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प्रश्न
Explain how ‘distribution of gross domestic product’ is a limitation in taking gross domestic product as an index of welfare.
उत्तर
GDP refers to the market value of all the final goods and services produced within the domestic territory during an accounting year. GDP as an index of welfare depends on the distribution of income in the economy. It is possible that even with the rise in the real GDP, the welfare of the people might not increase. This is because an increase in the GDP may be a result of the increase in the income of only a few individuals while, the majority of people remain deprived of the benefits of the rise in the GDP. In such a situation, a rise in the GDP does not enhance the economic welfare. In other words, a rise in national income may lead to false interpretation of the social welfare. Thus, it can be said that distribution of GDP is a limitation as a measure of economic welfare.
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संबंधित प्रश्न
Calculate (a) net national product at the market price and (b) gross national disposable income:
| (Rs in crores) | ||
| 1 | Gross domestic fixed capital formation | 400 |
| 2 | Private final consumption expenditure | 8,000 |
| 3 | Government final consumption expenditure | 3,000 |
| 4 | Change in stock | 50 |
| 5 | Consumption of fixed capital | 40 |
| 6 | Net indirect taxes | 100 |
| 7 | Net exports | (-) 60 |
| 8 | Net factor income to abroad | (-) 80 |
| 9 | Net current transfers from abroad | 100 |
| 10 | Dividend | 100 |
If the Nominal GDP is Rs 600 and Price Index (base = 100) is 120, calculate the Real GDP.
Write down the three identities of calculating the GDP of a country by the three methods. Also briefly explain why each of these should give us the same value of GDP.
Calculate value of "Interest" from the following data:
| S. No. | Particulars |
Amount (₹ in crores) |
| (i) | Indirect tax | 1,500 |
| (ii) | Subsidies | 700 |
| (iii) | Profits | 1,100 |
| (iv) | Consumption of fixed capital | 700 |
| (v) | Gross domestic product at market price | 17,500 |
| (vi) | Compensation of employees | 9,300 |
| (vii) | Interest | ? |
| (viii) | Mixed income of self-employed | 3,500 |
| (ix) | Rent | 800 |
NDPFC =?
Match the following:
| 1 | Prime Minister | A | Seeds that give a large proportion of output |
| 2 | Gross Domestic Product | B | Quantity of goods that can be imported |
| 3 | Quota | C | Chairperson of the planning commission |
| 4 | Land Reforms | D | The money value of all the final goods and services produced within the economy 'in one year |
| 5 | HYV Seeds | E | Improvements in the field of agriculture to increase its productivity |
| 6 | Subsidy | F | The monetary assistance given by the government for production activities |
Which of the following statements are correct
Statement 1: The wealth of a country can be increased with the efforts of a healthy workforce.
Statement 2: Investment in the health sector increases the efficiency and productivity of a nation's workforce.
Statement 3: In contrast to an unhealthy person, a healthy person can work better with more efficiency and consequently, can contribute relatively more to the GDP of the country
Which of the following features are related with Real Gross Domestic Product?
Profits earned by a branch of a foreign bank in India are ______ in the domestic product of India.
Suppose the GDP at a market price of a country in a particular year was Rs 1,100 crores. Net: factor Income from Abroad was Rs 100 crores. The value 1. 2. 3. 4. 5. of Indirect taxes − Subsidies was Rs 150 crores and National Income was Rs 850 crores. Calculate the aggregate value of depreciation.
Identify the correct pair as given in Column B by matching them with respective concepts in Column A:
| Column A | Column B | ||
| (1) | Reduction in the value of the domestic currency by the government | (a) | Devaluation |
| (2) | Reduction in the value of the domestic currency through market forces | (b) | Appreciation |
| (3) | Increase in the value of the domestic currency by the government | (c) | Depreciation |
| (4) | Increase in the value of the domestic currency through market forces | (d) | Revaluation |
Assertion (A): GDP does not exhibit the structure of the product.
Reason (R): If the increase in GDP is mainly due to increased production of war equipment and ammunitions, then such an increase cannot improve welfare in the economy.
______ is shown by Nominal GDP.
Identify the correctly matched items in Column A to that of Column B:
| Column A | Column B | ||
| 1 | GDP of a country | (a) | Absolute measure of welfare |
| 2 | Underestimation of GDP | (b) | Non-monetary exchanges excluded |
| 3 | Base year | (c) | Year of current market prices |
| 4 | Economic Welfare | (d) | Mental satisfaction and peace |
Read the below case and answer the question that follows:
|
The country's real gross domestic product (GDP) is likely to expand by 11 percent in the next financial year due to a faster economic recovery and on a low base, says a report. The report by domestic rating agency Brickwork Ratings said economic activities are slowly reaching PRE-COVID levels following the relaxation of the lockdown, except in sectors that remain affected by social distancing norms. "With progress in developing an effective vaccine for COVID-19 and signals of faster-than-expected recovery in the domestic economy, and also supported by a low base, we expect the real GDP to grow at 11 percent in F/Y 22, from the estimated contraction of 7 percent to 7.5 percent in F/Y 21," the agency said. According to the first advance estimates of national income released by the National Statistical Office (NSO), the country's GDP is estimated to contract by a record 7.7 percent during the current financial year. |
Read the following statements Assertion (A) and Reason (R).
Choose one of the correct alternatives given below:
Assertion (A): The country's real gross domestic product is likely to expand.
Reason (R): Some sectors remain affected by social distancing norms.
Which of the following statements is false?
Read the below case and answer the questions that follow:
The Centre on Saturday increased the budgetary allocation for the environment ministry from last fiscal by nearly five percent for 2020-21 with no change in the amount allotted to pollution abatement and climate change action plan. Union Finance Minister, Nirmala Sitharaman, allocated ₹3,100 crores for the ministry out of which ₹460 crores were allotted to control pollution, which is the same as the money it received in the last budget. Control of pollution has been conceptualized to provide financial assistance to Pollution Control Boards/Committees and funding to National Clean Air Programme (NCAP). Similarly, the budget for pollution abatement, which was cut by 50 percent last year from 2018-to 19, remained unchanged at ₹10 crores. The minister also announced that states, which are formulating and implementing plans for ensuring cleaner air in cities above one million population should be encouraged.
- Budget 2020: Allocation for Environment Ministry up 5% to ₹3,100 crore - Business Standards, 1st February 2020
Real GDP and Welfare are ______ related to each other.
"Gross Domestig Product (GDP) as an indicator of welfare loses its significance if the distribution of income turns unequal." Justify the given statement with valid reason.
From the following, calculate the value of net domestic product at factor cost:
| S.No. | Items | Amount in (₹ crore) |
| (i) | Royalty | 5 |
|
(ii) |
Rent | 75 |
| (iii) | Interest | 30 |
| (iv) | Compensation of Employees |
600 |
| (v) | Profit | 45 |
| (vi) | Dividends | 20 |
| (vii) | Mixed Income of self employed |
100 |
Union Finance Minister Mrs. Nirmala Sitharaman announced during her Budget speech that the Centre would reduce its fiscal deficit to 5.1% of gross GDP in 2024 – 25. (The present fiscal deficit is 5.8% of GDP.)
(Source: Union budget 2024 – 25)
What would be the impact of this decision on government borrowing? Why?
