ECONOMICS REVIEW QUESTIONS 02/01/2020

1. a)What is national Income

(b) Given that
GNP at market price = 3960 millions
GDP at market price = 4020 millions
NNP at market price = 3766 million
Find
(i) Net income factor from abroad
(ii) Net domestic product at market price
(iii) Depreciation value
(c) Which factors differentiate between GNP from GDP of a country.
2. a)Describe six determinant of investment in the economy
b) An economy of a certain country is given by Y= C+I+G +(X-M)
Given
C = 150 - 0.84Y
I = 400
G = 700
X= 130
M = 0.08Y
Calculate
i. equilibrium national income
ii. consumption expenditure
iii. investment multiplier
iv. marginal propensity to save
v. When equilibrium national income changes to 500.What is the new
government expenditure?

3. a)Explain five functions of commercial bank

b) Complete the following table and compute credit multiplier. Given cash ration fixed
at 20% and new deposits of 1000

PERSON NEW DEPOSITS CASH RESERVE NEW LOAN

A
B
C
D
E
4. a)Explain SIX significance of using National income statistics in measuring national
income
(b) Given the following statistics for a simple economy
Y = C + I + G, where,
C = 100 + 0.8Yd
T = 10 + 0.1Y
Page 1 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

I = 50 and G = 30
Calculate
i. Equilibrium level of national income
ii. Equilibrium level of consumption
5. Below is the summary of financial transaction of country X with the rest of the
World in financial year 2015/2016

ITEMS MILLIONS USD

Export 1529
Import 1813
Invisible recipient 772
Invisible payment 158
Net repayment to IMF by X 96
Investment over seas 131
Investment foreigners 243
Balancing item 41
Calculate
i. Balance on current Account
ii. Trade balance
iii. Balance of payment
iv. Make a comment on overall balance of payment
b) Briefly explain five method of adjusting balance of payment
6. a)write short notes on the following terms
i. gross domestic product
ii. gross national product
iii. national income
iv. net national product
v. net domestic product
b) The table below represents value of economic transaction for hypothetical economy
in billions of shillings
Wages and salaries ---------------------------45
Income from rent-----------------------------3
Profit of corporation ------------------------- 8
Indirect taxes-------------------------------7
Subsidies---------------------------------- 3
Depreciation………………………….. 8
Net income from abroad …………………….. -5
Required
i. gross domestic product
ii. net domestic product at market price
iii. net domestic product at factor cost
iv. gross national product

Page 2 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

v. national income
7. Analyse five measures which can be used to reduce income inequality in Tanzania
b) You are given the following table

consumption income APC APS MPC MPC

45000 40000
50000 50000
55000 60000
60000 70000
65000 80000
i. Complete the blanks spaces
ii. Using the completed table calculate the investment multiplier
8. a)Carefully study the following table and answer questions that follows

Quantity of house hold Share of income (%) Share of income (%)

2000 2005
Lowest fifth 3.9 5.3
Second fifth 8.6 11.6
Third fifth 13.9 17.5
Fourth fifth 19.3 24.1
Highest fifth 54.4 41.5

Required
i. draw Lorenz curve
ii. comment the Lorenz curves of the two years
iii. what was the level of income owned by the lowest 60% of the
population in 2005
b) Given the following
Y= C +I
C = 200- 0.6Y
I = 600
Compute
i. national income
ii. investment multiplier
iii. When investment increased by 50% what will be the new national income?
iv. If the MPS decrease by 50% what will be the value of the multiplier

Page 3 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

9. Calculate Gross Domestic Product at Market Price by

(a) Production Method and (b) Income Method
ITEMS Rs. crores
a. Intermediate consumption by
i) Primary sector 500
ii) Secondary sector 400
iii) Tertiary sector 400
b. Value of output by
i) Primary sector 1000
ii) Secondary sector 900
iii) Tertiary sector 700
c. Rent 10
d. Compensation of employees 400
e. Mixed income 550
f. Operating surplus 300
h. Net factor income from abroad (--)20
i. Interest 5
j. Consumption of fixed capital 40
k. Net indirect taxes 10
10. a)study the table showing the population and GNP of countries A and B and answer
questions that follows
country GNP (millions) Population(millions people)
A 1200 20
B 750 15
i. Calculate the per capital income of a country A and country B
b) Give eight reasons why high income per capital may not necessarily imply a
high standard of living
11. What are the three injections into the circular flow of income and why are they
Called injections?
b) If MPC =0.6 and an initial increase in investment of 200milions shillings
Calculate
i. final change in national income
ii. final change in aggregate saving
iii. final change in aggregate consumption
12. a)explain six functions of specialized banks in an economy
b) Assume an initial deposit of 100000 shillings is made in account of commercial
bank whereas by law 10% of reserves are kept, consequently banks will advance
loans many time greater than the legal money
Calculate
i. money multiplier
ii. total deposits created
iii. total reserves created

Page 4 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

iv. total loans created

13. Calculate national income from the data given below by expenditure method.
Item Rs. (In crores)
(i) Personal consumption expenditure 3500
(ii) Consumption of fixed capital 50
(iii) Net fixed capital formation 1250
(iv) Change in stock 500
(v) Exports 400
(vi) Imports 750
(vii) Net indirect taxes 40
(viii) Governments’ consumption expenditure 1600
(ix) Net factor income from abroad (-) 10
(x) Wages and salaries 450
14. a)What is the meaning of credit creation?
b) What are the assumptions of credit creation?
c) Given the cash ratio to be 20%
Initial deposit to bank is 240000 and there are 8 banks
i. portray the vertical process of creations by the 8 banks
ii. what will be the new deposit if the process continued up to
zero(0)
iii. Calculate the credit multiplier
iv. Calculate total amount of loans and deposits as per 8 banks
v. State three criteria do bank us when advancing loans
15. )Derive investment multiplier
b) Suppose you are given
C =100 +0.75y
I = 100
∆I =50
Work out for
i. saving function
ii. multiplier
iii. change in income
iv. Marginal propensity to consume
v. Marginal propensity to save
c) From the following data calculate personal income and personal disposable
income
Net Domestic Product at factor cost 8,000
Net Factor Income from abroad 200
Undisbursed Profit 1,000
Corporate Tax 500
Interest Received by Households 1,500
Interest Paid by Households 1,200

Page 5 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

Transfer Income 300

Personal Tax 500
16. a)what meant by incidence of Tax
b)A radio whose price is Tsh 80000/= without VAT, but when VAT is imposed 20%
of the new price of a radio increase to 85000/=Calculate the proportional of tax
born to seller and buyer
c) Highlight main type of foreign aids and debate the view that foreign aid are always
blessing
17. You are provided with the following equation
C = a +By…………………. i
S = -a+ (1-B) y……………. ii
y= c +s……………………….iii
y = c+ I……………………….iv
Required
a. For each case define variable
b. Using equations above derive investment multiplier
c. State determinant of investment in the economy
18. With the aid of diagram explain the deflationary gap
ii. Suggest measures which may be taken to arrest the situation

b) Given

Cumulative %of Cumulative% of Cumulative % of

population income in china income in south Africa
10 05 03
20 12 06
30 18 09
40 22 20
50 36 26
60 40 28
70 42 32
80 48 38
90 66 42
100 100 100
TOTAL 100 100
i. Use data above to draw Lorenz curve for China and south Africa
ii. Comment on the income distribution between two countries? Which
country got fair distribution of income
iii. Mention and explain briefly the factors which may cause problem
portrayed by the curves
19. With the aid of diagram present circular model of income flow
b) Carefully study data given below and answer questions that follow

Page 6 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

Personal consumption……………….. 3657

Depreciation…………………….. 400
Wages………………………………. 3254
Indirect business Taxes…………… 500
Interest……………………………… 530
Domestic investment …………….. 741
Government expenditure………….. 1098
Rental income……………… 17
Corporate profit………………………. 341
Export……………………………… 673
Net foreign factor income……………….. 20
Proprietors income…………………….. 403
Imports………………………………… 704
REQUIRED
i. calculate GDP using income approach and expenditure approach
For each approach above state two limitation of using it in compiling
national Income
20. You are given the following information for country W in a certain year.

GNPmp ………………………87503 Million shs.

Capital consumption allowance…………… …..4699 Million shs.
Net factor income from abroad ………………-191 Million shs.
Subsidies ………………………………………. 8675 Million shs.
Net indirect taxes……………. ……………….. . 9576 Million shs.
Where by:
GNPmp= Gross National Product at market price.
Find:
(i) Gross National Product at factor cost.
(ii) Net National Product at factor cost.
(iii) Net Domestic Product at factor cost.
(iv) Net Domestic Product at Market price.
(v) Net National Product at Market price.

21. Given the following table regarding country X in year 2000

Number of Number of Total Production Number of Production

resident foreigners production by Citizens by Citizens
(Million foreigners Abroad Abroad
tshs)

Page 7 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

(Millions
shs)

32800000 50000 976000000 200000000 100000 150000000

a) Calculate
i. The per capital gross domestic product
ii. The gross national product
iii. The output produced by citizens living abroad as a percentage
of gross national product
b) Comment briefly on your answer in (a)(iii) above.
b) You are given the following information in tshs millions
Net income from mining……………… 7000
Export earning……………………… 2400
Rent…………………………………. 6000
Contribution from fishing…………… 250
Government expenditure……………… 6000
Net investment………………………… 4500
Interest………………………………… 6000
Income from agriculture………………. 13000
Payment for import…………………. 1900
Private consumption……………. 10000
Profit…………………………. 600
Earning from forestry………………. 50
Employee’s compensation………….. 8400
Income from the service sector……… 700

Calculate national income by using

i. Income method
ii. Output method
iii. Expenditure method
22. You are provided with the following national income data for a hypothetical
economy
GNP at market price 97503mills shs
Net factor income from abroad - 201mills shs
Capital consumption allowance 5699 mills shs
Net indirect taxes 10576 mills shs
From the above information answer the following question
a) Calculate

Page 8 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

i. Gross National product (GNP) at factor cost

ii. Net national product (NNP) at factor cost
iii. Net domestic product (NDP) at factor cost
iv. Net domestic product at market price
b) Comment briefly on the net factor income from abroad.
c) Is the GDP a good measure of economic output and welfare?
23. Distinguish the following pair of terms
i. Nominal GDP and Real GDP
ii. Gross domestic product and Gross national product
b) Study table below and answer questions that follows

YEAR PRICE OF (X) QUANTITY OF PRICE OF (Y) QUANTITY OF

(X) (Y)
2011 100 1000 200 500
2012 200 1500 300 1000
i. Calculate nominal GDP and real GDP for 2011 and 2012
ii. Comment on real GDP obtained above
c) What is GDP deflator index
i. calculate GDP deflator for 2011 and 2012 and comment on your results
ii. What is the rate of inflation as measured by GDP deflator for the year 2012

24. Given the following figures determine the amount of National income using
expenditure method and income method
Personal consumption expenditure……………. 245
Transfer payment……………. 12
Rent……………………………… 14
Capital consumption allowance……………….27
Social security contribution……………… 20
Proprietor income……………….. 31
Net export………………………….. 03
Dividents……………………… 16
Wage and salaries……………. 221
Indistributed business taxes……………….01
Undistributed cooperate profit…………… 21
Indirect business taxes…………….. 18
Government purchase of goods and services ………… 72
Personal tax/cooperate income tax……………. 19
Net private domestic investment…………………. 33
Personal saving……………. 12
Interest paid by consumer……………. 4
Interest…………………………. 13
Required

Page 9 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

a. Using above national income figures determine GNP and NNP by both the
expenditure and income method
b. Make those adjustment for national income required then calculate personal
income
c. Make adjustment from personal income to obtain disposable income
d. State the weakness of the methods applied in (a) above

25. a)Distinguish the following terms as applied in economics

i. net national product and net domestic product
ii. Gini coefficient and Lorenz curve
iii. National income at factor cost and national income at market price
b) Given the following data
Gross national product at market price …….. 20millions.
Income from abroad ………………………..4millions
Gross domestic product at factor cost……. 10millions
Net indirect tax ………………. 2millions
Indirect Tax…………………….. 1.5
Net national product at market price………….. 15millions
Calculate
i. Depreciation
ii. Net factor income from abroad
iii. Subsidies and interpret the figure
26. a)Give the differences between autonomous investment and induced investment
b) If MPS = 0.3y -25 and the level of investment is given by I =0.25y, find the
equilibrium level of income
c) Carefully study the following table and answer questions that follows

Quantity of house hold Share of income (%) Share of income (%)

2000 2005
Lowest fifth 3.9 5.3
Second fifth 8.6 11.6
Third fifth 13.9 17.5
Fourth fifth 19.3 24.1
Highest fifth 54.4 41.5

Required
iv. draw Lorenz curve
v. comment the Lorenz curves of the two years
vi. what was the level of income owned by the lowest 60% of the
population in 2005
27. a)How government finance economic development ( give five points)

Page 10 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

b) From the data below calculate the gross national product at factor cost
Import…………………42000
Export………………….43000
Value of physical increase in stock……………..1300
Capital formation ………………………….. 25000
Government expenditure………………….. 29000
Consumer expenditure…………………….. 84000
Taxes on expenditure…………………….. 20,000
Subsidies………………………………….. 3000
Net property income from abroad………… 400
c) What factor may lead to increase in real national income?
28. a)Mention any five difficulties in compiling national income data
b) Given the following information data in T.sh. in millions;

Gross national product at factor cost 15

Income from abroad 3
Gross domestic product at factor cost 9
Net indirect tax 2
Indirect tax 3
Depreciation 2
Direct tax 4
Compute for;
i. Net factor income from abroad
ii. Subsidies
iii. Net national product at factor cost
iv. National income
v. National disposable income
vi. Gross national product at market price

29. a)What are the three injections into the circular flow of income and why are they
Called injections?
b) If MPC =0.6 and an initial increase in investment of 200milions shillings
Calculate
iv. final change in national income
v. final change in aggregate saving
vi. final change in aggregate consumption

30. Given the following

Y= C +I
C = 200- 0.6Y

Page 11 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

I = 600
Compute
i. national income
ii. investment multiplier
iii. When investment increased by 50% what will be the new national income?
iv. If the MPS decrease by 50% what will be the value of the multiplier
v. Given C = a +By derive saving function
31. a)What are the point of objection against comparative advantage theory of
international
trade
b) Suppose that Pakistan with X resources (labour) produces 10quintals of wheat or
100quintal of sugar and India with the same X resources (labour) produces 5 quintals
of wheat or 75quintals of sugar
i. Which country has got absolute advantage in producing wheat , sugar(
give reason to support your answer)
ii. Which country has got comparative advantage in the production of
wheat, sugar (give reasons to support your answers)
iii. Using the concept of opportunity cost show how should the two
countries specialize to benefit from international trade
32. a)write short notes on the following terms
i. gross domestic product
ii. gross national product
iii. national income
iv. net national product
v. net domestic product
b) The table below represents value of economic transaction for hypothetical economy
in billions of shillings
Wages and salaries ---------------------------45
Income from rent-----------------------------3
Profit of corporation ------------------------- 8
Indirect taxes-------------------------------7
Subsidies---------------------------------- 3
Depreciation………………………….. 8
Net income from abroad …………………….. -5
Required
i. gross domestic product
ii. net domestic product at market price
iii. net domestic product at factor cost
iv. gross national product
vi. national income

Page 12 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

33. An Economy of a certain country is given by Y=C+I+G+(x-m).

Given

C =150 +0.84y
I = 400
G = 700
X = 130
M = 0.08y
Calculate

i) Equilibrium national Income

ii) Consumption Expenditure
iii) Investment multiplier
iv) Marginal prospensity to save (MPS)

34. When equilibrium national income changes to 500. What is the new (a) What is
meant by Net investment and Gross investment? Calculate:-
(i) Gross investment
(ii) Net investment

Given, at the beginning of the year stocks were valued at Tshs. 22.4 billion at the
end of year Tshs. 24.7 billion on capital goods depreciation was Tshs 0.80 billion.
No new capital goods having been produced.

(b) If the information given is GDPmP = 480, Net exports = 80, NIFA = 20, Indirect
taxes 120, Subsidies = 90, the weaning way of capital is 50, undistributed profits
= 20, corporate taxes = 12, Social Security Contribution = 18, Personal taxes =
50, Transfer payments = 60
Compute:-
(i) NDPfc
(ii) National income
(iii) Personal income
(iv) Personal disposable income
(v) Comment on NIFA

35.Government expenditure?

Page 13 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

i)Define the term income multiplier

ii) Given the following income schedule in millions
Indirect tax ……………………….. 13100
Export of goods………………………… 14500
Depreciation………………………… 12300
Government purchases ……………… 60600
Net private domestic investment……… 63400
Imports ……………………………… 17800
Consumption ………………………… 230900
Calculate
i. Gross national product (GNP)
ii. Net national product (NNP)
iii. National income
b) What problem are likely to be faced when computing national income of
a country. Provide five (5) points
36. the following table represents hypothetical income (Y) and consumption (C) of
country Z

INCOME CONSUMPTION SAVING APC APS MPC MPS

0 100 ____ ____ ____ ____ ------
100 175 ____ ____ ____ ____ ------
200 250 ____ _____ _____ ------- --------
300 325 ____ ____ ____ ------- -------
400 400 ____ _____ ____ ------- -------
500 475 ____ ____ _____ ------ -------
600 550 ____ _____ ____ ------ --------
i. Fill the blank spaces in schedule provided
ii. Write down consumption and saving function
37. Given
Cumulative Cumulative Cumulative
percentage of percentage of percentage of
population income A income B
10 05 02
20 15 04
30 28 08
40 30 10
50 34 12
60 42 14
70 55 16
80 70 20
90 84 24
100 100 100

Page 14 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

100.00 100.00 100.00

(a) Present the data graphically.

(b) What is the problem portrayed by the curves
38. Below is the summary of financial transaction of country X with the rest of the
World in financial year 2015/2016

ITEMS MILLIONS USD

Export 1529
Import 1813
Invisible recipient 772
Invisible payment 158
Net repayment to IMF by X 96
Investment over seas 131
Investment foreigners 243
Balancing item 41
Calculate
v. Balance on current Account
vi. Trade balance
vii. Balance of payment
viii. Make a comment on overall balance of payment
39. Study the data given in the table below and answer the questions which follow

Countries Commodities (tons per man hour)

Tea (tons) Sisal (tons)
Tanzania 18 12
Kenya 9 4
i. which country has got absolute advantage in the production of Tea
ii. Which country has got a least cost comparative disadvantage in the
production of sisal?
iii. Which country has got comparative advantage in the production of tea?
iv. How should the two countries specialize to gain in specialization?

40. The saving function of an economy is S = -200+0.25Y. the economy is equilibrium

When income is equal to 2,000 units
Calculate
i. investment expenditure at equilibrium level of income
ii. autonomous consumption
iii. investment multiplier
iv. Marginal propensity to consume and marginal propensity to save
b) Describe six causes of income inequality
Page 15 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

41. Clearly show derivation of the identity Y = C + G + I + X – M

(b) You are given the following information of a particular country in a certain year.
GNP at market price is tshs. 3,970mn.
GDP at market price is tshs. 4,030mn
NNP at market price is tshs. 3,776mn
Find
(i) Net factor income from abroad and comment.
(ii) Net domestic product at market price
(iii) Depreciation value

42. Commercial banks are usually required to keep a certain portion of their reserves
inform of cash (cash-ratio) to meet the day-to-day requirements of their customers,
any excess of the cash reserve may be invested or lent out to customers.
Complete, the following table, and compute credit multiplier. Given cash ratio
fixed at 20% and new deposits of 1000:-

Person New deposits Cash reserve New loans

A 1000 ________________ _____________
B ______________ ________________ _____________
C ______________ ________________ _____________
D ______________ ________________ _____________
E ______________ ________________ _____________

(b) Is there a distinction between Banking and Non-banking financial institutions?

Page 16 of 30
ECONOMICS REVIEW QUESTIONS 02/01/2020

Page 17 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

43. Outline six (6) assumptions of acceleration principle.

(b) Given the following information

Country Bananas (tons) Beans (tons)

U.S.A 16 8
U.K 48 16

The figures represent input quantities per unit of output of the corresponding
commodities.
(i) Which country has got absolute advantage in production of bananas,
beans?
(ii) Which country has got comparative advantage in the production of
bananas or beans?
(iii) With reasons suggest how should countries specialize to improve
international trade?
44. a)The table below shows the production possibilities in USA and INDIA

COUNTRY/PRODUCT WHEAT CLOTH

USA 60Kgs 80metres
INDIA 20Kgs 40metres

i. Which country has more absolute advantage over the other and in which
commodity?
ii. Which country has comparative advantage over the other and in which
commodity?
iii. From the table calculate opportunity cost of wheat and cloth in the two
countries and prepare the opportunity cost table for two countries
iv. When both nations trade, which country has more favorable terms of trade
and why

Page 18 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

45. When may a country benefit from international trade?

(b) Study the data given and in the table below and answer the questions which
follow
Commodities (tons per man hour)
Countries
Tea (Tons) Sisal (Tons)

Tanzania 18 12

Kenya 9 4

(i) Which country has got absolute advantage in the production of Tea?
(ii) Which country has got at least comparative disadvantage in the production
of sisal?
(iii) Which country has got comparative advantage in the production of Tea?

iv. How should the countries specialize to gain in specialization

Page 19 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

46. Why GNP in Tanzania is less that that of USA? give four points
(b) (i) Describe four factors that affect welfare which are not included in GNP
(ii) Given that consumption function of a country Z is C= 1000+ 0.45y, if investment
is 650units determine the equilibrium level of national income

Page 20 of 30
ECONOMICS REVIEW QUESTIONS 02/01/2020

Page 21 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

47. a) Describe any five leakages in working of multiplies

b) Consider the following information and then answer the question that follows;
Gross domestic product billions 8084
Net fo
Consumption of fixed capital billions 868
Indirect business taxes billions 545
Social security contributions billions 732
Corporate income taxes billions 319
Undistributed corporate profits billions 149
Transfer payments billions 1424
Personal taxes billions 987
Calculate
a) NDP
b) National Income
c) Disposable Income

Page 22 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

48. Calculate national income from the following data:-

(Rs. Crores)
(i) Consumption of fixed capital 50
(ii) Employers contribution to social security 75
(iii) Interest 160
(iv) Net Indirect Taxes 55
(v) Rent 130
(vi) Dividends 45
(vii) Corporate Tax 15
(viii) Undistributed profit 10
(ix) Net factor income from abroad -10
(x) Wages and salaries 450

Page 23 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

49. Calculate national income from the following data:-

(Rs. Crores)
(i) Consumption of fixed capital 50
(ii) Employers contribution to social security 75
(iii) Interest 160
(iv) Net Indirect Taxes 55
(v) Rent 130
(vi) Dividends 45
(vii) Corporate Tax 15
(viii) Undistributed profit 10
(ix) Net factor income from abroad -10
(x) Wages and salaries
50. Calculate (a) Net National Product at MP, and (b) Gross National Disposable
Income
ITEMS Rs. crores
a. Private final Consumption expenditure 200
b. Net indirect taxes 20
c. Change in stocks (--)15
d. Net current transfers from abroad (--)10
e. Govt. final consumption expenditure 50
f. Consumption of fixed capital 15
g. Net domestic capital formation 30
h. Net factor income from abroad 5
i. Net imports 10
51. Calculate Net National Disposable Income from the following data.
ITEMS Rs. crores
a. Gross domestic product at MP 1000
b. Net factor income from abroad (-) 20
c. Net indirect taxes 120
d. Consumption of fixed capital 100
e. Net current transfers from abroad 50
52. ESTIMATE NATIONAL INCOME BY
(a) EXPENDITURE METHOD (b) INCOME METHOD FROM THE
FOLLOWING
DATA Rs. in crores
1. Private final consumption expenditure 210
2. Govt: final consumption expenditure 50
3. Net domestic capital formation 40
4. Net exports (-) 5
5. Wages & Salaries 170
6. Employer’s contribution 10
7. Profit 45

Page 24 of 30
ECONOMICS REVIEW QUESTIONS 02/01/2020

8. Interest 20
9. Indirect taxes 30
10. Subsidies 05
11. Rent 10
12. Factor income from abroad 03
13. Consumption of fixed capital 25
14. Royalty 15
53. FROM THE FOLLOWING DATA CALCULATE
(a) NATIONAL INCOME (b) PERSONAL DISPOSIBLE INCOME.
1. Profit 500
2. Rent 200
3. Private income 2000
4. Mixed income of self-employed 800
5. Compensation of employers 1000
6. Consumption of fixed capital 100
7. Net factor income from abroad -(50)
8. Net retained earnings of private employees’ 150
9. Interest 250
10. Net exports 200
11. Co-operation 100
12. Net indirect tax 160
13. Direct taxes paid by houses hold’s 120
14. Employers contribution to social security scheme. 60
54. CALCULATE NNP AT MARKET PRICE BY PRODUCTION METHOD AND
INCOME METHOD Crores
1. Inter mediate consumption
(a) primary sector 500
(b) Secondary sector 400
(c) tertiary sector 300
2. Value of output of
(a) primary sector 1,000
(b) Secondary sector 900
(c) tertiary sector 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

Page 25 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

55. CALCULATE GNP at FACTOR COST BY INCOME METHOD AND

EXPENDITURE METHOD. Rupees in crores
1. Private final consumption expenditure 1000
2. Net domestic capital formation 200
3. Profit 400
4. Compensation of employers 800
5. Rent 250
6. Gov.: final consumption expenditure 500
7. Consumption of fixed capital 60
8. Interest 150
9. Net current transfer from row (-)80
10. Net factor income from abroad (-)10
11. Net exports (-)20
12. Net indirect taxes 80
56. From the following data calculate National Income by
(i) Income method and (ii) Expenditure method.
(Rs. In Crores)
(i) Compensation of employees 1,200
(ii) Net factor income from abroad (-)20
(iii) Net indirect taxes 120
(iv) Profit 800
(v) Private final consumption expenditure 2,000
(vi) Net domestic capital formation 770
(vii) Consumption of fixed capital 130
(viii) Rent 400
(ix) Interest 620
(x) Mixed income of self- employed 700
(xi) Net exports (-)30
(xii) Government final consumption expenditure 1,100
57. From the following data, calculate Gross national product at Market Price by
(i) Income method. (ii) Expenditure method:
(Rs. In Crores)
(i) Mixed income of self-employed 400
(ii) Compensation of employees 500
(iii) Private final consumption expenditure 900
(iv) Net factor income from abroad (-)20
(v) Net indirect taxes 100
(vi) Consumption of fixed capital 120
(vii) Net domestic capital formation 280
(viii) Net exports (-)30
(ix) Profits 350
(x) Rent 100

Page 26 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

(xi) Interest 150

(xii) Government final consumption expenditure 450
58. From the following data, calculate:
(a) National income, and (b) Personal disposable income
(Rs. In Crores)
(i) Compensation of employees 1,200’
(ii) Rent 400
(iii) Profit 800
(iv) Consumption of fixed capital 300
(v) Mixed income of self- employed 1,000
(vi) private income 3,600
(vii) net factor income from abroad (-)50
(viii) net trained earnings of private enterprises 200
(ix)interest 250
(x) net indirect taxes 350
(xi) net exports (-)60
(xii) direct taxes paid by households 150
(xiii) corporation tax 100
59. From the following data calculate national income by
(a) Income method and (b) Expenditure method.
(Rs. In cores)
(i) Private final consumption expenditure 2,000
(ii) Net capital formation 400
(iii) Change in stock 50
(iv) Compensation of employees 1,900
(v) Rent 200
(vi) Interest 150
(vii) operating surplus 720
(viii) Net indirect tax 400
(x) Employers’ contribution to social security schemes 100
(xi) Net exports 20
(xii) Net factor income from aboard (-)20
(xii) Government final consumption expenditure 600
(xvi) Consumption of fixed capital 100

60. Find gross national product at market price by income method and expenditure
method.
ITEMS Rs. CRORES
a. Mixed income of the self-employed 400
b. Compensation of employees 500
c. Private final consumption expenditure 900
d. Net factor income from abroad (-)20

Page 27 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

e. Net indirect taxes 100

f. Consumption of fixed capital 20
g. Net domestic capital formation 280
h. Net exports (--) 30
i. Rent 100
j. Interest 150
k. Government final consumption expenditure 450
61. From the following data, calculate national income by income method
Items (Rs. In crores)
Compensation of employees 800
Mixed income of self employed 900
Net factor income from abroad - 50
Rent 350
Profit 600
Consumption of fixed capital 200
Net indirect taxes 250
Interest 450
Operating Surplus 1400
62. From the following data calculate national income by
i) income method ii)expenditure method
1. Compensation of employees 1,200
2. Net factor income from - 20
3. Net indirect taxes 120
4. Profit 800
5. Private final consumption expenditure 2,000
6. Net domestic capital formation 770
7. Consumption of fixed capital 130
8. Rent 400
9. Interest 620
10. Mixed income of self-employed 700
11. Net exports - 30
12. Govt. final consumption expenditure 1,100
13. Operating surplus 1820
14. Employer’s contribution to social security
scheme 300
63. Given the following information
Private domestic consumption ---------------------- 6,000
Profit………………………………………… 18000
Capital consumption balance …………………… 80
Compensation to working labour force………….. 4500
Net domestic investment …………………………. 1680
Interest ………………………………………… 900

Page 28 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

Allowance to pensioners ……………………………. 200

Rent ………………………………………… 800
Retired soldiers and elders………………… 200
Transfer payment ………………………… 400
Reguired
a) Compute GDP using expenditure method
b) Compute GDP using income method
c) Briefly explain the factors which influence the size of national income
64. a) Define
i. Narrow definition of money (M1)
ii. Broad definition of money (M2)
b) Given the following data
Money outside the banking system = 50,000,000
Demand deposits = 10,000,000
Saving deposits = 15,000,000
Time deposits = 20,000,000
Calculate
i. Narrow definition of money supply
ii. Broad definition of money supply
65. You are given the following information
National income Y = 1000m
Consumption = 600m
MPC =APC = -0.6
i. Calculate the effect on income if planned investment increases by 50m
ii. Calculate the value of APS and MPS
iii. Calculate the investment multiplier
iv. Calculate the new national income
1
v. If MPC increases by what will be the new level of national income
3
66. You are given the following information of a particular country in a year
GNPmp = 4050m
GDP mp = 5040m
NNPmp = 3800m
Indirect business tax = 610m
Subsidies = 270m
Corporate taxes = 120m
Undistributed profit = 130
Social security contribution = 300m
Transfer of payment = 530m
Direct personal tax = 300m
Find
i. Net foreign investiment and comment on it
ii. NDPfc

Page 29 of 30
 ECONOMICS REVIEW QUESTIONS 02/01/2020

iii. National income

iv. Capital consumption balance
v. Personal disposable income
67. Given the following information
GDPmp = 480
Net export = -80
NIFA = 20
Indirect tax 120
Subsidies = 90
The wearing away of capital is = 50
Undistributed profit = 20
Corporate tax = 12
Social security contribution = 18
Personal taxes = 50
Transfer payment = 60
Compute
i. NDPfc
ii. National income
iii. Personal income
iv. Personal disposable income
v. Comment on NIFA

Page 30 of 30