Which of the following is constituted under Article 280 of the Constitution of India?

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.

The correct answer is D, product method. The product method adds up the value of goods and services produced by all firms in the economy.

National income can be measured in three ways, and all three should give the same figure. The product or value added method adds the value added by each firm, that is output minus intermediate consumption, so that the same output is not counted twice. The income method adds the incomes earned by the factors of production, namely wages, rent, interest and profit. The expenditure method adds final expenditure in the economy as consumption, investment, government spending and net exports. In India the National Statistical Office prepares these estimates.

A is wrong: the expenditure method looks at final spending, not at output of firms. B is wrong: there is no separate consumption method; consumption is one item of the expenditure method. C is wrong: the income method counts factor incomes.

Exam tip: Three routes to the same GDP - product or value added, income, and expenditure.

The correct answer is D, 1982. The National Bank for Agriculture and Rural Development was set up on 12 July 1982.

NABARD was created by an Act of Parliament of 1981 on the recommendation of the Shivaraman Committee, formally the Committee to Review Arrangements for Institutional Credit for Agriculture and Rural Development, and it began work in July 1982. It is the apex refinance institution for agriculture, small industry, handicrafts and other rural activities, and its headquarters is in Mumbai. It supervises Regional Rural Banks and cooperative banks, runs the Rural Infrastructure Development Fund, and promotes the self-help group and bank linkage programme.

A is wrong: 1979 is not connected with NABARD. B is wrong: 1981 is the year the enabling Act was passed, not the year the bank started functioning. C is wrong: 1978 is too early for this institution.

Exam tip: NABARD - Act 1981, began 12 July 1982, Shivaraman Committee, headquarters Mumbai.

The correct answer is B, the Government of India through the Ministry of Finance. Fiscal policy means the use of taxation, public expenditure and public borrowing to influence output, employment and prices, and all three instruments belong to the government and are given effect through the Union Budget. During a slowdown it may spend more or tax less, and when demand is overheating it may do the opposite.

Option A, the Reserve Bank of India, conducts monetary policy through the repo rate, the cash reserve ratio, the statutory liquidity ratio and open market operations; it acts as banker to the government but does not frame the budget. Option C, the Securities and Exchange Board of India, regulates the securities market. Option D, the Finance Commission, is a constitutional body under Article 280 that recommends how central taxes should be shared with the states, which is a distribution question and not fiscal policy itself.

The correct answer is C, Article 116. It empowers the Lok Sabha to make a grant in advance, pending the completion of the procedure prescribed for voting the demands for grants and the passing of the Appropriation Act. This is the vote on account, and it keeps the machinery of government running in the interval, since money cannot lawfully be drawn from the Consolidated Fund without parliamentary authorisation.

Option A, Article 113, provides that estimates of expenditure charged on the Consolidated Fund shall not be submitted to the vote of Parliament and that a demand for a grant needs the President's recommendation. Option B, Article 115, deals with supplementary, additional or excess grants. Option D, Article 117, lays down the special provisions governing financial bills, including the requirement of the President's recommendation.