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Some macroeconomic identities - class-XI

Description: some macroeconomic identities
Number of Questions: 23
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Tags: national income and related aggregates national income analysis circular flow of income and methods of calculating national income economics national income national income accounting national income aggregates
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In a closed economy, gross domestic product is always equal to gross national product. 

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. True

  2. False

Show answer
Correct Option: A
Explanation:
This happens because net factor income from abroad is zero due to no interaction with the rest of the world.

The concept of normal resident applies to individuals only. 

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. True

  2. False

Show answer
Correct Option: B
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.

If factor cost is greater than market price, then it means that ____________________.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Indirect Taxes$ >$ Subsides

  2. Indirect Taxes $=$ Subsidies

  3. Indirect Taxes $<$ Subsides

  4. Indirect Taxes $\ge$ subsidies

Show answer
Correct Option: C
Explanation:

If factor cost is greater than market price, then it means Indirect taxes < Subsidies. Market price can be less than factor cost when subsidies will be more than the indirect tax.

Formula: Market price - indirect tax + subsidies = Factor cost

Which of the following constitute the reason for difference between Market Prices and Factor Cost?

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Indirect Taxes

  2. Subsidies

  3. Both (a) and (b)

  4. Neither (a) nor (b)

Show answer
Correct Option: C
Explanation:

Market price is basically the current price at which an asset is bought or sold in the market. It includes the cost of production in the  form of wages,rent,interest,profit.etc. whereas factor cost may not reflect the effect of taxes and subsidies unlike market price. It takes into account only of the actual cost of production including the profit. Hence, the reason for difference between market price and factor cost is indirect taxes and subsidies.

Mixed income refers to the income of: ______.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. small enterprises

  2. traders

  3. self employed persons

  4. all the three

Show answer
Correct Option: D

In Dx$=$f(Px, T, Y)Y is?

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Income level of consumer

  2. Tastes of consumer

  3. Quantity of demand of goods

  4. None of the above

Show answer
Correct Option: A

Personal income distribution is relatively ___________________.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. More unequal in urban areas than in rural areas

  2. More equal in urban areas than in rural areas

  3. More or less the same in rural and urban areas

  4. More unequal in rural areas than in urban areas

Show answer
Correct Option: A

Which of these is/are not included in net domestic product at factor cost?

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Wages or compensation of employees

  2. Rent, interest, profit or operating surplus

  3. Mixed income

  4. None of the above

Show answer
Correct Option: D

For most economies which of these statement is true?

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. National income accounts and national output accounts are equal to each other.

  2. Estimation of national income is just impossible

  3. National output is less than national Income

  4. National income is less than national output

Show answer
Correct Option: A

GNP at MP=Rs. 99,000 Net factor income abroad=(-) 560
Capital consumption allowance= Rs. 6100, Net indirect tax=Rs. 8470
From the above, estimate of GNP at factor cost.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs. 90,530

  2. Rs. 91,000

  3. Rs. 89,990

  4. Rs. 93,100

Show answer
Correct Option: A

Given personal income of Rs.7510, personal income tax of Rs.410, Consumption being Rs. 5000, Personal saving will be _______.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs.7000

  2. Rs.6890

  3. Rs.2100

  4. Rs.6700

Show answer
Correct Option: C

Given personal income of Rs.7510, personal income tax of Rs. 410, Consumption being Rs. 5000, Personal saving being Rs. 2100. Find the disposal income.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs. 7000

  2. 6890

  3. Rs. 7100

  4. Rs. 6700

Show answer
Correct Option: C

______ is the personal income minus personal income tax and miscellaneous payments to government.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Surplus income

  2. Disposable income

  3. Expendable income

  4. Residual income

Show answer
Correct Option: B
Explanation:

Disposable income refers to the income which is freely available to the disposal of the individual. The gap between the personal income of an individual and disposal income is due the taxes and other payments made to the government on the personal income earned. 
Symbolically: ${\text{Disposable Income = Personal Income - Taxes and other payments made to the government on the personal income}}$ 

Given personal income of Rs.8000, personal income tax of Rs.1200, Consumption Rs. 5000, Personal saving is equal to ______.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs.2000

  2. Rs.2400

  3. Rs.2900

  4. Rs.1800

Show answer
Correct Option: D

The major difference between personal income and disposal income is _______.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. indirect tax

  2. direct taxes

  3. savings

  4. investment

Show answer
Correct Option: B

If there is a simultaneous fall in consumers disposal income as well as number of suppliers of a product in the market, the _________.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. equilibrium quantity will decrease

  2. equilibrium price will decrease

  3. equilibrium price will go up

  4. equilibrium quantity will increase

Show answer
Correct Option: A

From the following equation estimate disposal income (Y) when consumption (C) is Rs. 910.
C=Rs. 160+0.75Y$ _d$

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs. 1100

  2. Rs. 900

  3. 1000

  4. 800

Show answer
Correct Option: C

From the following equation estimate Income (Y) consumption is Rs.1000 is _______.
C=Rs. 200+0.80Y$ _d$

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs. 1000

  2. Rs. 1100

  3. Rs. 900

  4. Rs. 800

Show answer
Correct Option: A

From the following equation estimate disposal income (Y) when consumption C=is Rs. 760 is ________.
C=Rs. 160+0.75Y$ _d$

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs. 1000

  2. Rs. 900

  3. Rs. 800

  4. Rs. 750

Show answer
Correct Option: C

From the following equation estimate disposal income (Y) when consumption C=is Rs. 1000 is _______.
C=Rs. 150+0.85Y$ _d$

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs. 1000

  2. Rs. 800

  3. Rs.900

  4. 1100

Show answer
Correct Option: B

From the following equation estimate disposal income (Y) when consumption (C) is Rs. 1000.
C=Rs. 160+0.80Y$ _d$

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. Rs. 1100

  2. Rs. 800

  3. Rs. 900

  4. Rs. 1000

Show answer
Correct Option: B

National product at market prices is higher than national product at factor cost by the amount of ____________.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. subsidy

  2. indirect taxes + subsidies

  3. indirect taxes

  4. indirect taxes - subsidies

Show answer
Correct Option: D

The difference between values at Market Prices and Factor Cost is attributed to ___________.

economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

  1. net factor income from abroad

  2. depreciation

  3. net indirect taxes

  4. all of the above

Show answer
Correct Option: C
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