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Question 1 of 10
1. Question
2 points
Which of the following are included as part of India’s GDP?
(i) Activities in Indian embassies and consulates in other countries
(ii) Air India services between two different countries
(iii) Value addition in India’s economic territory
(iv) Economic activities of residents of India in international waters
Select the correct answer using the code given below:
Correct
(d)
GDP is the total final value of goods and services produced within the domestic territory of a country in a specified time period (generally a financial year).
The concept of domestic territory (economic territory) is different from the geographical or political territory of a country. Domestic territory of a country includes the following:
• Political frontiers of the country including its territorial waters.
• Ships, and aircrafts operated by the residents of the country between two or more countries for example, Air India’s services between different countries.
• Fishing vessels, oil and natural gas rigs and floating platforms operated by the residents of the country in the international waters or engaged in extraction in areas where the country has exclusive rights of operation.
• Embassies, consulates and military establishments of the country located in other countries, for example, Indian embassy in U.S.A., Japan etc. It excludes all embassies, consulates and military establishments of other countries and offices of international organisations located in India.
Thus, domestic territory may be defined as the political frontiers of the country including its territorial waters, ships, aircrafts, fishing vessels operated by the residents of the country, embassies and consulates located abroad etc.
Incorrect
(d)
GDP is the total final value of goods and services produced within the domestic territory of a country in a specified time period (generally a financial year).
The concept of domestic territory (economic territory) is different from the geographical or political territory of a country. Domestic territory of a country includes the following:
• Political frontiers of the country including its territorial waters.
• Ships, and aircrafts operated by the residents of the country between two or more countries for example, Air India’s services between different countries.
• Fishing vessels, oil and natural gas rigs and floating platforms operated by the residents of the country in the international waters or engaged in extraction in areas where the country has exclusive rights of operation.
• Embassies, consulates and military establishments of the country located in other countries, for example, Indian embassy in U.S.A., Japan etc. It excludes all embassies, consulates and military establishments of other countries and offices of international organisations located in India.
Thus, domestic territory may be defined as the political frontiers of the country including its territorial waters, ships, aircrafts, fishing vessels operated by the residents of the country, embassies and consulates located abroad etc.
Question 2 of 10
2. Question
2 points
The visit of foreigners in India to see the various places/events in the country, amounts to which of the following in terms of economy:
Correct
(d)
Exports means produced within the country and sold to foreigners (or non-residents). If a foreigner is coming to India and then purchasing goods and services, then it is a case of exports.
In the same way, if a foreigner is coming to India for medical treatment or tourism then the foreigner is basically purchasing medical and tourism services produced in our country.
So, the best possible answer is exports.
Incorrect
(d)
Exports means produced within the country and sold to foreigners (or non-residents). If a foreigner is coming to India and then purchasing goods and services, then it is a case of exports.
In the same way, if a foreigner is coming to India for medical treatment or tourism then the foreigner is basically purchasing medical and tourism services produced in our country.
So, the best possible answer is exports.
Question 3 of 10
3. Question
2 points
Quarterly and Annual GDP data is released by NSO with a time lag of
Correct
(b)
National Statistical Office (NSO) releases the quarterly and annual GDP data with a lag of two months. For example, the data for the GDP and GDP growth for FY 2019-20 will be released on 31st May 2020
Incorrect
(b)
National Statistical Office (NSO) releases the quarterly and annual GDP data with a lag of two months. For example, the data for the GDP and GDP growth for FY 2019-20 will be released on 31st May 2020
Question 4 of 10
4. Question
2 points
The demand for GDP in the economy comes from which of the following sectors:
Correct
(d)
An economy produces two types of final goods i.e. consumption and capital goods. Consumption goods get consumed and capital goods are used for further production process (capital goods are also called investment). The value of these two goods produced in the economy in a year is called GDP. These two types of goods i.e. GDP is purchased by the four sectors of the economy
• Household sector (consumption goods)
• Private sector (capital goods)
• Government sector (consumption and capital both)
• External sector (consumption and capital booth)
Incorrect
(d)
An economy produces two types of final goods i.e. consumption and capital goods. Consumption goods get consumed and capital goods are used for further production process (capital goods are also called investment). The value of these two goods produced in the economy in a year is called GDP. These two types of goods i.e. GDP is purchased by the four sectors of the economy
• Household sector (consumption goods)
• Private sector (capital goods)
• Government sector (consumption and capital both)
• External sector (consumption and capital booth)
Question 5 of 10
5. Question
2 points
Consider the following statements regarding Gross Domestic Product:
(i) It is the value added by all the firms in the economy
(ii) It is the final value of goods and services produced in the economy
(iii) It is the sum of final consumption and investment expenditure by the household, private and government sector and net of exports and imports
(iv) It is the income received by the four factors of production
Select the correct answer using the code given below:
Correct
(d)
GDP is the sum of the final value of all goods and services (consumption and capital) produced in the economy or it can also be defined as the value added by all the enterprises/firms in the economy (by value added method). So (i) & (ii) statements are true.
By expenditure method, GDP = C + I + G + X-M
C + I + G is the expenditure done by the three sectors of the economy on two types of final goods i.e. consumption and capital (investment goods).
X-M is the net of exports and imports. So, (iii) statement is also true.
By Income method, GDP is also equal to the income received by the four factors of production i.e. Profit, Rent, Interest and wages.
So, (iv) statement is also true.
Incorrect
(d)
GDP is the sum of the final value of all goods and services (consumption and capital) produced in the economy or it can also be defined as the value added by all the enterprises/firms in the economy (by value added method). So (i) & (ii) statements are true.
By expenditure method, GDP = C + I + G + X-M
C + I + G is the expenditure done by the three sectors of the economy on two types of final goods i.e. consumption and capital (investment goods).
X-M is the net of exports and imports. So, (iii) statement is also true.
By Income method, GDP is also equal to the income received by the four factors of production i.e. Profit, Rent, Interest and wages.
So, (iv) statement is also true.
Question 6 of 10
6. Question
2 points
Consider the following statements
(i) Capital goods are final goods and are not used as an input
(ii) Intermediate goods are those which have been produced but should be further transformed before it can be used for any purpose
Select the correct answer using the code given below:
Correct
(b)
Intermediate goods are semi-finished goods which have been produced by a process but cannot be used as it is and need to go through further production/transformation process to be converted into a final good. For example, steel sheets. The steel sheets cannot be used as it is and needs to be transformed into final products like automobiles, appliances etc. So (ii) statement is true.
A particular good will be capital in nature only if it possesses the following three characteristics:
• It is a produced durable output of a man-made process
• It again acts as an input for further production process (to be sold in the market)
• While acting as an input, it does not get transformed or consumed (hence it’s a final good)
Incorrect
(b)
Intermediate goods are semi-finished goods which have been produced by a process but cannot be used as it is and need to go through further production/transformation process to be converted into a final good. For example, steel sheets. The steel sheets cannot be used as it is and needs to be transformed into final products like automobiles, appliances etc. So (ii) statement is true.
A particular good will be capital in nature only if it possesses the following three characteristics:
• It is a produced durable output of a man-made process
• It again acts as an input for further production process (to be sold in the market)
• While acting as an input, it does not get transformed or consumed (hence it’s a final good)
Question 7 of 10
7. Question
2 points
Which of the following are not counted in India’s GDP calculation?
(i) Informal sector activity
(ii) Re-exports
Select the correct answer using the code given below:
Correct
(d)
Informal economic activity constitutes around 30% of the GDP. We may not be able to measure it accurately but while calculating the GDP figures informal activity is extrapolated based on formal activities and are included in GDP.
Re-exports means, something imported and then processed and then again exported. So, whatever goes in processing will be part of our GDP. For example, India imported crude oil worth Rs 50 and then refined/processed it and then exported in Rs. 80, then Rs. 80 – Rs. 50 = Rs. 30 will be included in India’s GDP
Incorrect
(d)
Informal economic activity constitutes around 30% of the GDP. We may not be able to measure it accurately but while calculating the GDP figures informal activity is extrapolated based on formal activities and are included in GDP.
Re-exports means, something imported and then processed and then again exported. So, whatever goes in processing will be part of our GDP. For example, India imported crude oil worth Rs 50 and then refined/processed it and then exported in Rs. 80, then Rs. 80 – Rs. 50 = Rs. 30 will be included in India’s GDP
Question 8 of 10
8. Question
2 points
Economic growth in India is measured by change in GDP at:
Correct
Solution:A
Incorrect
Solution:A
Question 9 of 10
9. Question
2 points
If India is experiencing economic growth, then which of the following statements must hold true:
(i) Real GDP is increasing
(ii) Nominal GDP is increasing
(iii) Rate of growth of real GDP is increasing
(iv) Rate of growth of nominal GDP is increasing
Select the correct answer using the code given below:
Correct
Solution: A
Incorrect
Solution: A
Question 10 of 10
10. Question
2 points
If a country is experiencing recession, then which of the following shall be true:
Correct
(a)
Real GDP growth measures growth in quantity only and nominal GDP measures growth in value (which includes quantity as well as price).
Incorrect
(a)
Real GDP growth measures growth in quantity only and nominal GDP measures growth in value (which includes quantity as well as price).
