Aggregates related to national income - NDP

Correct answer: B. 2270 crore rupees

Explanation: The governing formula is NDP at market price = NDP at factor cost + net indirect taxes. Since net indirect taxes are negative 80 crore rupees, NDPMP = 2350 + (−80) = 2270 crore rupees. Thus, option B is correct. Option A treats the negative tax as positive, option C ignores taxes, and option D subtracts 180 instead of 80.

Correct answer: A. It is payment for a current productive service

Explanation: NDP includes the value of current productive services provided within the domestic economy, whether the employer is private or governmental. A government engineer performs engineering and administrative work during the current period, and the salary is the income paid for that service. It is therefore treated as compensation of employees and included in domestic product. The salary is not a transfer payment, a capital gain, or merely tax collection. Hence option A is correct.

Correct answer: A. 340 crore rupees

Explanation: Gross domestic product becomes net domestic product after deducting depreciation: NDP = GDP − depreciation. Hence, depreciation = GDP − NDP. The stated excess of GDP over NDP is 340 crore rupees, so depreciation is 340 crore rupees. The other values incorrectly double, ignore, or halve the given difference.

Correct answer: B. Second economy

Explanation: NDP is obtained by subtracting depreciation, or consumption of fixed capital, from GDP: NDP = GDP − depreciation. Since both economies have the same GDP, the economy with lower depreciation retains more output after allowing for capital wear and tear. The second economy therefore has higher NDP. Option A reverses the effect, C ignores depreciation, and D concerns national rather than domestic aggregates.

Correct answer: B. ₹580 crore

Explanation: NDP is a domestic-territory measure. It includes net production generated within India, regardless of whether the producer is Indian or foreign. Therefore, the foreign company’s ₹580 crore output made in India is included. The Indian company’s ₹420 crore output made abroad belongs to the other country’s domestic product and is excluded from India’s NDP. Hence option B is correct.

Correct answer: A. Mixed income

Explanation: Mixed income is the combined return earned by a self-employed person when separate payments for labour, capital, entrepreneurship and sometimes property cannot be identified. The architect’s single unseparated income therefore enters national-income accounting as mixed income. It is not only profit, because it also rewards personal labour and capital; it is not employee compensation or a transfer. Hence option A is correct.

Correct answer: B. ₹8,850 crore

Explanation: The governing distinction is between gross and net domestic product. Gross GDP includes the value of depreciation, while net domestic product removes consumption of fixed capital. Therefore, NDP at market price = GDP at market price − depreciation = ₹9,600 crore − ₹750 crore = ₹8,850 crore. Option B is correct. Adding depreciation would incorrectly move from net to gross, while the other amounts do not follow the required subtraction.

Correct answer: B. GDPMP − Depreciation

Explanation: The governing concept is that gross values include consumption of fixed capital, whereas net values exclude it. Therefore, NDP at market price is obtained by subtracting depreciation from GDP at market price: NDPMP = GDPMP − depreciation. Option B is correct. Adding depreciation produces a gross amount, and the other formulas either use the wrong aggregate or apply an unrelated price adjustment rather than the gross-to-net conversion.

Correct answer: B. It is not paid in return for a current productive service

Explanation: NDP measures the value of goods and services produced within the domestic economy, not every payment received by households. Unemployment allowance is a transfer payment: the recipient does not provide a current productive service directly in exchange for it. Therefore it is excluded from NDP, making option B correct. Its being cash or being targeted at particular people does not determine national-income treatment.

Correct answer: B. The gap widens

Explanation: The governing relationship is NDP = GDP − depreciation, or equivalently GDP − NDP = depreciation. Thus, if depreciation increases while GDP is otherwise unchanged, the amount subtracted from GDP becomes larger and NDP falls relative to GDP. The gap between the two aggregates therefore widens. It does not narrow, remain fixed, or disappear. Hence option B correctly describes the effect of a rise in depreciation.

Correct answer: C. ₹8,400 crore

Explanation: The governing relationship is GDP = NDP + depreciation because NDP is the net measure after deducting consumption of fixed capital, whereas GDP is the gross measure before that deduction. Substituting the values gives GDP = ₹7,500 crore + ₹900 crore = ₹8,400 crore. Therefore, option C is correct. Option B merely repeats NDP, while option A subtracts depreciation in the wrong direction.

Correct answer: B. ₹750 crore

Explanation: Net indirect taxes measure the excess of indirect taxes over subsidies. The governing formula is Net indirect taxes = Indirect taxes − Subsidies. Hence, Net indirect taxes = ₹1,050 crore − ₹300 crore = ₹750 crore. Therefore, option B is correct. Option C ignores the subsidy, option D adds the subsidy instead of subtracting it, and option A contains an incorrect subtraction.

Correct answer: B. Minus ₹250 crore

Explanation: Net exports are calculated as exports minus imports, not imports minus exports. Therefore, net exports = ₹650 crore − ₹900 crore = −₹250 crore. Since imports exceed exports by ₹250 crore, the result is a trade deficit and must be shown as negative. Hence, option B is correct; ₹1,550 crore is the sum, not net exports.

Correct answer: C. ₹300

Explanation: Per-capita real NDP is obtained by dividing total real NDP by population. Therefore, ₹15,000 crore ÷ 50 crore persons = ₹300 per person. The crore units cancel because both numerator and denominator are expressed in crores. Thus option C is correct; the other values come from incorrect division or unrelated arithmetic.

Correct answer: B. The difference will rise

Explanation: The accounting identity is NDP = GDP − depreciation. Rearranging it gives GDP − NDP = depreciation. Therefore, if depreciation rises while GDP is held constant, the gap between GDP and NDP becomes larger. It will not automatically become zero, fall, or remain unchanged because depreciation is precisely the amount deducted from gross output to obtain net output.

Correct answer: A. Normal depreciation

Explanation: The gradual loss of efficiency caused by ordinary use is normal depreciation, also called consumption of fixed capital. It represents the part of a machine’s productive value used up during production and is deducted from gross product to calculate net product. A capital gain is an increase in value, a transfer loss is not the relevant national-income category, and net indirect tax concerns taxes and subsidies.