National Income Accounting Class 12 MCQ Quiz – Test Your Understanding!

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Are you ready to test your knowledge of National Income Accounting from the Class 12 Economics syllabus? This chapter is crucial for understanding how a country measures its economic performance through GDP, GNP, NNP, and other national income aggregates.

About the Quiz

Chapter Name: National Income Accounting
Subject: Economics
Book: NCERT Class 12 Economics
Question Type: Multiple Choice Questions (MCQs)
Leaderboard: Yes (Check Your Rank!)

Why Take This Quiz?

✔ Helps in CBSE board exam revision
✔ Strengthens understanding of GDP, NDP, GNP, NNP, and per capita income
✔ Enhances problem-solving and calculation skills
✔ Track your progress with the leaderboard

Click Below to Start the Quiz!

Chapter 1-National Income Accounting

1 / 15

In the value-added method, the value added by a firm is calculated as:

Value of output + Value of intermediate goods

Sales – Depreciation

Value of output – Value of intermediate goods

Gross Investment – Net Investment

2 / 15

Intermediate goods are always durable in nature.

True

False

3 / 15

If in an economy the value of Net Factor Income from Abroad is Rs. 200 crores and the value of Factor Income to Abroad is Rs. 40 crores. Identify the value of Factor Income from Abroad.

Rs. 160 crores

Rs. 240 crores

Rs. 180 crores

Rs. 200 crores

4 / 15

Assertion (A): GDP may overestimate welfare if negative externalities like pollution are ignored.
Reason (R): GDP includes non-monetary transactions and barter exchanges.

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Both A and R are true, but R is not the correct explanation of A.

Both A and R are true, and R is the correct explanation of A.

A is true, but R is false.

A is false, but R is true.

5 / 15

Gross National Product (GNP) differs from Gross Domestic Product (GDP) because it includes:

Subsidies

Indirect taxes

Depreciation

Net Factor Income from Abroad (NFIA)

6 / 15

For a closed economy (with no foreign trade), which one of the following is correct?

GDP + GNP = 0

GDP < GNP

GDP > GNP

GDP = GNP

7 / 15

Assertion (A): Net Investment equals Gross Investment minus Depreciation.
Reason (R): Depreciation represents the increase in the stock of capital goods over time.

Both A and R are true, but R is not the correct explanation of A.

A is true, but R is false.

Both A and R are true, and R is the correct explanation of A.

A is false, but R is true.

8 / 15

Which of the following goods is classified as a final good?

Bread purchased by a household for consumption

Machinery parts used in assembling a tractor

Flour purchased by a bakery for making bread

Wheat sold by a farmer to a mill

9 / 15

Which of the following is NOT a component of Net Domestic Product at Factor Cost (NDPfc) under the income method?

Operating surplus

Mixed income of self-employed

Compensation of employees

Indirect taxes

10 / 15

Which of the following is an example of a negative externality affecting GDP and welfare?

Exports increasing national income

Construction of a new highway

Increased education spending

Pollution from a factory reducing fishermen’s income

11 / 15

Personal Disposable Income (PDI) is derived from Personal Income (PI) by:

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Subtracting personal taxes and non-tax payments

Subtracting net factor income from abroad

Adding corporate taxes

Adding transfer payments

12 / 15

Net Investment is calculated as:

Gross Investment + Depreciation

Gross Investment – Depreciation

Depreciation – Gross Investment

Gross Investment + Net Factor Income from Abroad

13 / 15

The formula for converting GDP at market price (GDPmp) to GDP at factor cost (GDPfc) is:

GDPmp + Indirect Taxes – Subsidies

GDPmp – Indirect Taxes + Subsidies

GDPmp + Depreciation

GDPmp – Net Factor Income from Abroad

14 / 15

Match the Income Aggregate with its Adjustment:

Column A	Column B
A. GDPmp to GDPfc	1. Subtract personal taxes and non-tax payments
B. GNPmp to NNPmp	2. Subtract depreciation
C. PI to PDI	3. Subtract indirect taxes + Add subsidies
D. NDPfc to NNPfc	4. Add Net Factor Income from Abroad

A – 3, B – 2, C – 1, D – 4

A – 3, B – 2, C – 4, D – 1

A – 3, B – 1, C – 2, D – 4

A – 1, B – 2, C – 3, D – 4

15 / 15

Real GDP is different from Nominal GDP because it:

Excludes net exports

Is adjusted for price changes using constant prices

Includes inflation effects

Is measured at current prices

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Key Topics Covered in the Quiz

✔ Concepts of GDP, GNP, NNP, NDP
✔ Factor cost vs. market price
✔ Methods of national income calculation (Income, Product, Expenditure)
✔ Real vs. Nominal GDP
✔ Limitations of GDP as a growth measure

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