QUIZ I - 2021-22
MBA- 2nd Semester
Managerial Economics- II (ME-II)
Read the questions carefully and then answer. All the questions are compulsory. Follow the
instructions given in each questions.
Maximum time-30 min
Full Marks- 10
I. Short answer type questions1) NDPFC
(4x1=4)
NDPfc = GDPmp – depreciation – Net Indirect taxes, OR,
NDPfc = NDPmp – Net Indirect Taxes = NDPmp – Indirect Taxes + Subsidies
Net Domestic Product at factor cost. It refers to the sum total of factor incomes generated within the domestic
territory of a country during the period of an accounting year.
Domestic income is the sum total of factor incomes generated by all the
production units located within the domestic territory of a country during a period of
account. It does not matter whether the producer is the normal resident or foreigner.
What is essential is that production is done within the domestic territory of the country.
Again domestic income does not include 'net factor income earned from abroad'.
2) Transfer Payments
A transfer payment is a payment of money for which there are no goods
or services exchanged. Transfer payments commonly refer to efforts by
local, state, and federal governments to redistribute money to those in
need. In the U.S., Social Security and unemployment insurance are
common types of transfer payments.
3) Circular flow of income in a THREE sector model
To complete the circular income of income and expenditure in a three-sector closed model,
the government sector is added. Taxation is a leakage from the circular flow and government
purchases are injections into the circular flow. To do so, government sector implements taxes
on businesses and consumers.
4) Difference between GDP & GNP
GDP measures the value of goods and services produced within a country's borders, by
citizens and non-citizens alike. GNP measures the value of goods and services produced by
only a country's citizens but both domestically and abroad. GDP is the most commonly used
by global economies.
GDP
GNP
Definition
The value of goods and services produced
within the geographical boundaries of a nation
in a financial year is termed as GDP
The value of goods and services produced by a
citizen of a nation irrespective of geographical
limits in a financial year is known as GNP
What does it measure?
Measures only domestic production
Measures only the production by nationals
Emphasis
Production that is obtained domestically
Production that is achieved by citizens living in
different nations
Highlights
GDP highlights the strength of the country’s
economy
GNP highlights the residents’ contribution to the
development of the economy.
Scale of operations
Local Scale
International Scale
Excludes
Goods and services that are being produced
outside the economy.
Goods and services that are produced by
foreigners living in the country.
II. Fill in the missing figures. What inference could be drawn from the
following table with the result drawn?
(2)
Categories
Nominal GDP
Real GDP
GDP Deflator
2017
17800
18800
0.94
III. Numerical based questions:
1) Given that- (In $)
2018
22800
19700
1.15
Rate of growth (%)
28.08
04.78
22.3
(4)
a)
b)
c)
d)
e)
f)
g)
h)
i)
j)
Personal consumption expenditure=1800
I.T = 320
Subsidies= 150
Depreciation=40
Govt. final expenditure=2500
Export=800
Import =800
NFIA=250.
Private investment expenditure= 2000
Change in stock= 300
Find out GDP at MP, NDP at MP, GDP at F.C,GNP at
F.C,NNP at FC.
1. gdp at mp- 1800+300+2500+2000+(800-800)
=6600
2. gdp at fc – 6600-(320-150)
= 6430
3. ndp at mp- 6600-40
=6560
4. gnp at fc- 6430+250
=6680
5.nnp at fc- 6680-40
= 6640