Worksheet -1

Chapter – National Income and Accounting

1. …… refers to the flow of money across different sectors of the economy.

(a) Real flow
(b) Circular flow
(c) Money flow
(d) Both (a) and (c)
2. Which of the following is not a flow?
(a) Capital (b) Income (c) Investment (d) Depreciation
3. Statement I All goods purchased by producers are intermediate goods.
Statement II All goods purchased by consumers are final goods.
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement II is true and Statement I is false
(c) Both statements are true
(d) Both statements are false
4. Which of the following is not a Factor
Payment’?
(a) Free uniform to defence personnel
(b) Salaries to the members of Parliament
(c) Rent paid to the owner of a building
(d) Scholarship given to the students
5. Statement I: Commission charged on sale of goods will be excluded from national product.
Statement II: Depreciation is charged on the Fixed assets.
Alternatives
(a) Statement I is true and Statement II is false (
(b) Statement II is true and Statement I is false
(c) Both statements are true
(d) Both statements are false
6. Statement I Old age pensions are excluded from national product.
Statement II Interest paid by a firm to the government is included in the domestic product.
Alternatives
(a) Statement I is true and Statement II is false
(b) Statement II is true and Statement I is false
(c) Both statements are true
(d) Both statements are false
7. Assertion (A) Income earned by foreigners working in a foreign bank in India is a part of gross
domestic income.
Reason (R) It is included in gross domestic income because foreign bank is located the domestic territory
of the country.
Alternatives
 (a) Both Assertion (A) and Reason ® are correct and Reason ® is the correct explanation of Assertion
(A)
(b) Both Assertion (A) and Reason ® are correct, but Reason ® is not the correct explanation of
Assertion (A)
(c) Assertion (A) is correct, but Reason ® is incorrect.
(d) Both (A) and Reason ® are incorrect
8. Giving reason, classify the following into Intermediate products and final products.
(i) Computers installed in an office.
(ii) Mobile sets purchased by a mobile dealer.
9. Distinguish between Final goods and intermediate goods. Give an example of each.
10. If nominal income is 500 and price Index is 125,
Calculate real income.
11. “Subsidies to the producers should be treated as transfer payments”. Defend or refute the given
statement with valid reason.
12. Government of India has recently launched ‘Jan-Dhan Yojana’ aimed at every household in country to
have atleast one bank account. Explain how deposits made under the plan are going to affect national
income of the country.
13. How will you treat the following while estimating National Income of India?
(i) Dividend received by an Indian from his Investment in shares of a foreign company.
(ii) Money received by a family in India from relatives working abroad.
(iii) Interest received on loans given to a friend for purchasing a car.
14. While calculating National Income of India from its domestic factor income, how will you treat the
following? Give reasons for your answer.
(i) Salaries received by Indians working in branches of foreign banks in India.
(ii) Profits earned by an Indian bank from theirb ranches in abroad.
(iii) Rent paid by Embassy of Japan in India to an Indian resident.
15. Will the following be a part of domestic income of India? Give reasons for your Answer.
(i) Old age pension given by the government.
(ii) Factor income from abroad.
(iii) Salaries to Indian residents working in Russian Embassy in India.
(iv) Profits earned by a company in India, which is owned by a non-resident.
16. Calculate sales from the following data
S.No Items. (in lakhs)
(i) Subsidies 200
(ii) Opening Stock 100
(iii) Closing Stock. 600
(iv) Intermediate Consumption 3,000
(v) Consumption of Fixed Capital 700
(vi). Profit 750
(vii) Net Value Added at Factor Cost 2000