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# CA Foundation | National Income Accounting MCQ Test | Chanakya Commerce Classes

CA Foundation Paper 4 Business Economics Chapter 6 Unit 1 National Income Accounting MCQ test page with instant scoring by Chanakya Commerce Classes.

Canonical URL: https://www.chanakyaclasses.com/mcqs/national-income-accounting

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Business Economics MCQ
National Income Accounting MCQ Test
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CA Foundation · Paper 4 · Business Economics
Chapter 6 · Unit 1 ·
National Income Accounting
MCQ Test Page · CA Foundation level · ICAI pattern · instant scoring and answer review
30 MCQs
Foundation Level
Past Exam Style
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Question 01
National income refers to:
money earned only by government
money value of final goods and services produced in an economy in a year
income of companies only
only export earnings of a country
National income broadly measures the money value of final goods and services produced during a year.
Question 02
Which of the following is included while estimating national income?
sale of second-hand goods
transfer payments
illegal income not officially recorded in basic accounts
production of final goods and services during the year
National income accounting includes current final production, not mere transfer of existing assets or transfer payments.
Question 03
The problem of double counting arises when:
value of intermediate goods is counted more than once
only final goods are counted
exports are excluded
depreciation is deducted
Double counting happens if intermediate goods are counted along with final goods.
Question 04
To avoid double counting, national income generally includes:
all goods whether final or intermediate
only imported goods
only final goods and services or value added
only transfer incomes
The standard solution is to count final output or value added at each stage.
Question 05
Gross Domestic Product at market price means:
income earned by residents abroad only
money value of final goods and services produced within domestic territory at market prices
sum of transfer incomes
domestic production excluding depreciation and indirect taxes
GDPMP measures final output produced within the domestic territory valued at market prices.
Question 06
Net Domestic Product is obtained by deducting ______ from GDP.
depreciation
net indirect taxes
exports
personal taxes
Net aggregates are obtained by subtracting depreciation, also called consumption of fixed capital.
Question 07
Gross National Product differs from Gross Domestic Product because of:
indirect taxes
depreciation
transfer payments
net factor income from abroad
GNP = GDP + Net Factor Income from Abroad.
Question 08
National income at factor cost is generally represented by:
GDP at market price
NNP at market price
NNP at factor cost
personal income
In standard macro accounting, national income is usually taken as NNP at factor cost.
Question 09
Factor cost differs from market price because of:
exports and imports
indirect taxes and subsidies
depreciation only
transfer incomes only
Market price includes net indirect taxes, while factor cost reflects returns to factors of production.
Question 10
To convert from market price to factor cost, we:
subtract net indirect taxes
add depreciation
subtract exports
add personal taxes
Factor cost = Market price − indirect taxes + subsidies, that is, subtract net indirect taxes.
Question 11
Which of the following is a transfer payment?
rent of a shop
wages of labour
interest on business loan
old age pension
Transfer payments are received without corresponding current production of goods and services.
Question 12
Transfer payments are excluded from national income because:
they are always illegal
they are paid only by households
they do not represent current production
they are paid in cash only
National income measures current production, not redistribution of income.
Question 13
Which of the following is included in domestic product?
income generated within domestic territory whether by residents or non-residents
income earned by residents abroad only
transfer incomes from government only
capital gains only
Domestic product is based on place of production, not ownership by residents.
Question 14
National product is based mainly on:
territory only
normal residents
market taxes only
population size only
National product includes production associated with normal residents.
Question 15
Which of the following methods is used to measure national income?
product method
income method
expenditure method
all of these
All three are standard approaches to measuring national income.
Question 16
The product method measures national income by summing:
value of final goods and services or value added
all transfer receipts
only salaries and wages
only business profits
The product method is based on output or value added.
Question 17
The income method measures national income by adding:
consumer expenditure and investment only
exports and imports only
factor incomes like wages, rent, interest and profit
all government transfers
Income method adds factor payments generated in production.
Question 18
The expenditure method measures national income by summing:
factor incomes only
final expenditure on goods and services
only indirect taxes
only depreciation and subsidies
Expenditure method adds final spending on current output.
Question 19
Which of the following is an intermediate good?
bread bought by a family for consumption
car bought by household for personal use
textbook bought by a student
flour purchased by a bakery for making bread
Intermediate goods are used for further production, not final use.
Question 20
Value added by a firm is equal to:
value of output minus value of intermediate consumption
value of output plus imports
sales tax minus subsidy
profits only
Value added measures a firm's own contribution to production.
Question 21
Personal income differs from private income because of:
imports only
undistributed profits, corporate taxes, social security contributions and transfer payments
depreciation only
exports only
Personal income is what households actually receive, after adjustments from private income.
Question 22
Disposable personal income means:
personal income plus personal taxes
national income minus subsidies
personal income minus personal taxes
GNP minus depreciation
Disposable income is the income available for consumption and saving after paying personal taxes.
Question 23
Depreciation refers to:
wear and tear of fixed capital
increase in value of land
export surplus
government subsidy
Depreciation measures consumption of fixed capital over time.
Question 24
Which of the following is excluded from national income accounting?
salary of a teacher
rent from a shop
profit of a firm from current production
sale of shares and bonds
Financial transactions like sale of shares do not represent current production of goods and services.
Question 25
Imputed rent of owner-occupied houses is:
excluded because no money changes hands
included to correctly measure housing services
treated as transfer income
counted as export income
Imputed values are included where necessary to reflect actual services produced and consumed.
Question 26
If GDP at market price is ₹5000 crore and depreciation is ₹400 crore, then NDP at market price is:
₹4600 crore
₹5000 crore
₹4600 crore
₹5400 crore
NDPMP = GDPMP − depreciation = 5000 − 400 = ₹4600 crore.
Question 27
If GDP is ₹8000 crore and net factor income from abroad is ₹200 crore, then GNP is:
₹8200 crore
₹7800 crore
₹8000 crore
₹8400 crore
GNP = GDP + NFIA = 8000 + 200 = ₹8200 crore.
Question 28
If NNP at market price is ₹7000 crore and net indirect taxes are ₹500 crore, then NNP at factor cost is:
₹7500 crore
₹7000 crore
₹6800 crore
₹6500 crore
NNPFC = NNPMP − net indirect taxes = 7000 − 500 = ₹6500 crore.
Question 29
Which one is a final good?
steel bought by a car manufacturer
car purchased by a household for personal use
cotton bought by a textile mill
wheat bought by a flour mill
A final good is purchased for final use and not for resale or further production.
Question 30
The central purpose of national income accounting is to:
measure aggregate production and income of an economy systematically
measure profits of one firm only
record share prices
calculate only tax revenue
National income accounting gives a systematic picture of total production, income and expenditure in the economy.
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Chanakya Commerce Classes
MCQ Test · Chapter 6 · Unit 1 · National Income Accounting