# 150 MCQs of National income chapter class 12 CBSE Board

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National income and related aggregates are the first units of macroeconomics class 12 CBSE Board. we have compiled the important MCQs of many topics such as consumption, capital, and intermediate goods, investment concept, domestic territory, and normal residents. Apart from it, it comprises methods of calculating national income by value-added, income, and expenditure method.

We have compiled around more than 200 MCQs on all topic of national income chapter class 12 of macroeconomics according to the syllabus of CBSE Board.

## MCQs of National Income chapter class 12

1. Food Items purchased by a production unit are

a) Single use consumer goods
b) Durable use consumer goods
c) Single use Capital goods
d) Durable use capital goods

Ans – c

2. Capital at the end of the year 2012 was â‚¹ 100 crore and at the end of the year 2013 was â‚¹ 110 crore. Depreciation during the year 2013 was â‚¹ 5 crore. Gross investment during 2013 is:-

a) â‚¹ 5 crore
b) â‚¹ 10 crore
c) â‚¹ 15 crore
d) â‚¹ 110 crore

Ans – b

3. Fixed capital at the end of the year 2013 was â‚¹ 50 crore and at the end of the year 2014 â‚¹ 55 crore. Closing stock at the end of year 2013 and 2014 was respectively â‚¹ 10 crore and â‚¹ 5 crore respectively. Gross investment during 2014 is :-

a) 0
b) 5
c) 10
d) 15

Ans – a

4. Capital loss is:-

a) Normal wear and tear of fixed capital goods
b) Foreseen obsolescence
c) Unforseen obsolescence
d) All the above

Ans – c

5. A firm hires the services of a chartered accountant and pays fees. For the firm, payment of fess is:-

a) Final expenditure
b) Intermediate expenditure
c) Investment expenditure
d) Capital expenditure

Ans – b

6. Purchase of refrigerator by a restaurant is:-

a) Consumption expenditure on durable good
b) Consumption expenditure on non-durable good
c) Intermediate expenditure
d) Final expenditure

Ans – d

7. Capital and investment are:-

a) Both flows
b) Both stocks
c) Capital is stock while investment is flow
d) Investment is stock while capital is flow

Ans – c

8. A ‘resident’ of a country is one :

a) Who was born in that country
b) Who lives in that country
c) Who is citizen of that country
d) Who lives, earns, spends and accumulates in that country

Ans – d

9. Economics territory is one in which the following move freely :

a) People
b) Goods
c) Capital
d) All the above

Ans – d

10. Economic territory of a country is also called :

a) Geographical territory
b) Political frontiers
c) Domestic territory
d) All the above

Ans – b

11. Chinese embassy in India is a part of economic territory of:

a) China
b) India
c) Both China and India
d) International area

Ans – a

12. GDP at mp is:

a) Inclusive of depreciation
b) Inclusive of indirect tax
c) Exclusive of subsidies
d) All the above

Ans – d

13. Given GDP at mp = 100, subsidies = 5 and depreciation = 10, then NDP at fc equals :

a) 95
b) 100
c) 105
d) 115

Ans – 95

14. Given NDP at fc = 80, indirect tax = 10, and net factor income to abroad = -10, what is NNP at mp?

a) 70
b) 80
c) 90
d) 100

Ans – d

15. Macroeconomics is concerned with:

a) the lever of output of goods and services in the economy
b) the general level of prices
c) GDP growth
d) all of these

Ans – d

16. Study of general price level is a subject matter of:

a) microeconomics
b) macroeconomics
c) both a) and b)
d) none of these

Ans – b

17. Aggregation is involved in:

a) microeconomics
b) macroeconomics
c) both a) and b)
d) none of these

Ans – c

18. Economic agents include:

a) government
b) consumers
c) producers
d) all of these

Ans – d

19. Which of the following statements is associated with general equilibrium analysis?

a) It is the method of study in microeconomics
b) It is the method of study in macroeconomics
c) There is no change in the labour market
d) None of these

Ans – b

20. Consumption of all goods and services in the economy during the period of an accounting year is knows as:

a) aggregate demand
b) aggregate supply
c) aggregate consumption
d) none of these

Ans – c

21. Classification of goods depend on the:

a) consumption of goods
b) production of goods
c) first – use of goods
d) end -use of goods

Ans – d

22. Final goods are used by the:

a) consumers
b) producers
c) government
d) all of these

Ans – d

23. Those goods which satify human wants directly are called:

a) intermediate goods
b) consumer goods
c) capital goods
d) none of these

Ans – b

24. Capital goods are those goods:

a) which are used in the production process for several years
b) which are used in the prodcution process for few years
c) which involve depreciation losses
d) both a) and c)

Ans – d

25. Food processor used by the households in theri kitchen is an example of:

a) capital goods
b) intermediate goods
c) consumption goods
d) none of these

Ans – c

26. In the production of sugar, sugarcane is:

a) a final good
b) a capital good
c) an intermediate good
d) none of these

Ans – c

27. If a car is purchased by a taxi-operator, it will be regarded as a:

a) capital good
b) intermediate good
c) final good
d) both a) and c)

Ans – d

28. T.V, radio, washing machine, etc,. are examples of:

a) durable consumer goods
b) semi-durable consumer goods
c) single use consumer goods
d) capital goods

Ans – a

29. Which of the following is a semi-durable good?

b) Clothes
c) Milk
d) Petrol

Ans – b

30. Increase in the stock of capital is knows as:

a) capital loss
b) capital gain
c) capital formation
d) none of these

Ans – c

31. Net investment is equal to:

a) gross investment + depreciation
b) gross investment – depreciation
c) gross investment * depreciation
d) gross investment / depreciation

Ans – b

32. Net capital formation causes:

a) increase in production capacity
b) increase in depreciation
c) increase in profits
d) increase in cost

Ans – a

33. Which of the following leads to depreciation:

a) Normal wear and tear
b) Damages due to floods
c) Damages due to market crash
d) None of these

Ans – a

34. Which of the following leads to unexpected obsolescence?

a) change in demand
b) Natural calamities
c) change in technology
d) None of these

Ans – b

35. Which of the following is the cause of expected obsolescence?

a) Natural calamities
b) Change in demand
c) Change in technology
d) Both b) and c)

Ans – d

36. Depreciation reserve fund is needed for:

a) inventory stock
c) replacement investment
d) none of these

Ans – c

37. A stock variable

a) has no time dimension
b) is a static concept
c) both a) and b)
d) none of these

Ans – c

38. A quantity measured per unit of time period is known as:

a) stock variable
b) flow variable
c) inventory
d) none of these

Ans – b

39. ‘Income of the family’ is the example of which variable?

a) Stock
b) Flow
c) Both stock and flow
d) Neither stock nor flow

Ans – b

40. Which of the following is a stock variable?

a) Interest on capital
b) Distance between Delhi and Manali
c) Expenditure of Money
d) All of these

Ans – b

41. Which of the following is not a flow variable?

a) Income
b) Capital formation
c) Supply of money in a country
d) Leakage of water from the overhead tank

Ans – c

42. A car running between Delhi and Agra at a speed at 120 Km/h includes:

a) only stock variables
b) only flow variables
c) both a stock and a flow variable
d) none of these

Ans – c

43. Factor services rendered by the households to the firms lead to:

a) real flow
b) money flow
c) services flow
d) both a) and c)

Ans – a

44. Reason for the circular flow of income is:

a) government intervention
b) production of goods and services
c) mutual interdependence of producer and household sector
d) invention of money

Ans – c

45. The market price of the final goods and services (including depreciation) produced within the domestic territory of a country during an accounting year, is called:

a) GDP at market price
b) GNP at market price
c) GDP at factor cost
d) GNP at factor cost

Ans – a)

46. National income is often estimated as:

a) NDP at fc
b) NNP at mp
c) NDP at mp
d) NNP at fc

Ans – d

47. Domestic product is equal to

a) National product + Net factor income from abraod
b) National product – Net factor income from abroad
c) National product / Net factor income from abroad
d) National Product * Net factor income from abroad

Ans – b

48. Net indirect taxes are estimated as:

a) Indirect taxes + Subsidies
b) Subsidies – Indirect taxes
c) Indirect taxes – Subsidies
d) both b) and c)

Ans – c

49. Which of the following is not correct?

a) NNP at market price = GNP at market price + Depreciation
b) NDP at market price = NNP at market price – net factor income from abroad
c) NDP at factor cost = NDP at market price – Indirect taxes + subsidies
d) GDP at Factor cost = NDP at factor cost + Depreciation

Ans – a

50. Which one is correct?

a) National Income = NDP at factor cost – Net factor income from abraod
b) GNP at Factor cost = GNP at market price + Net Indirect tax
c) Natinoal Income = Domestic income + Net factor income from abroad
d) GDP at Factor cost = NDP at factor cost – Depreciation

Ans – c

51. Basis of the difference between the concepts of market price and factor cost is:

a) direct taxes
b) indirect taxes
c) subsidies
d) Net indirect taxes

Ans – d

52. Which one leads to factor cot?

a) Market price – Indirect taxes
b) Market price – Net indirect taxes
c) Market price + Indirect taxes
d) Market price + Net indirect taxes

Ans – b

53. Which one includes depreciatoin?

a) GNP at market price
b) NNP at market price
c) NNP at factor cost
d) None of these

Ans – a

54. Which of the following is an example of normal residents of India?

a) Foreign worker working in WHO located in India
b) The german working as director in IMF office located in India
c) Ambassador in India from rest of the world
d) Ambassador of India in rest of the world

Ans – d

55. National income includes:

a) old-age pensions
b) money spent by an NRI to his family in India
c) transfer payments from rest of the world
d) none of these

Ans – d

56. Financial help to a victim is:

a) tranfer payment
b) factor income
c) net factor income from abroad
d) none of these

Ans – a

57. The difference between national income and domestic income is that of:

a) net indierct taxes
b) net factor income from abroad
c) consumption of fixed capital
d) both a) and b)

Ans – b

58. GNP at market price is measured as:

a) GDP at market price – Depreciation
b) GDP at market price + Net factor income from abroad
c) GNP at market price + subsidies
d) NDP at factor cost + Net factor income from abroad

Ans – b

59. National income refers to:

a) factor incomes only
b) income of only normal residents of the country
c) the sum total of domestic income and net factor income from abroad
d) all of these

Ans – d

60. National income (NNP at fc) is equal to:

a) GNP at fc + depreciation
b) GNP at fc – depreciation
c) NNP at mp – Net indirect taxes
d) both b) and c)

Ans – d

61. Which of the following makes GDP an inappropriate index of welfare?

a) Non-monetary transactions
b) Externalities
c) Composition and distribution of GDP
d) All of these

Ans – d

62. The impact of an externality is:

a) Positive
b) Negative
c) either positive or negative
d) neither positive nor negative

Ans – c

63. Real National income means:-

a) National income at current prices
b) national income at factor prices
c) national income at constant prices
d) national income at average prices of the past 10 years

Ans – c

64. GDP Deflator =

a) Real income/Nominal income * 100
b) Nominal Income/Real Income * 100
c) Real Income/Population * 100
d) None of these

Ans – b

65. Increase in price of commodities due to increase in taxes assumes relevance in the estimation of NNP at MP because:

a) taxes are compulsary payments
b) taxes are transfer payments
c) taxes are paid out of income of the households
d) taxes cause a rise in market price of the commodities which otherwise
would have been sold at a lower price

Ans – d

66. Household inventory is:

a) not included in national income
b) a stock concept
c) both a) and b)
d) none of these

Ans – c

1. Remittances from a relative working abroad are:-

a) included in natinal income
b) not included in national income
c) tranfer payments
d) both b) and c)

Ans – d

68. own account production of goods is included in national income because:

a) goods are tangible
b) their valuation is possible
c) goods are more productive than services
d) none of these

Ans – b

a) production of durable goods
b) output – intermediate consumption
c) production of non-durable goods
d) expenditure on intermediate goods

Ans – b

70. Gross domestic capital formation is the sum total of:

a) expenditure on fixed assets
b) gross domestic fixed capital formation and change ins stock
c) net domestic fixed capital formation + inventory investment + depreciation
d) both b) and c)

Ans – d

71. Value added method measures the contribution of which of the following within the domestic territory of a country?

a) Household consumers
b) The producing enterprises owned by residents of the country
c) The producing enterprises owned by the non-residents of the country
d) Both b) and c)

Ans – d

72. Which of the following items is not included while estimating national income by Income method?

a) Rent
b) Mixed income
c) Fixed investment
d) Undistributed profits

Ans – c

73. Which of the following is not an element of final consumption expenditure?

a) Household expenditure on food
b) Government final consumption expenditure
c) Household expenditure on education
d) Expenditure on raw material

Ans – d

74. As a result of double counting, national income is:

a) over-estimated
b) Under-estimated
c) correctly estimated
d) not estimated for the entire year of accounting

Ans – a

75. Which of the following is not included in national income?

b) REpatriation of wages earned by the NRIs to their parents in India
c) Excise duty on domestic production
d) All of these

Ans – d

76. Which of the following is not a transfer payment?

a) Interest on national debt
b) Retirement pensions
c) Old age pensions
d) Donations

Ans – b

77. Which of the following items is not included while estimating GNP of a country at market price?

a) Sales of the enterprises
b) Indirect taxes
c) Remittances by NRIs
d) Subsidy

Ans – c

78. Own account production of services is not included in national income because:

a) services are different from goods
b) services are not productive
c) it is difficult to measure market value of such services
d) none of these

Ans – c

79. Difference between closing stock and opening stock during an accounting year is knows as:

a) increase in stock
b) change in stock
c) decrease in stock
d) none of these

Ans – b

80. Compensation of employees includes:

a) wages and salaries in cash
b) wages and salaries in kind
c) pension on retirement
d) all of these

Ans – d

81. Operating Surplus =

a) Rent + Profit + Interest
b) Rent + Interest + Compensation of employees
c) NDP at fc – Compensation of employees – Mixed income of self employed
d) both a) and c)

Ans – d

82. Which of the following is not included in inventory investment?

a) Change in stock of finished goods
b) Change in stock of semi-finished goods
c) Change in stock of raw material
d) Change in sales during the year

Ans – d

83. Which of the following is not a part of final expenditure?

a) Consumer goods purchased by the government
b) Consumer goods exported to rest of the world
c) Seeds purchased by the farmers
d) Government fixed investment expenditure

Ans – c

84. Problem of double counting can be avoided by using:

a) final outpur method
c) both a) and b)
d) neither a) nor b)

Ans – c

85. Which of the following is irrelevant in the estimation of compensation of employees?

a) Free accommodation provided to the school principles
b) Free education of the students whose parents are working in schools
c) Wages and salaries in cash
d) Old age pensions

Ans – d

86. Which of the following is a phase of circular flow of income?

a) Generation Phase
b) Distribution Phase
c) Disposition Phase
d) All of these

Ans – d

87. Which of the following is not an example of flow variable?

a) Number of births during a year
b) National Wealth
c) National Income
d) Wheat produced during a year

Ans – b

88. Which of the following is not considered a factor income?

a) Rent
b) Wages
d) Profit

Ans – c

89. Two-sector economy consists of:

a) Households, firms
b) Firms, Foreign sector
c) Households, Government
d) Firms, Government

Ans – a

90. Stock variable is defined as a variable which is

a) Measured over a period of time
b) Measured at a particular point of time
c) Can not be measured
d) None of these

Ans – b

91. Losses are classified as:

a) Stock variable
b) Flow variable
c) Either a) or b)
d) Neither a) nor b)

Ans – b

92. Real flow is also know as:

a) Nominal flow
b) Physical flow
c) Money flow
d) Both a) and b)

Ans – b

93. Which of the following is the consumption sector?

a) Households
b) Firms
c) Foreign
d) Government

Ans – a

94. Money flow involves exchange of:

a) Goods and services
c) Money
d) None of these

Ans – c

95. Real flow refers to the flow of factor services fromâ€¦..toâ€¦â€¦.

a) Firms to households
b) Households to firms
c) Firms to government
d) Households to government

Ans – b

96. In a closed economy,â€¦â€¦â€¦is not included.

a) Households
b) Firms
c) Government
d) Foreign sector

Ans – d

97. Which of the following is not a flow?

a) capital
b) Income
c) Investment
d) Depreciation

Ans – a

98. Which of the following is a stock?

a) Wealth
b) Saving
c) Exports
d) Profits

Ans – a

99. Which of the following is a flow?

a) Deposits in a bank
b) Capital
c) Depreciation
d) Wealth

Ans – c

100. Which of the following is a stock?

a) Savings
b) Production
c) Consumption of fixed capital
d) Capital

Ans – d

101. Flow of Goods and services and factors of production across different sectors in a barter economy is knows as:

a) Circular Flow
b) Real Flow
c) Monetary Flow
d) Capital Flow

Ans – b

102. Which of the following are covered under the domestic territory of India?

a) state bank of India in London
c) Office of Tata Motors in Australia
d) Russian Embassy in India

Ans – b

103. Which one of the following is an intermediate product?

a) Purchase of oil by consumers
b) Machine purchased by firms
c) Wheat used by a flour mills
d) Wheat used by households

ans – c

104. Which one of the following is not an example of final goods?

a) Chalk, dusters, etc. purchased by a school
b) seeds used by the farmers
c) milk used by sweets shop
d) All of the above

Ans – d

105. Which of the following constitute the reason for difference between market Prices and Factor Cost?

a) Subsidies
b) Indirect Taxes
c) bothe a) and b0
d) Neither a) nor b)

Ans – c

106. Final goods refer to those goods which are used either forâ€¦..or forâ€¦..

a) Consumption, investment
b) Consumption, resale
c) Resale, investment
d) Resale, further production

Ans – a

107. Net factor income from abroad is:

a) Exports munu Imports
b) Visible Exports minus Visible Imports

Ans – c

108. Depreciation means:

a) Destruction of a plant in a fire accident
b) Losses of fixed assets over time dur to wear and tear
c) Loss of fixed assets in an earthquake
d) Closure of the plant due to lockout

Ans – b

109. Market price and Factor cost will be equal when there is:

a) No direct tax
b) No Indirect tax
c) No subsidy
d) No indirect tax and no subsidy

Ans – d

110. Which of the following is an example of transfer income?

a) Bonus
b) Unemployement Allowance
c) Compensation from the employer
d) All of the above

Ans – b

111. Which of the following is an example of an intermediate goods

a) Car sold by a dealer of second hand cars
b) Steel and Cement used to constrct a flyover
c) Fertilizers purchased by a farmer
d) All of the above

Ans – d

112. Sugar purchased by a Sweet shop is anâ€¦â€¦good, while it is a â€¦â€¦good when it is purchased by a consumer

a) Capital, final
b) final, intermediate
c) intermediate, final
d) final, producer

Ans – c

113. Depreciation of fixed capital assets refers to:

a) Normal wear and tear
b) Foreseen obsolescence
c) Normal wear and tear & foreseen obsolescence
d) Unforeseen obsolescence

Ans – c

114. Unforeseen obsolescence of fixed capital assets during production is:

a) Consumption of fixed capital
b) Capital loss
c) Income loss
d) None of the above

Ans – b

115. Refrigerator purchased by a confectionery shop is an example of:

a) Final good
b) Intermediate good
c) Capital good
d) Both a) and c)

Ans – d

116. Which of the following is an example of Non-durable good?

a) Milk
c) Both a) and b)
d) Clothes

Ans – c

117. Addition to the capital stock of an economy is termed as:

a) Investment
b) Capital loss
c) Consumption of fixed capital
d) All of these

Ans – a

118. Japanese Embassy in India is a part of domestic territory of

a) India
b) Japan
c) Both a) and b)
d) International Area

Ans – b

119. Foreign embassies in India are a part of India’s

a) Economic territory
b) Geographical territory
c) both a) and b)
d) None of the above

Ans – b

120. Goods purchased for the following purpose are final goods:

a) For satisfaction of wants
b) For investment in firm
c) Both a) and b)
d) None of the above

Ans – c

121. Out of the following, which aggregate represents ‘National Income’?

a) NNP at MP
b) GNP at FC
c) NNP at FC
d) GNP at MP

Ans – c

1. If factor income received from abroad is equal to factor income paid abroad, then which of the following is not a valid statement?

a) National income = Domestic Income
b) NDP at FC + Depreciation = GNP at FC
c) NDP at FC + Depreciation = GNP at MP
d) All are valid

Ans – c

1. Fill in the blank: NNP at FCâ€¦â€¦â€¦â€¦â€¦â€¦= GDP at MP

a) + Depreciation – Net Factor Income from abroad – Net Indirect Taxes
b) + Depreciation + Net Factor INcome from abroad + Net Indirect taxes
c) + Depreciation – Net factor income from abraod + Net Indirect taxes
d) + Depreciation + Net facotr income from abroad – Net Indiarect taxes

Ans – c

1. If economic subsidies are added to and indirect taxes are subtracted from the national income at market prices, then it will be equal to:

a) Domestic Income
b) National Income
c) Gross national product at market prices
d) Gross Domestic product at factor cost

Ans – b

1. Which of the following is not a component of operating surplus?

a) Interest
b) Rent
c) Royalty
d) Compensation of Employees

Ans – d

1. In which type of country, domestic income is equal to national income?

a) open Economy
b) Closed Economy
c) Both a) and b)
d) Neither a) nor b)

Ans – b

1. Domestic factor income is another name for:

a) NDP at FC
b) NNP at MP
c) GDP at FC
d) NNP at FC

Ans – a

1. Net domestic product at factor cost is less than national income when:

a) Net factor income from abroad is positive
b) Net factor income from abroad is negative
c) Net factor income from abroad is zero
d) Net exports are positive

Ans – a

1. National Income is equal to:

a) Domestic product plus factor incomes earned from abroad
b) Domestic product plus net factor incomes earned from abroad
c) Domestic product minus factor incomes to abroad
d) Domestic product plus export minus imports

Ans – b

1. If net national product is given at Marke prices, we_____indirect taxes and______subsidies to get National Income of the economy.

d) Subtract, Divide

Ans – c

1. From the following information, compute GNP at MP. GDP at FC = â‚¹ 3,000; Net factor income to abroad = â‚¹ 200. Indirect Taxes = â‚¹ 420, Subsidies = â‚¹ 240.

a) 3,380
b) 2,980
c) 3,020
d) 2,620

Ans – b

1. GNP exceeds NNP by:

a) Amount of total taxes
b) Government expenditure
c) Transfer Payments
d) Difference between gross and net investment

Ans – d

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