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. Gross fixed capital formation
B. Old age pension paid by government
C. Final consumption expenditure of households
D. Government final consumption expenditure
Discuss
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Correct Answer: Option B

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 market prices
C. GDP at factor cost
D. NNP at factor cost
Discuss
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Correct Answer: Option D

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. minus indirect taxes minus subsidies
B. plus indirect taxes plus 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. Income method
B. Value added method
C. Production method
D. Expenditure method
Discuss
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Correct Answer: Option A

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. estimate depreciation
B. measure informal sector output
C. avoid double counting
D. include transfer payments
Discuss
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Correct Answer: Option C

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. minus net factor income from abroad
D. plus depreciation
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. indirect taxes
B. net factor income from abroad
C. subsidies
D. depreciation
Discuss
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Correct Answer: Option D

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. customs duty
D. direct personal taxes
Discuss
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Correct Answer: Option D

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 NNP multiplied by 100
B. GDP at factor cost divided by GDP at market price multiplied by 100
C. Nominal GDP divided by Real GDP multiplied by 100
D. Real GDP divided by Nominal GDP multiplied by 100
Discuss
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Correct Answer: Option C

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. 150
C. 125
D. 80
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. is measured at base year prices
D. includes depreciation
Discuss
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Correct Answer: Option C

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 population
B. total labour force
C. total number of households
D. total working population
Discuss
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Correct Answer: Option A

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. Capital stock
B. Investment expenditure
C. National income
D. Government expenditure
Discuss
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Correct Answer: Option A

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. GDP
B. Capital stock
C. Wealth
D. Money supply
Discuss
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Correct Answer: Option A

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. factor income received from abroad plus factor income paid to abroad
B. factor income received from abroad minus factor income paid to abroad
C. exports minus imports
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. Transport
B. Automobile manufacturing
C. Mining
D. Banking
Discuss
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Correct Answer: Option C

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. Agriculture
C. Construction
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 paid in cash
C. are included in personal income
D. are paid to foreigners
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 950 crore
D. Rs 850 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. Intermediate consumption
C. Sale of old shares
D. Final consumption expenditure
Discuss
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Correct Answer: Option D

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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