National Income And Related Aggregates (Ch-1) Important Questions || Class 12 Economics (Macroeconomics) Book 1 Chapter 1 in English ||

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Chapter – 1

National Income And Related Aggregates

In this post, we have given the Important Questions of Class 12 Economics Chapter 1 (National Income And Related Aggregates) in English. These Important Questions are useful for the students who are going to appear in class 12 board exams.

BoardCBSE Board, UP Board, JAC Board, Bihar Board, HBSE Board, UBSE Board, PSEB Board, RBSE Board
ClassClass 12
Chapter no.Chapter 1
Chapter Name(National Income And Related Aggregates)
CategoryClass 12 Economics Important Questions in English
Class 12 Economics Chapter 1 National Income And Related Aggregates Important Questions in English

Chapter – 1

National Income And Related Aggregates


Important Questions

Q1 Define Production.

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Ans: Production is the process of converting inputs into outputs or value added to the raw materials.

Q2 Define consumption.

Ans: The process of using up utility of goods and services for direct satisfaction of individual or collective human wants is called Consumption.

Q3 Define Capital Formation.

Ans: Excess of production over Consumption is called investment.

Q14 Define Good.

Ans: In economics, a good is defined as any physical object, natural or manmade, or service rendered, that could command a price in the market.

Q5 Define Consumption Goods.

Ans: Goods purchased or even produced, for satisfaction of wants is called consumption goods. Example: washing machines, TV etc.

Q6 Define Capital Goods.

Ans: Goods capable of being used for producing other goods are called Capital goods. Eg. Car machinery etc.

Q7 Define final goods.

Ans: Goods and services purchased, or own produced, for the purpose of consumption and investment are final goods.

Q8 Define Intermediate goods.

Ans: Intermediate goods refer to those goods and services which are purchased during the year by one production unit from other production unit and completely used up, or resold, during the same year.

Q9 Define Stocks.

Ans: Variables whose magnitude is measured at a particular point of time are called stock variables.

Q10 Define Flow.

Ans: Variables whose magnitude is measured over a period of time are called flow variables.

Q11 Distinguish between leakages and Injections



  • These flow variables have a negative impact on the process of production.
  • These are withdrawals from circular flow of income.
  • Effect on economy: reduce demand of goods and services; reduce flow of income
  • Examples: saving taxation and imports.


  • These cause positive impact on the process of production or income generation.
  • These are additions to the circular floe of income.
  • Effect on economy: Add to the production capacity of the economy; generate demand of goods and services.
  • Examples: investment, exports, consumption expenditure

Q12 What are the steps for estimating national income by value-added method?


  • Identification of producing units

 (namely primary sector, secondary sector and tertiary sector)

  • Calculation of GDPmp or GVAmp:
    • GVOmp=Sales + Change in Stocks+Goods produced for self-consumption
    • =(Domestic Sales+exports)+(Closing Stock-Opening Stock)
  • GVA mp/GDPmp =GVOmp-intermediate Consumption
    • =GVOmp-(Domestic purchase+imports)
  • Calculation of Domestic Income(NDP fc): NDP fc=GDPmp-Depreciation-NIT
  • Calculation of National income (NNpfc): NNPfc=NDPfc+NFIA

Q.13 What is double counting? How can it be avoided?

Ans: Counting the value of commodities at every stage of production more than one time is called double counting.

It can be avoided by

  • taking value added method in the calculation of the national income.
  • By taking the value of final commodity only while calculating N. I.

Q14 Given the following data:

  • GDPFC = 25,215 Crores
  • Net Indirect Taxes = 1575 Crores
  • Depreciation = 1000 Crores

1. NFIA = 40 Crores

Calculate: –




  •  = 25215 + 1575
  •  = Rs. 26,790 Crores


  • = 26790 + 40
  • = Rs. 26,830 Crores

iii) NNPMP = GDPMP – Depreciation – NFIA

  • = 26,790 – 1000 – 40
  • = Rs. 25,750 Crores


  • = 25,750 – 1575
  • = Rs. 24,175 Crores


  • = 24,175 – 40 + 1575
  • = Rs. 25,710 Crores


  • = 25,710 – 1,575
  • = Rs. 24,135 Crores

Q15 There are only two producing sectors A and B in an economy. Calculate:

(a) Gross value added at market price by each sector

(b) National income.

Rs. (Crore)

  • Net factor income from Abroad.
  • Sales by A 1000
  • Sales by B 2000
  • Change in the stock of B (–) 200
  • Closing stock of A 50
  • Opening stock of A 100
  • Consumption of fixed capital by A and B 180
  • Indirect taxes paid by A and B 120
  • Purchase of raw material by A 500
  • Purchase of raw material by B 600
  • Exports by B 70


a) GVAMP of Sector A = 1000 – 50 – 500 = 450

GVAMP of Sector B = 2000 – 200 – 600 = 1200

b) Total = 450 + 1200 = 1650

National Income (NNPFC) = 1650 – 150 – 120 + 20 = 1370 Crores

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