Here we are providing 1 Mark Questions for Economics Class 12 Chapter 2 National Income Accounting are the best resource for students which helps in class 12 board exams.

## One Mark Questions for Class 12 Economics Chapter 2 National Income Accounting

Question 1.
What is depreciation? (C.B.S.E. 2011), (2013 Comp.)
Depreciation is the loss in the value of fixed capital due to normal wear and tear, foreseen obsolescence and normal rate of accidental damage. It is also known as consumption of fixed capital.

Question 2.
Define intermediate goods. (C.B.S.E. Outside Delhi 2011 Comp) (2013 Comp.))
Intermediate goods are those goods, which are not meant for final consumption. These are raw materials used in the production of other goods, and services.

Question 3.
Define net exports.
Net exports refer to the difference between the value of exports (X) and the value of imports (M) of a country during an accounting year.

Question 4.
What is saving?
Saving is defined as that part of National Income, which is not spent on final consumption expenditure.

Question 5.
Give two examples of indirect taxes.
Examples of indirect tax:
(i) Custom Duty
(ii) Excise Duty
(iii) Sales Tax

Question 6.
Define corporation tax.
Corporation tax is a tax on the income of the corporations.

Question 7.
Define indirect tax.
Indirect tax is a tax collected by an intermediary (seller) from the person who bears the ultimate economic burden of the tax (buyer). Its burden can be shifted by the tax payer on someone else.

Question 8.
How rate of saving is calculated?
Rate of saving is calculated as:
$$\frac{\text { Net Domestic Saving }}{\text { Net Domestic Product }} \times 100$$

Question 9.
How rate of capital formation is estimated?
Rate of capital formation is calculated as:
$$\frac{\text { Net Domestic Capital Formation }}{\text { Net Domestic Product }} \times 100$$

Question 10.
Give two examples of intermediate goods. (C.B.S.E. Outside Delhi 2013)
Following are the two examples of intermediate goods:
(i) Cloth: Cloth is used as an intermediate good for manufacturing garments.
(ii) Steel: Steel is used as an intermediate good for manufacturing, say, bicycle.

Question 11.
Define a stock.
Stock is an economic variable that is measured at a specific point of time. It is a static concept.

Question 12.
Define flow concept.
Flow is an economic variable that is measured over a specific period of time. It is a dynamic concept.

Question 13.
Define a closed economy.
A closed economy is the one, which does not undertake economic transactions with the rest of the world.

Question 14.
Define an open economy.
An open economy is the one, which undertakes economic transactions with the rest of the world.

Question 15.
Is National Income a stock or flow variable?
National Income is a flow variable because it is measured over a period of time.

Question 16.
What do you mean by money flow?
Money flow refers to the flow of money value across different sectors in an economy.

Question 17.
State which of the following is a stock and which is a flow?
(i) Wealth
(ii) Cement Production
(i) Wealth is a stock concept because it is measured at a point of time.
(ii) Cement production is a flow concept because it is measured over a period of time.

Question 18.
State whether the following is a stock or flow:
(i) Population of a country
(ii) Number of births
(i) Population of a country is a stock concept because it is measured at a point of time.
(ii) Number of births is a flow concept because it is measured over a period of time.

Question 19.
Define flow variable. (C.B.S.E Outside Delhi 2012), (C.B.S.E 2011)
Flow variables are the variables which are measured over a specific period of time.

Question 20.
What are stock variables? (C.B.S.E 2012), (C.B.S.E Outside Delhi 2011)
Stock variables are those variables which are measured at a specific point of time.

Question 21.
What do you mean by circular flow?
Circular flow is a pictorial illustration showing the flow of receipts of and payments for goods and . services, and factor of production across different sectors in an economy.

Question 22.
Give any two examples of flow concept. (C.B.S.E 2019)
(i) National Income
(ii) Population growth
(iii) Investment .

Question 23.
What are leakages in circular flow?
Leakages in the economy refer to the withdrawal of income from the process circular flow in the form of savings, taxes and imports from the foreign sector. For example: Savings.

Question 24.
What are injections into circular flow?
Injections in the economy refer to the contribution of income into the process circular flow in the form of investment, government spending and exports to the foreign sector. For example: Investment.

Question 25.
Who supplies factor services in the circular flow?
Household sector supplies factor services in the circular flow.

Question 26.
What is National Income?
National Income is the aggregate of income earned by all the factors owned by the normal residents of a country during a period of one year.

Question 27.
What is National Income Accounting?
National Income Accounting is an organised arrangement of figures relating to the economic activities in the aggregate economy during a specific period of time.

Question 28.
Define GNP at Market Prices.
GNP at Market Price is the value of all final goods and services produced during a period of one year. It includes net factor income from abroad and depreciation.

Question 29.
Define NNP at Market Prices.
NNP at Market Price is the value of all final goods and services produced during a period of one year. It includes net factor income from abroad but excludes depreciation. It can be calculated as:
NNPMP = GNPMP – Depreciation

Question 30.
Define GNP at Factor Cost.
GNP at Factor Cost is the sum total of incomes earned by all the factors in an economy during a period of one year. It includes net factor income from abroad and depreciation.

Question 31.
Define NNP at Factor Cost.
NNP at Factor Cost is the sum total of incomes earned by all the factors in an economy during a period of one year. It includes net factor income from abroad, but excludes depreciation. It can be calculated as:
NNPPC = GNPPC – Depreciation

Question 32.
What are transfer payments? (C.B.S.E. Outside Delhi 2011 Comp.)
Transfer payments are the payments, which are received by an individual without rendering any service to the producing unit. The government gives fees and scholarships, old age pension and other benefits as transfer payments.

Question 33.
What is meant by Gross Domestic Product. (C.B.S.E. Outside Delhi 2011 Comp.)
Gross Domestic Product (GDP) is value of final goods and services produced within the domestic territory of a country during one year.

Question 34.
What is Nominal Gross Domestic Product? (C.B.S.E. 2011)
Nominal Gross Domestic Product is money value of all the final goods and services measured at current prices produced by the normal residents of a country during one year.

Question 35.
What is the alternative name of the product method for measuring National Income?
Value added method is the alternative name of the product method for measuring National Income.

Question 36.
Name the methods of measuring National Income.
The methods of measuring National Income are:
(i) Product Method
(ii) Income Method
(iii) Expenditure Method

Question 37.
Indicate one problem associated with the measurement of National Income.
Problem of double counting is associated with the measurement of National Income.

Question 38.
What is the alternative name for the final expenditure method of measuring National Income?
Consumption and investment method is the alternative name of the final expenditure method of measuring National Income.

Question 39.
Define:
(i) Nominal GNP
(ii) Real GNP
(i) Nominal GNP is the value of income or output at current year prices.
(ii) Real GNP is the value of current income at base year prices.

Question 40.
What is GDP deflator?
GDP deflator measures the change in the base year’s GDP on the basis of the change in the once I level. It is calculated as:
$$\text { GDP Deflator }=\frac{\text { Nominal GNP }}{\text { RealGNP }} \times 100$$

Question 41.
State the formula that converts nominal GDP in real GDP.
$$\text { Real GDP }=\frac{\text { Nominal GDP }}{\text { Pricelndex }} \times 100$$