Which among the following is included in the gross domestic product?
- A.Sale of used goods
- B.Bartered goods and services
- C.Sales of final goods
- D.Transfer payments
Correct answer
Explanation
The correct answer is C, Sales of final goods. Gross Domestic Product counts the value of final goods and services produced inside a country during a year. Only final output is added, because the value of intermediate goods is already inside the price of the finished product, and counting both would be double counting. The exclusions follow from the same rule. A used good was counted in the year it was made, so selling it again adds nothing to this year's production, although the dealer's commission is a fresh service and does count. A transfer payment such as a pension, a scholarship or unemployment relief is income handed over with no good or service in return, so it is not production. Option A is wrong because the sale of used goods is not new output. Option B is wrong because barter is not recorded in money and cannot be valued, so it stays outside measured GDP. Option D is wrong because transfer payments create no output at all. Exam tip: GDP counts final goods only, and leaves out second-hand sales and transfer payments.
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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