National Income Accounting

Question 1

Define Stock

Answer 1

Quantity measured at time ‘t’

Question 2

Define Flow

Answer 2

Quantity measured over time ‘t’ (or) per unit time ‘t’

Question 3

Factor Income is named as ____ for the following:
1. Land
2. Labor
3. Capital
4. Entrepreneurship

Answer 3

1. Land - Rent
2. Labor - Wages (or) Salaries
3. Capital - Interest
4. Entrepreneurship - Profits

Question 4

Circular Flow of Income:

1. Real Flow - ______
2. Money Flow - ________

Answer 4

1. Real Flow
   HHs —–> Firms [Factors of Production: Labor]
   Firms ——-> HHs [Goods and Services]
2. Money Flow
   HHs ——-> Firms [Expenditure]
   Firms ——-> HHs [Wages (or) Salaries]

Question 5

Resident in Economy

Answer 5

Minimum of 1 year outside the territory carrying consumption, production, and investment in that said country

Exception(s): Students, Govt. Officials

Question 6

Will the goods resold money be added to NI?

Will the goods brought with the resold money be added to NI?

Will the commission taken in selling the used vehicle by a mediator be added to NI?

Answer 6

[1] No - As there is no new production

[2] Yes - The money is used to value the goods produced newly and used as the final products

[3] Yes - Mediation is considered as service

Question 8

GDP Equation

Answer 8

GDP = C + I + G + X - M
(C) - Consumption
(I) - Investment
(G) - Government Spending/Expenditure
(X) - Exports
(M) - Imports