Assertion Reason MCQs of National Income Macroeconomics Class 12

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Looking for important Assertion Reason MCQs of National Income chapter with answers of Macroeconomics class 12 CBSE, ISC and other state Board.

Assertion Reason Multiple Choice Questions of National Income chapter with answers of Macroeconomics class 12

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Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Domestic Income is a territorial concept.

Reason (R): Domestic Income includes the value of final goods and services produced in the entire world.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – c)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Money received from the sale of second-hand cars will be considered while estimating national income.

Reason (R): Their value is already included and it does not contribute to the current flow of goods and services.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – d)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Domestic Income is equal to National Income in the case of a closed economy.

Reason (R): Closed Economy has no economic relations with the rest of the world.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Explanation:- Money received from the sale of the second-hand car will not be considered while estimating national income as the value of second-hand goods has already been accounted for during the year of their production (when these were initially produced and purchased by the final users).

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Value Added Method, Income Method, and Expenditure Method are three different methods to measure the National Income.

Reason (R): Production, Income, and Expenditure are three different phases of the circular flow of Income.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): National Income is a national Concept.

Reason (R): National Income includes the value of final goods and services produced in the entire world by all producers who are normal residents of the country.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Payment of uniforms for nurses by a hospital is not included in the estimation of national income.

Reason (R): Uniforms are provided by the hospital at the time of work. It is to be treated as intermediate consumption.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Explanation:-

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Microeconomics and Macroeconomics are interdependent upon each other. One can not study the two in isolation.

Reason (R): Microeconomics has a smaller degree of aggregation while Macroeconomics has a greater degree of aggregation.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is False but Reason (R) is True
d) Both of the statements are false

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Financial help received by the flood victims should not be included while estimating national income.

Reason (R): Financial help is a transfer payment and should not be included.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Nominal GDP is always equal to Real GDP.

Reason (R): Real GDP is a better measure to make a periodic comparison in the physical output of goods and services over different years as compared to Nominal GDP.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – d)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Real GDP shows the change in the level of economic activity and facilitates inter-regional and international comparison.

Reason (R): It is an inflation-adjusted index and accounts for an increase in the level of production in response to the price changes.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): LED TV is an example of durable consumer goods.

Reason (R): LED TV can be repeatedly used for several years and is of relatively high value.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is False but Reason (R) is True
d) Both of the statements are false

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Public goods possess the characteristics of non-rivalry and non-excludability.

Reason (R): Non-rival means consumption by one person does not reduce consumption for another person whereas non-excludability implies that no one can be excluded in terms of benefitting from the consumption of public goods.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Production of services for self-consumption is not included in national income.

Reason (R): Domestic Services are already included in the value of final goods. If they are included again, it will lead to double counting.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – c)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Imputed value of owner-occupied lands are a part of both domestic income and national income.

Reason (R): Factors of production are bound to give their services regardless of the fact that it is giving its services to the owner or an outsider.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): All producer goods are capital goods.

Reason (R): Producer goods are those which are used in the production of other goods whereas capital goods are the fixed assets of the producers.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is False but Reason (R) is True
d) Both of the statements are false

Ans – c)

Explanation:- Producer goods are those which are used for further production. These may be used either as raw material or as fixed assets. Capital goods are fixed assets of the producers which are repeatedly used in the production of other goods and services and are of high value. Therefore, all producer goods are not capital goods.

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): GDP as an index of welfare may underestimate or overestimate the welfare.

Reason (R): It does not consider the non-monetary exchanges and does not take into consideration the positive or negative aspects associated with economic activity.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Interest paid by the government on public debt is not included in the interest income.

Reason (R): Interest paid on loans taken for consumption purposes is not included as factor income.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): High fixed investment is a sign of growth and development.

Reason (R): Fixed investment indicates the production capacity of a nation. Greater the addition to production capacity (fixed investment), higher the growth and development.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is False but Reason (R) is True
d) Both of the statements are false

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Net Exports is a domestic concept.

Reason (R): Net Exports includes non-factor services.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – b)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Expenditure on maintenance of machinery is an intermediate expenditure.

Reason (R): All expenditures on repair and maintenance incurred by the firm are treated as part of intermediate consumption.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is False but Reason (R) is True
d) Both of the statements are false

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Operating Surplus does not arise in the general government sector.

Reason (R): General Government produces goods and services with the aim of earning profit without any intention of social welfare.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – c)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Unexpected obsolescence is an element of depreciation.

Reason (R): Loss of value of fixed assets owing to unexpected obsolescence is called capital loss.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is False but Reason (R) is True
d) Both of the statements are false

Ans – c)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Real flow and money flow are one or the same thing, presented in a different form.

Reason (R): In money flow, there is no involvement of goods in its physical form.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is False but Reason (R) is True
d) Both of the statements are false

Ans – d)

Explanation:- Real flow and money flow are different in the way that the formal is based upon the sue of goods in the system. While the later uses money. Money flow also involves goods but in exchange of money only.

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Savings are zero in the case of a two-sector economy.

Reason (R): Households spend the entire factor income received from firms on the consumption of goods and services.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): The stock variable does not have a time dimension.

Reason (R): The stock variable is measured over a period of time.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – c)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Total production is equal to total consumption in the case of circular flow in a two-sector economy.

Reason (R): The household sector supplies factor services only to firms and the firm hire factor services only from households.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – b)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Real Flow is also known as Nominal Flow.

Reason (R): Real Flow involves flow of goods and services between firms and households.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – d)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Factor income is a Bilateral Income.

Reason (R): Factor income is earned for contributing to the production process.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Intermediate goods have direct demand.

Reason (R): The demand for intermediate goods depends on the demand for final goods.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – d)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Transfer Income is not included in the National Income.

Reason (R): Transfer Income is a unilateral (one-sided) concept.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – b)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Subsidy is a transfer payment.

Reason (R): Subsidy contributes to current flow of goods and services.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – c)

Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternatives given below:

Assertion (A): Depreciation is also termed as consumption of fixed capital

Reason (R): Depreciation refers to that value of fixed capital that is used up in the process of production.

Alternatives:

a) Both Assertion and Reason are true and Reason (R) is the correct
explanation of Assertion (A)
b) Both Assertion and Reason are true and Reason (R) is not the correct
explanation of Assertion (A)
c) Assertion (A) is True but Reason (R) is False
d) Assertion (A) is False but Reason (R) is True

Ans – a)

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