Important Questions Class 12 Macroeconomics Chapter 2
Important Questions for CBSE Class 12 Macroeconomics Chapter 2 – National Income Accounting
Important Questions Class 12 Macroeconomics Chapter 2 are detailed notes beneficial for board exam preparation. An overall overview of chapter 2 of Macroeconomics is compiled together in these notes. These notes consist of marks distribution of Important Questions, terminologies, and concepts related to National Income Accounting. Chapter 2 Class 12 Macroeconomics Important Questions prepared by Extramarks subject matter experts, will help students get a deeper understanding of the topics mentioned above.
These notes are concise and made in accordance with the CBSE Syllabus. Class 12 Macroeconomics Chapter 2 Important Questions is presented with step-by-step solutions. Students can refer to these CBSE notes on the Extramarks’ website.
CBSE Class 12 Macro Economics Chapter-2 Important Questions
Study Important Questions for Class 12 Macro Economics Chapter 2 – National Income Accounting
A few of the important questions for Class 12 Macroeconomics Chapter 2 is provided here. Students can access the complete set of questions with the link given.
Short Answers
1-2 marks
Q1. Microeconomics is different from macroeconomics because:
- a) Microeconomics deals with individual behaviour.
- b) Microeconomics deals with prices only.
- c) Microeconomics deals with economic behaviour.
- d) Microeconomics deals with the government’s decisions.
Ans. a) Microeconomics deals with individual behaviour.
Q2. Which of the below-mentioned words is an example of macroeconomics?
- a) Inflation
- b) Price determination
- c) Consumer’s equilibrium
- d) Producer’s equilibrium
Ans. a) Inflation
Q3. Choose from among the given options, the meaning of non-market activities.
- a) Non-marketable
- b) Production
- c) Economic
- d) Involuntary
Ans. a) Non-marketable
Q4. State which of the given below data is an example of transfer payments.
- a) Old age pension
- b) Retirement pension
- c) Employers’ contribution for social security
- d) Free meals in the company canteen
Ans. a) Old age pension
Q5. Money flow is the flow of
- a) Services only
- b) Goods only
- c) Goods and services only
- d) Factor payments.
Ans. d) Factor payments
Q6. Explain the National Disposable Income.
Ans. The type of income that can be used for spending purposes or disposition to the whole economy is referred to as National Disposable Income. It is the maximum amount of goods and services at the disposal of the domestic economy including the net current transfers from abroad, covering items such as AIDS, etc.
National Disposable Income = Net National Product (NNP) + Net current transfers from abroad (NDI)
Q7. What is real GNP?
Ans. As per economics, the Gross National Product (GNP) calculated at constant prices, or by a base year price is called real GNP.
Q8. What is meant by double counting? How can this be prevented?
Ans: The process of evaluating the value of goods several times at every production stage is known as double counting.
The methods used to prevent it from occurring are:
- a) The value-added technique can be used while estimating national income.
- b) Estimating national income depending on the worth of the final commodity.
Q9. State the difference between personal and private income.
Ans: The difference between personal and private income are as follows:
Personal Income |
Private Income |
1. The sum of all the earned and transferred revenues from different sources of income, both inside and outside the country, is considered to be the personal income of an individual. . |
1. Factor and transfer income obtained from various private sources, including inside and outside the country, is considered to be private income. |
2. Personal income (PI) ≡ NI – Undistributed profits – Net interest payments made by households – Corporate tax + Transfer payments to the households from the government and firms. |
2. Private Income = Factor income from net domestic product accruing to the private sector + National debt interest + Net factor income from abroad + Current transfers from government + Other net transfers from the rest of the world |
Short Answer and Questions
3-4 Marks
Q1. What are the precautionary measures to be taken while computing national income by product method, especially the value-added method?
Ans: The measures are as follows:
- a) Avoid the doubt counting approach of production. Rather, rely on the value added by every production unit.
- b) Include the output produced for self-consumption.
- c) The cost of intermediary consumption should not be included.
- d) The sale and acquisition of used products should not be taken into account.
- e) The value of services provided shall always be included in sales.
Q2. State the main steps in computing national income through the production method.
Ans: The important steps needed to be considered while computing the national income using the product approach are:
- The manufacturing units should be segregated into industrial sectors like primary, secondary, and tertiary.
- Compute the net value added to the factor cost.
- Compute the output value after adding sales and stock changes.
- Compute the gross value added by deducting intermediate consumption from the output value.
- Deduct depreciation and net indirect tax from gross value added at market price to measure the NDPFC.
- Eventually, add net factor income from outside the country to the NDPFC to measure the NNPFC, which is national income again.
Long Answers
5 – 6 marks
Q1. Evaluate the National Income and Private Income from the given data and calculate:
S.No |
Contents |
Rs. (in crores) |
1 |
Net current transfers from the rest of the world |
10 |
2 |
Private final consumption expenditure |
600 |
3 |
National debt interest |
15 |
4 |
Net exports |
(-)20 |
5 |
Current government transfers |
5 |
6 |
Net domestic product at factor cost accruing to the government. |
25 |
7 |
Government final consumption expenditure |
30 |
8 |
Net indirect tax |
05 |
9 |
Net domestic capital formation |
40 |
10 |
Net indirect tax |
10 |
Ans: a) National Income (NNPFC) = (Private final consumption expenditure + Government final consumption expenditure + Net domestic capital formation + Net exports + Net factor income from abroad- Net indirect tax)
= 600 + 100 + 70 + (-20) + 10 – 30
= 780 – 50
= 730 crores
b) Private Income = NNPFC – Net domestic product at factor cost accruing to the govt +
Transfer payments + National debt interest
= 730 – 25 + (10 + 5) + 15
= 760 – 25
= 735 crores
Q2. Calculate NNP at market price by
S.No |
Contents |
Rs. (in crores) |
1 |
Intermediate consumption
Primary sector
Secondary sector
Tertiary sector |
500
400
300 |
2 |
Value of output of
Primary sector
Secondary sector
Tertiary sector |
1000
900
700 |
3 |
Rent |
10 |
4 |
Emoluments of employers |
400 |
5 |
Mixed income |
650 |
6 |
Operating surplus |
300 |
7 |
Net factor income from abroad |
-20 |
8 |
Interest |
05 |
9 |
Consumptive of fixed capital |
40 |
10 |
Net indirect tax |
10 |
Ans. 1. By Production Method:
Value added at MP = Value of output – Intermediate consumption
= (1000 + 900 + 700) – (500 + 400 + 300)
= 2600 – 1200
Hence GDPMP = 1400 crores
NNPMP = GDPMP – (Consumptive of fixed capital + Net factor income from abroad)
= 1400 – 40 – (-20)
NNPMP is equal to 1380 crores
- By Income Method:
NNPMP = Emoluments of employers + Mixed income + Operating surplus + Net indirect tax + Net factor income from abroad
= 400 + 650 + 300 + 10 + (-20)
NNPMP = 1350 + 10 – 20
= 1340 crores
National Income Class 12 Important Questions
Class 12 Chapter 2 National Income is one of the important chapters of Macroeconomics. This chapter highlights the difference between national income and domestic income, its computation, and its various methods such as the product method, the income method, the expenditure method, etc. These questions were framed by analysing past years papers’ and the revised CBSE Syllabus. Therefore, these notes cover both theoretical and practical aspects of Chapter 2 of Class 12 Macroeconomics. Students can refer to this set of questions prepared by Extramarks to save time while preparing for the board exams. They will find it easier to revise the important questions and regularly practise the practical problems and important questions of National Income Class 12 to become familiar with and gain an understanding of the chapter’s main concepts.