Explanation
Wheat used by a flour mill is an intermediate product since wheat is used as raw material by flour mill. Value is yet to be added to wheat by converting it into flour.
Which of the following is not an example of flow variable?
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Number of births during a year
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National wealth
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National income
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Wheat produced during a year
Explanation
National wealth is not an example of flow variable. It is a stock since it is measured at a point of time. National wealth is not time dimensional. It is not measured over a specified period of time like flow. Therefore, national wealth is a stock concept.
Losses are classified as ______________.
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Stock variable
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Flow variable
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Either a or b
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Neither a nor b
Explanation
Losses are classified as a flow variable since it is measured over a specified period of time. It is time dimensional as it is generally measured over a year.
The following statement is true or false? Give reasons.
Butter is only a final product.
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True
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False
Explanation
The statement is false because:
It depends on the end use of butter. If butter is purchased by a household, then it Is a final good.
However, if it is purchased by a bakery shop for making cakes, then it is an intermediate good.
The following statements true or false? Give reasons.
End-use of the goods categorise the goods as intermediate goods and final goods.
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True
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False
Explanation
If the end-use of the good is for further production or resale, then the good Is an intermediate good. However, if the end-use of the good is consumption or investment, then the good is a final good.
The following statements true or false? Give reasons.
Both 'Expected Obsolescence' and 'Unexpected Obsolescence' are considered for determining the amount of depreciation.
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True
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False
Explanation
Both 'Expected Obsolescence' and 'Unexpected Obsolescence' are considered for determining the amount of depreciation- this is a false statement since only expected obsolescence is considered for determining the amount of depreciation. It has two components: loss of value of fixed assets due to change in technology and change in demand.
Net domestic product at factor cost is less than national income when ______________.
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Net factor income from abroad is positive
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Net factor income from abroad is negative
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Net factor income from abroad is zero
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Net exports are positive
Explanation
Net domestic product at factor cost is less than national income when Net factor income from abroad is positive.
NNP(at FC) >NDP(at FC): This situation will be seen when net factor income from abroad is Positive.
Which of the following is an example of an intermediate goods?
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Car sold by a dealer of second hand cars
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Steel and cement used to construct a flyover
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Fertilizers purchased by a farmer
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All the these
Explanation
All of the following are examples of an intermediate good:
a) Car sold by a dealer of second hand cars: It is an intermediate good since cars are purchased by a dealer as goods for resale.
b) Steel and cement used to construct a flyover: It is an intermediate good since steel and cement are used as a raw material.
c) Fertilizers purchased by a farmer: It is an intermediate good since fertilizers is used as a raw material in agriculture.
Goods purchased for the following purpose are final goods ________________.
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For satisfaction of wants
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For investment in firm
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Both (a) and (b)
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None of the above
Explanation
Goods purchased for the following purpose are final goods:
a) For satisfaction of wants
b) For investment in firm
Final goods are those goods which crossed the boundary of production and are ready to use by their final users, Final goods must lead to either final consumption expenditure or investment expenditure in the economy.
Unforeseen obsolescence of fixed capital assets during production is ________________.
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Consumption of Fixed Capital
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Capital Loss
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Income Loss
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None of the above
Explanation
Unforeseen obsolescence of fixed capital assets during production is capital loss. Unforeseen obsolescence which may happen due to natural calamity is not taken into account while calculating depreciation and hence, it causes capital loss.
Which of the following is not a flow?
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Capital
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Income
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Investment
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Depreciation
Explanation
Capital is not a flow. Capital falls under the stock concept since it relates to a point of time. Capital is not time dimensional. Capital is not related to a period of time like flow.
Foreign embassies in India are a part of India's _______________.
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Economic territory
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Geographical territory
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Both (a) and (b)
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None of the above
Explanation
Foreign embassies in India are a part of India's geographical territory and not economic territory. For example: Embassy of USA in India is a part of domestic territory of USA and a part of geographical territory of India.
Which of the following flowchart correctly establishes the treatment of 'Depreciation'?
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0%
0%
0%
Explanation
Flowchart A correctly establishes the treatment of 'Depreciation'. Depreciation refers to loss of the value of fixed assets mainly due to wear and tear and expected obsolescence.
Formula: Gross - Depreciation = Net
or, Net + Depreciation = Gross.
Refrigerator purchased by a confectionery shop is an example of _______________.
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Final Good
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Intermediate Good
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Capital Good
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Both (a) and (c)
Explanation
Refrigerator purchased by a confectionery shop is an example of intermediate good since refrigerator is not yet ready for use by the final users. Value is yet to be added. Refrigerator is used as a raw material by a confectionery shop.
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