Economy Set 1 MCQs

Economy GK

Economy Set 1 MCQs

Practice Economy GK MCQs on basic economic concepts including economy, economics, microeconomics, macroeconomics, goods and services, demand and supply, factors of production, opportunity cost, economic activities, sectors of economy and other fundamental concepts frequently asked in SSC, Railway, Banking, UPSC, JKSSB, JKPSC, Police, Defence and other competitive examinations.

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Total Questions

Practice Questions

Page 1 of 111
Question #1
Which of the following is not included in the calculation of Gross Domestic Product at market prices?
A. Government final consumption expenditure
B. Final consumption expenditure of households
C. Old age pension paid by government
D. Gross fixed capital formation
Discuss
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Correct Answer: Option C

Explanation:
Old age pension is a transfer payment and is not a payment for current production, hence it is excluded from GDP.
This question belongs to: Economy GK Economy Set 1
Question #2
In India, the estimate of National Income is usually expressed as:
A. GNP at market prices
B. GDP at factor cost
C. NNP at factor cost
D. GDP at market prices
Discuss
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Correct Answer: Option C

Explanation:
National Income is conventionally defined as Net National Product at factor cost.
This question belongs to: Economy GK Economy Set 1
Question #3
GDP at market prices equals GDP at factor cost:
A. plus indirect taxes plus subsidies
B. minus indirect taxes minus subsidies
C. minus indirect taxes plus subsidies
D. plus indirect taxes minus subsidies
Discuss
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Correct Answer: Option D

Explanation:
GDP at market prices = GDP at factor cost + indirect taxes - subsidies.
This question belongs to: Economy GK Economy Set 1
Question #4
Which of the following methods estimates national income by summing wages, rent, interest and profit?
A. Production method
B. Expenditure method
C. Income method
D. Value added method
Discuss
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Correct Answer: Option C

Explanation:
The income method sums all factor incomes: wages, rent, interest and profit.
This question belongs to: Economy GK Economy Set 1
Question #5
The value added method of measuring national income is primarily used to:
A. measure informal sector output
B. estimate depreciation
C. include transfer payments
D. avoid double counting
Discuss
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Correct Answer: Option D

Explanation:
The value added method avoids double counting by measuring only the addition to value at each stage of production.
This question belongs to: Economy GK Economy Set 1
Question #6
Gross National Product at market prices equals GDP at market prices:
A. minus depreciation
B. plus net factor income from abroad
C. plus depreciation
D. minus net factor income from abroad
Discuss
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Correct Answer: Option B

Explanation:
GNP = GDP + net factor income from abroad.
This question belongs to: Economy GK Economy Set 1
Question #7
Net Domestic Product at market prices equals GDP at market prices minus:
A. depreciation
B. subsidies
C. net factor income from abroad
D. indirect taxes
Discuss
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Correct Answer: Option A

Explanation:
NDP is obtained by deducting depreciation from GDP.
This question belongs to: Economy GK Economy Set 1
Question #8
Personal Disposable Income is obtained by subtracting from personal income:
A. corporate tax
B. indirect taxes
C. direct personal taxes
D. customs duty
Discuss
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Correct Answer: Option C

Explanation:
Personal disposable income is personal income minus direct personal taxes and other non-tax payments.
This question belongs to: Economy GK Economy Set 1
Question #9
The GDP deflator is calculated as:
A. Nominal GDP divided by Real GDP multiplied by 100
B. Real GDP divided by Nominal GDP multiplied by 100
C. GDP at factor cost divided by GDP at market price multiplied by 100
D. Nominal GDP divided by NNP multiplied by 100
Discuss
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Correct Answer: Option A

Explanation:
GDP deflator = (Nominal GDP / Real GDP) × 100.
This question belongs to: Economy GK Economy Set 1
Question #10
If nominal GDP is Rs 12,500 crore and real GDP is Rs 10,000 crore, the GDP deflator is:
A. 100
B. 80
C. 125
D. 150
Discuss
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Correct Answer: Option C

Explanation:
GDP deflator = (12500/10000) × 100 = 125.
This question belongs to: Economy GK Economy Set 1
Question #11
Real GDP differs from nominal GDP because real GDP:
A. includes indirect taxes
B. is measured at current year prices
C. includes depreciation
D. is measured at base year prices
Discuss
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Correct Answer: Option D

Explanation:
Real GDP is valued at constant base year prices to remove the effect of inflation.
This question belongs to: Economy GK Economy Set 1
Question #12
Per capita income is obtained by dividing national income by:
A. total number of households
B. total working population
C. total population
D. total labour force
Discuss
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Correct Answer: Option C

Explanation:
Per capita income is national income divided by mid-year total population.
This question belongs to: Economy GK Economy Set 1
Question #13
Which of the following is a stock variable?
A. Investment expenditure
B. Government expenditure
C. Capital stock
D. National income
Discuss
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Correct Answer: Option C

Explanation:
Capital stock is measured at a point of time and is therefore a stock variable.
This question belongs to: Economy GK Economy Set 1
Question #14
Which of the following is a flow variable?
A. Money supply
B. Wealth
C. Capital stock
D. GDP
Discuss
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Correct Answer: Option D

Explanation:
GDP is measured over a period of time and is a flow variable.
This question belongs to: Economy GK Economy Set 1
Question #15
Net factor income from abroad is equal to:
A. exports minus imports
B. factor income received from abroad minus factor income paid to abroad
C. factor income received from abroad plus factor income paid to abroad
D. remittances received by India
Discuss
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Correct Answer: Option B

Explanation:
Net factor income from abroad is the difference between factor income received from abroad and factor income paid abroad.
This question belongs to: Economy GK Economy Set 1
Question #16
Which of the following is classified under the primary sector?
A. Banking
B. Mining
C. Transport
D. Automobile manufacturing
Discuss
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Correct Answer: Option B

Explanation:
The primary sector includes agriculture, mining, fishing and forestry.
This question belongs to: Economy GK Economy Set 1
Question #17
Which of the following is a tertiary sector activity?
A. Mining
B. Construction
C. Agriculture
D. Software services
Discuss
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Correct Answer: Option D

Explanation:
Software services are part of the tertiary or services sector.
This question belongs to: Economy GK Economy Set 1
Question #18
Transfer payments are excluded from national income because they:
A. do not correspond to current production of goods and services
B. are included in personal income
C. are paid to foreigners
D. are paid in cash
Discuss
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Correct Answer: Option A

Explanation:
Transfer payments are one-sided payments with no corresponding production of goods or services.
This question belongs to: Economy GK Economy Set 1
Question #19
If GDP at factor cost is Rs 1,000 crore, indirect taxes are Rs 200 crore and subsidies are Rs 50 crore, then GDP at market prices is:
A. Rs 1,150 crore
B. Rs 1,250 crore
C. Rs 850 crore
D. Rs 950 crore
Discuss
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Correct Answer: Option A

Explanation:
GDP at market prices = 1000 + 200 - 50 = Rs 1,150 crore.
This question belongs to: Economy GK Economy Set 1
Question #20
In the expenditure method of GDP estimation, which of the following is included?
A. Transfer payments
B. Final consumption expenditure
C. Sale of old shares
D. Intermediate consumption
Discuss
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Correct Answer: Option B

Explanation:
The expenditure method includes final consumption expenditure, investment, government expenditure and net exports.
This question belongs to: Economy GK Economy Set 1
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