The Net National Product can be calculated by subtracting Depreciation from _________.
- A.Direct Taxes
- B.Gross Domestic Product
- C.Gross National Product
- D.National Income
Correct answer
Explanation
The correct answer is C, Gross National Product. Net National Product is simply Gross National Product minus depreciation, that is NNP = GNP − Depreciation. Depreciation, also called consumption of fixed capital, is the wear and tear of machines, buildings and other capital goods during the year; taking it out shows how much output is really left with the nation. GNP itself is GDP plus the net factor income from abroad, so it counts what the residents of a country earn wherever they work. When NNP is measured at factor cost, it is the same as national income. A is wrong because direct taxes are a form of government revenue and are not an output aggregate. B is wrong because GDP minus depreciation gives Net Domestic Product, not NNP. D is wrong because national income is the result of the calculation, not its starting point. Exam tip: GDP + net factor income from abroad = GNP; GNP − depreciation = NNP; NNP at factor cost = national income.
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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