National Income and its aggregates: Introduction

Assignment 1
Class 12 Subject- Economics

1. Differentiate between gross investment and net investment.

2. State two basic principles of circular flow of income.
3. All machines are not capital goods. Justify
4. Only net investment and not gross investment shows change in
stock of capital. Defend or refute.
5. Define the following:
a) Domestic income
b) National income
6. When can GDP of an economy equal to GNP?
7. When will domestic factor income be greater than national
income?
8. National income is always greater than domestic income.
Defend or refute
9. Name the four sectors of an economy.
10. State whether the statements are true or false and support your
answer with a reason:
a) Classification of goods depend on the end use of goods
b) Final goods are used by consumers only
c) No value is added in the final good
d) Gross investment may occur even when net investment is
zero
e) Flow of goods and services is money flow
f) All machines are not capital goods
g) Domestic product refers to value addition only by resident
producers
h) Increase in national income implies increase in domestic
income
i) Net indirect taxes are never equal to zero
11. Classify the following as stock or flow
a) Population of country
b) Money supply
 c) Bank deposits
d) Sale of rice
e) Changes in quantity of money
f) Expenditure
g) Exports and imports
h) Hundred Rupee note
i) Machinery of a sugar mill
j) Profits
12. Classify the following as final or intermediate consumption
a) Sugarcane in the production of sugar
b) Milk purchased by a household
c) Purchase of rice by a grocery shop
d) Purchase of air conditioner for use in a shop
e) Purchase of wheat in the wholesale market
f) Fees paid to a lawyer by producer
13. Classify as factor income or transfer income
a) Purchase/sale of new shares of a company
b) Payment of corporate tax by a firm
c) Cash transfer of subsidy on LPG
d) Scholarship given to a student
e) Unemployment allowances given to individual
f) Wages paid for working in a factory
g) Bonus given to an employee by an employer
h) Rent earned on a piece of land
i) Expenditure on a friend’s marriage
j) Financial help given to victims of flood
k) Pension given to old age people
l) Brokers’ commission on sale of second hand goods
14. Classify the following as consumption or capital goods
a) A car used as taxi
b) Refrigerator in a hotel
c) Air conditioner in a house
d) Cloth lying unsold with trader at the end of an year
15. Differentiate between GDP at MP and NNP at FC.