(Jllll" J ■ Basic Concepts of Macroeconomle5

c. Semt-durabietoocts
d. Economtc Assistance
e. Difference between National tnr-.. _..,
·..._,.., ••"' Domtstlc fncome
Multlpl• Choice Qu..tlons (MCQs)
wt,ieh of the following are covered under the dome ti
1' al State Bank of India In London neSl~G rrltory of India 7
~ Google office in t d'
c Office ofTata Motors in Australia (d) R . n ,a
. . . ussian Embassy In India
J. WfliCh one ofthe following 1s an intermediate product?

J.
r- se of pulses by consumers
used by a flour mill

Chalk, dusters, etc. purchased by a school

(b) Mach· h
me pure ased by a firm
(d) Wheat used by households
Whkh one of the following is not an example of final goods?
(b).Jertilizers used by the farmers
c Wheat used by the flour mill ..Jt6f All of the above
4. Which of the following constitute the reason for difference between Market Prices and Factor Cost?
~) JndirectTaxes (b) Subsidies
-S,Both (a) and (b) (d) Neither (a) nor (b)
s. Iffactor cost is greater than market price, then it means that:
(a) )'direct Taxes> Subsides (b) Indirect Taxes= Subsidies
.('Indirect Taxes< Subsides (d) Indirect Taxes~ subsidies
I. ~ s refer to those goods which are used either for . or for
(J"Consumption, investment (b) Consumption, resale
Resale, investment (d) Resale, further production

,. NllfKtor income from abroad is:

ta &ports minus Imports
.·~ Exports minus Visible Imports . .
fTfldet tncomes received from abroad minus factor incomes paid abroad
fM.tortncomes received from abroad
~~
d a plant In a fire accident
ISSetS In an earthq ua ke
~oss of fixed assets ewer time due to wear 9JN
........
(d) Closure of the plant due to loclWV'
~-
cost wlll be equal when there Is:
(b No tndtrect tax
~ lndlreet we and no subskt/

111 . . . . . oftrandtr ":'~tAlloll' IKt

...............-
d) Attdthl.._
 luft , l11n ry M,,
, I fI ,,

12. Sugat purchl @d by .t ~Wfflt ,ho~l 11 iM (Jl J j Whll• It I "

~std by aco,, um,t
tat ~a\.Ffnal (h) t ln11I Int tm tll f
~ltt.flnal ( I) ~1n,1, Pr du t
,,. tdt-ntifytht m ng lttm In the followlnQ nowdutrt

~1att0n
~Net Indirect Tuxe

...
Net Factor Income from Abroad (d) Indirect Thxrs
14. Which of the following flowchart correctly establlshes the trHtment of 'Oeprttclatlon l
Groaa

I
C
j
.9
-
.!- j
C

I
l
~ flf fi
TJ
-
+

15.
I
-(b)
... ,•.
( )
JI
Oepreciafion of fixed capital assets refers to:
la)~ wear and tear (b) Foreseen obsolescence
$ Normal wear & tear & for@Hen obsolescence (d) Unforeseen obsolescence
16. U. :foreseen obsolftcenc:e of fixed capita I assets durlni,J>roductlon Is:
B E.
Consumption of Flud Capital V Capita! Loss
< Income Loss (d) None of the abow
17. IWrtgarctu, pu,chased by I conflctlonery shop Is M eQffiple of:
RAIi Good (b) lntermedllte Good
~ (l)IIICf Cc)

....,
C....,Good
I& ._.fll.. WlotJqgll111-....._flNon-du 1

~
__,. sasic Concepts of Macroeconomics

in India are a part of India's:

embassies
(Ch~os
1nr, e correct alternative) {CBS£, Delhi Comptt. 20111
fare~
fc0r,orn 1
·cterritory G •
eograph1cal territory
J1•
(a) sath (a) and (b) (d) None of the above
(cl rchased for the following purpose are final goods· (choo th .
c;c,odS pU · se ecorrect alternat,ve)
JJ, . f wants {CBSE, All India Comptt.20111
satisfaction° (b) For investment in firm
(a) r:h (a) and (b) {d) None of the above
601
1' Price will be equal to Factor Cost when:
• Market .
JJ (a) indirect Taxes are zero . . (b) jpdirectTaxes are equal to subsidies
(cl No indirect tax and no subs1d1es J,t( Both (b) and (c)
., oc,rnestic Income is greater than National Income. /
J (a) Never ~ May or may not
(cl Always (d) None of these
the production of sugar, sugarcane is:
JS. In
(al AFinal Good ~ n Intermediate Good
(cl Acapital Good (d) None of these
J6. Subsidy implies
(alJelling the product above the cost of production
~ Selling the product below the cost of production
(cl Selling the product at cost less indirect taxes
(d) Selling the product at cost plus indirect taxes
17, National Income will be equal to Domestic Income when:
(a) Depreciation= 0 (b) Indirect Taxes = O
(c) Net Indirect Taxes= O ~et Factor income from Abroad = 0
2L Anal Goods are used by:
(a) Households (b) ~s
(c) Government ~ All of the above
21. ~of the following leads to unexpected obsolescence?
~~I Calamities (b) Change in Demand
tc) Change In Technology (d) Both (b) and (c)
• Mlrllltvatue of a Motor Vehicle at the time of purchase was f 7,50,000. After two years, its market value is
111 ded to be, 4,50,000. The reason for fall in the value is:
NaftftalWear and Tear (b) ,ssage ofTime
JI.....Clld Obsolescence JJ/1'All of these
b the following purpose are final goods:
(b) Investment
(d) None of the above

(IN Domestk Territory

~ o f. . .

.......
•Ml•••rt"lCIIMlldll_,.tlll 1b1fwJ
:
 Introductory Mac, ~
oecono
rn,C3
_ ... c• .... ._.__.sed by I hou~ofd Is a , (Choos, tM corrw alternative)
C G
(CBS(.
- "" ........,_ 202O(SB;<II
Sil'9R UM C~t,I Good Single Use onsumer 00d
~abaeConsumerGood d) Semi durableConsumerGooct
U. If an «onomy the ~u. of Net Factor Income from Abroad Is, 200 crores and the value of Factor lnco
Abfold , 40 crore-s. kif.nttfy the value of Factor Income from Abroad. (CBS£. Sample A Ille
11 , ! 200~ (b f 160 crores ape, }021
~2"'° (di ,1aocrores
M.N!(~~~
.lndil«."t ~ + Subsidies (~direct Taxes - Subsidies
Indirect Taxes (d) Indirect Taxes+ Subsidies

~7.. _ _ _ _ goods~ n wtthin the production boundary and are not ready for use by their final users
(bl Capital
(d) None of these
. . ~ ~ tndudes:
T•ldetlncome ~ c t o r Income
lodl(A)~(b
(d) Neither (a) nor (b)

- Net =----·
Glas-s In - Depreciation (b) Gross Investment + Depreciation
Gloss tnw:stme. tl - Depreciation
(d) Gross Investment x Depreciation
._ GNP• Mlrilet Price is measured as:
Mll' + ~ + Net Indirect taxes + Net Factor Income from Abroad
GDP•+ Factor Income from Abroad - Factor Income to Abroad
c ,-,,w + Consumption of Axed Capital + Net Factor Income from Abroad
~Alafdlele

41. 1M cMuu.ce belwc!en National Income and Domes~come is that of:

~ ¥ Net Factor Income from Abroad
Net tndnct Tnes (d) Both (b) and (c)
42- final Good5 a.e UMd by:

(b) Producers
~(b
(d) None of these
. ..,.•• _ . , . , . . .tHClat
1• ..., .... ~ ............
b ■ low
-.w..,, ..,.,n.awwo1............,...gtwn
....... UU: flCIDr 1nc.ame.~, •---·-
-·····• -Fac1at-JncD11111,a....,.,. ••• 11111••.·.. . . . . . . . . . . ..
 • aasic concepts of Macroeconomics
,~,Pt•' 2 . p •
wing statements. AsLrt,on (A) and Reason (R) Ch
dthe fo 11 O • oose one of the correct alternatives given
Rea
2' below: (A)• Intermediate goods have direct demand
t10". .
,.ss•' R)' The demand for intermediate goods depend O d
R,,so" ( · " emand for final goods.
naciVes:
l sot h"Assertion (A) and Reason (R) are True and Reason (R) Is the correct expla atton of Assert on (A .
Airer
(a th A5sertion (Al and Reason (R) are True and Reason (R) Is not the correct ex
\bl 80 rt·on (Al is True but Reason [RJ Is False. P nallon ofAssertion (A
i:::rt:on [A) is False but Reason [R) i1 True.
Read the following statements: Assertion (A) and Reason (R). Choose one of the correct alternat es g ven
3,
t,elO\\f: • . .
·on (A): Transfer Income Is not included mthe National Income
Assert1 • • •
Reason (R): Transfer Income Is a unilateral (one-sided) concept.
Alternatives:
(a) ~h Assertion (A) and Reason (R} are True and Reason (R) is the correct explanat on of Assert on (A}
.,olfloth Assertion (A} and Reason (R} are True and Reason (R} is not the correct exp!anatlOn cf. AssertiOn (A).
(c) Assertion (Al '.s True but Reason (R} i~ False.
(d) Assertion (Al Is False but Reason (R) 1s True.
. Read the following statements: Assertion (A} and Reason (R). Choose one of the correct alternatives g en
4
below:
Assertion (A): Subsidy is aTransfer Payment.
Reason (R): Subsidy contributes to current flow of goods and services.
Alternatives:
(a) ~h Assertion (A) and Reason (R) are True and Reason (R} Is the correct explanation of Assertion (A).
efsoth Assertion (A) and Reason (Rl are True and Reason (R) Is not the correct explanation of Assertion A).
(cl Assertion (A) is True but Reason (R) is False.
(cf) Assertion (A) is False but Reason (R) is True.
s. Read the following statements: Assertion (A) and Reason (R}. Choose one of the correct alternatives given
below:
Assertion (A): Depreciation is also termed as Consumption of Fixed Capital.
Rtuon (R): Depreciation refers to that value of fixed capital which 1s used up in the process of productton
Alte'9"'ives:
¥Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Asserf on (A).
{b) Both Assertion (A) and Reason (R) are True and Reason (R} is not the correct explanation of AssertiOn (A}.
(cl Assertion (A) is True but Reason (R) is False.
(d) Assertion (A) is False but Reason (R) is True.
Statement Based Questions
, 1• Read the following statements carefully and choose the correct alternative from the following.
Statewlliilt 1: For the purpose of national income accounting, domestic territory just means the pol fcal
frontiers of acountry.
ltll•z:t 2: Indian Embassy In Japan is a part of the domestic territory of India.
~
"1 loll\ the statements are true. (b) _,Poth the statements are false.
,_,&.Uhl. 1 ls lNe and Statement 2 is false. ./,II( Statement 2 is true and Statement 1 is false.
 2.26 Introductory Macro.c
~
2. Read the following statements carefully and choose the correct altematiw from~ folcnl.¥
Statemant 1: Normal residents indude both. indtviduafs and instftutJons.
Statanent 2: International organisations are treated as normal residents of the i n ~ 11"
Ntptattves:
~ Both the statements are true. (b) Both the statements are false.
(c) Statement 1 is true and Statement 2 is false. (d) Statement 2 is true and Sta~t 1 is faJ~
3. RNd the following statements carefully and choose the correct altemat,ve from the following·
StatNin•nt 1: Factor income is a Bilateral Income.
St.atwment 2: Factor income refers to income received without rendering any productive servk~ n ~t
Alternatives:
(a) ~h the statements are true. (b) Both the statements are false
~atement 1 is true and Statement 2 is false. (d) Statement 2 is true and Statement 1 1s false.
4. Read the following statements carefully and choose the correct alternative from the foflowtng
Statement 1: Intermediate goods are included in National Income but not in Domestk Income.
Statement 2: Intermediate goods are used up in the same year.
Alternatives:
(a) Both the statements are true. (b) _JSoth the statem@nts are false
(c) Statement 1 is true and Statement 2 is false. ~Statement 2 is true and Statement 1 Is false
5. Read the following statements carefully and choose the correct alternative from the following·
Statement 1: Net factor income from abroad is positive when Income earned from atwo.d is ~ss th.!
income paid to abroad.
Statement 2: Net factor income from abroad is negative In a closed economy as such economy ~snot
deaJ with the rest of the world sector.
~motives: /
(a) Both the statements are true. ~ Both the statements.,. false.
(c) Statement 1 Is true and Statement 2 is false. (d) Statement 2 ls true and Sta..,,.,.. 1 ls falM.