If we deduct depreciation from GNP the measure of aggregate income that we obtain is called ______.
- A.Gross Domestic Product at market prices
- B.Gross Domestic Product
- C.Net National Product
- D.Personal income
Correct answer
Explanation
The correct answer is C, Net National Product. Gross National Product minus depreciation gives Net National Product.
Depreciation is the wear and tear of machinery, buildings and other capital goods during the year. The word 'gross' means depreciation has not been taken out and 'net' means it has, so GDP minus depreciation gives Net Domestic Product and GNP minus depreciation gives Net National Product. The word 'national' brings in net factor income from abroad, that is income earned by Indians outside the country minus income earned by foreigners inside it. NNP at factor cost is what is usually called national income, and dividing it by the population gives per capita income.
A and B are wrong: both are gross domestic measures and take no account of depreciation. D is wrong: personal income is the income actually received by households, reached after further adjustments.
Exam tip: Gross minus depreciation equals net; domestic plus net factor income from abroad equals national.
Practice Questions
View allAccording to the law of diminishing marginal utility, as the amount of a good consumed increases, the marginal utility of that good tends to
- A.improve
- B.diminish
- C.remain constant
- D.first diminish and then improve
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Each extra unit of a good gives a consumer less additional satisfaction than the unit before it, so marginal utility falls as consumption rises.
Read the full explanation →Consider the following statements about impact of tax : 1. A tax is shifted forward to consumers if the demand is inelastic relative to supply. 2. A tax is shifted backward to producers if the supply is relatively more inelastic than demand. Which of the statements given above is/are correct?
- A.1 only
- B.2 only
- C.Both 1 and 2
- D.Neither 1 nor 2
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The burden of a tax falls more heavily on whichever side of the market is less elastic, the side that cannot easily walk away.
Read the full explanation →UBI, as an alternative for subsidies in poverty alleviation, stands for
- A.Union Basic Income
- B.Undefined Basic Income
- C.Unconditional Basic Income
- D.Universal Basic Income
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UBI is the idea of paying every citizen a fixed sum of money regularly, without conditions, in place of a large number of separate subsidies and welfare schemes.
Read the full explanation →Who among the following is the Chairman of the Fourteenth Finance Commission?
- A.C. Rangarajan
- B.Vijay Kelkar
- C.Y. V. Reddy
- D.Rakesh Mohan
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The Fourteenth Finance Commission, set up in 2013 for the award period 2015-2020, was chaired by Y. V. Reddy, a former Governor of the Reserve Bank of India.
Read the full explanation →Why was constitutional amendment needed for introducing GST?
- A.States were not willing to agree with the Union for introduction of GST without amendment in the Constitution.
- B.GST was to be implemented on concurrent base and Article 246 was inadequate for such a case.
- C.The Empowered Committee of Finance Ministers had recommended for constitutional amendment.
- D.The GST Council had recommended for constitutional amendment so that its power enhances.
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GST is levied by the Union and the States together on the same supply, and Article 246, which splits taxing powers between them through separate lists, did not allow such a concurrent tax.
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