ASSIGNMENT (RELATED AGGREGATED OF NATIONAL INCOME)

1. Define externalities. Give an example of negative externality. What is its impact on welfare?
2. What are externalities? Give an example of a positive externality and its impact on welfare of the people.
3. Explain how ‘non-monetary exchanges’ are a limitation in taking domestic product as an index of welfare?
4. Explain how ‘distribution of Gross Domestic Product’ is a limitation in taking Gross Domestic Product as an index of welfare.
5. Give the meaning of factor income to abroad and factor income from abroad. Also give an example of each.
6. Distinguish between domestic product and national product. When can domestic product be more than the national product?
7. Distinguish between Real Gross Domestic Product and Nominal Gross Domestic Product. Which of these is a better index of welfare of the people and why?
8. Explain why subsidies are added to and indirect taxes deducted from domestic product at market price to arrive at domestic product at factor cost?

9. The first estimate of national income in India was made by

(a) Mahalanobis (b) V. K. R. V. Rao (c) Dadabhai Naoroji (d) Shirras

10. Which of the following serves as an instrument of decision making in a capitalist economy?

(a) Capitalists (b) Consumers (c) Price mechanism (d) Amount of production

11. Will the following be included in gross domestic product / Domestic Income of India? Give reasons for each answer.
1. Consultation fee received by a doctor.
2. Purchase of new shares of a domestic firm.
3. Profits earned by a foreign bank from its branches in India.
4. Services charges paid to a dealer (broker) in exchange of second hand goods.
5. Rent received by a resident Indian from his property in Singapore.
6. Profits earned by a branch of an American Bank in India.
7. Salaries paid to Koreans working in Indian embassy in Korea.
8. Profits earned by a branch of foreign bank in India.
9. Payment of salaries to its staff by an embassy located in New Delhi.
10. Interest received by an Indian resident from its abroad firms.
11. Payment made by a Japanese tourist for goods purchased in India.
12. Broker’s commission on sale of second hand goods.
13. Remittances from non-resident Indians to their families in India.
14. Rent paid by the embassy of Japan in India to a resident Indian
15. Profit earned by foreign companies in India.
16. Profit earned by a branch of state bank of India in Japan.
17. Financial aid received from abroad after cyclone.
18. Compensation given by the insurance company to an injured worker.

[Link] reason, explain how the following should be treated in the estimation of National Income
a. Payment of interest by a firm to a bank.
b. Payment of interest by a bank to an individual.
c. Payment of interest by an individual to a bank
d. Contribution to provident fund by the employees.
e. Festival gifts by employees
f. Expenditure on education of children
g. Expenditure on free services provided by the govt.
h. Payment of electricity bill by a school
i. Entertainment tax received by the govt.
j. Expenditure by a firm on payment of fees to CA.
k. Payment of corporate tax by a firm.
l. Purchase of refrigerator by a firm for own use.
m. Financial assistance to flood victims.
13. “GDP does not give a clear indication of economic welfare of a country”. Defend or refute the given statement with valid reason.
14. Sale of petrol and diesel car is rising particularly in big cities. Analyse its impact on GDP and welfare.
15. Increase in per capita means increase in per capita availability of goods and services. Does an increase in per capita income necessarily means rise in the welfare of
the people of the country? Give reason in support of your answer.
16. “India’s GDP is expected to expand 7.5% in 2019-20.” World Bank.
Does the given statement mean that welfare of the people of India increase at the same rate? Comment with reason.
[Link] between transfer income and factor income. Give examples.
[Link] net factor income from abroad. Explain its components.
[Link]-----normal resident of a country, domestic territory of a country, GDP at market price, NDP at factor cost, NNP at factor cost.
20. Fill in the blanks.
[Link] at market price= NNP at market price------------------------------------------
i) NNP at factor cost = GDP at market price--------------------------------------------
ii) GNP at factor cost = GDP at market price--------------------------------------------
iii) NDP at market price =NNP at factor cost---------------------------------------------
iv) NDP at factor cost = GNP at market price -----------------------------------------
22. Distinguish between net exports and net factor income from abroad.
23. “Increase in domestic income always leads to an increase in national income.” Do you agree with the given statement? Support your answer with valid reason.
24. ”National income includes income earned by factors of production within the domestic territory only.” Defend or refute the given statement with valid reason.
25. Define income from property and entrepreneurship
26. Define the following: net exports, Externalities, problem of double counting.
27. Discuss briefly the components of “Income from Property and Entreprenuership”.
28. Explain the precautions that should be taken while estimating NI by expenditure method.
29. What is meant by the problem of double counting? How this problem can be avoided?
30. State any two precautions that must be taken into consideration while estimating NI by value added method.
31. Differentiate between National Income at current prices and National Income at constant prices. which of the two presents a better view of economic growth and
why?
32. Which among the following are capital goods and which Are consumer goods and why?
a) A car used as a taxi b) Refrigerator in a hotel c) Air conditioner in a house
33. Define intermediate consumption and explain it with an example. How is it different from final consumption?