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CBSE Class 12 Economics Exam 2020: : Important Questions & Answers of Chapter 2 (National Income Accounting)

Check important questions of CBSE Class 12 Macro-Economics (Chapter 2: National Income Accounting) along with their answers. These NCERT based questions are prepared by a subject expert. These questions are from the important topics of  Chapter 2.

 
Feb 10, 2020 17:27 IST
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Important Questions & Answers Macro chapter 2
Important Questions & Answers Macro chapter 2

CBSE Class 12th Economic exam is scheduled for 13th March 2020. In this article we have complied a list of important questions from Chapter 2 of Part B (Macroeconomics): National Income Accounting. Questions given below are important questions and are expected to be asked in Class 12 Economics board exam 2019-20.

Ques 1 Define ‘‘Trade Surplus’’ and ‘‘Trade Deficit’’.

Solution:

Trade surplus will arise if the total value of country’s exports of merchandise is more than value of its imports of the merchandiser.

Trade deficit will arise if value of country’s imports is more than the value of its exports during the year.

CBSE Class 12 Syllabus 2020: All Subjects

 Ques 2 A country with trade deficit cannot have current account surplus in its Balance of Payments.’’ Do you agree with the given statement ? Discuss with reason.

Solution:

No, trade deficit occurs when value of goods/visibles imported is more than the value of goods/ visibles exported.

Trade deficit = Value of imports(Vm) < Value of exports (Vx)

Trade Surplus in this situation will arise when the deficit on trade account is less than the surplus on account of invisible.

Ques 3 “Gross Domestic Product (GDP) does not give us a clear indication of economic welfare of a country.” Defend or refute the given statement with valid reason.

Solution:

Yes, given statement is defended. As GDP may not take into account

i) Non-monetary exchanges like services of housewife

ii) Externalities i.e. benefits and harms which are caused due to economic activities

iii) Distribution of income.

Download CBSE Class 12 Economics Syllabus 2019-20 in PDF format

Ques 4 ‘‘Higher Gross Domestic Product (GDP) means greater per capita availability of goods in the economy.’’ Do you agree with the given statement ? Give valid reason in support of your answer.

Solution:

“Higher Gross Domestic Product (GDP) means greater per capita availability of goods in the economy.” This statement is not true.

  1. If the rate of population growth is more than the rate of growth of

GDP, the per capita availability of goods and services will fall.

  1. GDP doesn’t account for changes in inequalities in distribution of Income. If the rising GDP is concentrated in a few hands, per capita availability of goods in the economy might not increase.

Ques 5 Explain the meaning of Real Gross Domestic Product and Nominal

Gross Domestic Product

Solution:

Nominal Gross Domestic Product (GDP)is measured as the product of current year output (Q1) of final goods and services and their current year price(P1).

Real Gross Domestic Product (GDP), on the other hand, is measured as product of current year output (Q1) and their base year price (P0). Real GDP

will increase if the output of goods and services produced in an economy is increasing.

 Ques 6 Define the problem of double counting in the computation of national income. State any two approaches to correct the problem of double counting.

Solution:

The problem of double counting arises when the value of some goods and services are counted more than once while estimating national income.

Two ways to avoid double counting are : 

a) Deduct intermediate consumption from value of output to arrive at value added

b) Take the value of final product only

Ques 7 State whether the following statements are true or false. Support your answer with reason.

(a) Taxation is an effective tool to reduce the inequalities of income.

(b) Revenue deficit increases when government fails to recover loans forwarded to different nations.

Solution:

a) The given statement is true. Generally, the governments collect higher taxes from the rich people and spend it on the welfare of the poor. Thereby, reducing the inequalities of income.

b) The given statement is false, because recovery of loans is a capital receipt. It does not affect the revenue receipts.

Download CBSE Class 12 Economics Syllabus 2019-20 in PDF format

Ques 8 Primary deficit in a government budget will be zero, when ___________ .

(Choose the correct alternative)

(a) Revenue deficit is zero

(b) Net interest payments are zero

(c) Fiscal deficit is zero

(d) Fiscal deficit is equal to interest payment

Solution:

(d) Fiscal Deficit is equal to interest payment

Ques 9 Suppose in a hypothetical economy, the income rises from ` 5,000 crores to ` 6,000 crores. As a result, the consumption expenditure rises from ` 4,000 crores to ` 4,600 crores. Marginal propensity to consume in such a case would be ________. (Choose the correct alternative)

(a) 0.8

(b) 0.4

(c) 0.2

(d) 0.6

Solution:

  1. d) 0.6

 Ques 10 Given   the   following   data, find  the   values of ‘‘Gross  Domestic Capital Formation’’ and  ‘‘Operating Surplus’’.

Solution:

Gross Domestic Capital Formation = (i) – {iii+vii+x} + vi – xii +iv

GDCF = 22,100- {7,200+6,100+3,400}+500-(-150)+700

GDCF = 6,750 crores

Operating surplus = National Income – wages and salaries – Mixed Income of Self Employed – Net Factor Income from Abroad

= (i) – (ii) – (viii) – (xii)

= 22,100 – 12,000 – 4,800 – (-150)

= 5,450 crores

Chapter-wise Important Questions & Answers on Microeconomics and Macroeconomics

 
 
 

 

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