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National Income PYQs – Economics, SSC & Railway

51 National Income (Economics) questions asked in recent SSC and Railway exams, newest first, with exam, date & shift, answers and solutions.

📚 51 questionsSSC 46 · Railway 5
SSC Stenographer 2026 – 11 September 2026 Shift 1 · GDP, GNP, NDP and NNP

Q1. What is the principal macroeconomic indicator used to measure the overall value of all final goods and services produced within India's borders?

  1. (a) GDP
  2. (b) NSDP
  3. (c) CPI
  4. (d) GNP
Answer & solution

Answer: (a) GDP

Answer: Option 1 — GDP
Gross Domestic Product is the market value of all final goods and services produced within a country's domestic territory in a year.
The words "within India's borders" are the giveaway — GDP is a territory measure, whoever the producer is.
Revision note — GDP and the national income aggregates
• GDP counts output inside the domestic territory; GNP counts output by the country's normal residents, wherever they are.
• GNP = GDP + Net Factor Income from Abroad (NFIA). For India NFIA is usually negative, so GNP is slightly less than GDP.
• NDP = GDP − depreciation and NNP = GNP − depreciation; NNP at factor cost is National Income.
• Only final goods are counted; intermediate goods are excluded to avoid double counting.
• Nominal GDP uses current prices, real GDP uses constant (base-year) prices, and Nominal ÷ Real × 100 is the GDP deflator.
• Estimates are prepared by the National Statistical Office (NSO) under MoSPI; the current base year is 2011-12.
• GDP is a flow variable measured over a period; money supply and foreign exchange reserves are stock variables.
Do not mix these up
• GDP vs GNP — territory versus residents; the gap between them is exactly net factor income from abroad.
• GDP vs NSDP — NSDP is the Net State Domestic Product, a state-level net figure, not a national gross one.
• GDP vs CPI — the Consumer Price Index measures retail price change, that is inflation, not output.
Also asked from this topic: what is excluded when measuring GDP (intermediate goods); national income at constant prices (real income); the prices used for nominal GDP (current prices).
SSC GD 2026 – 31 May 2026 Shift 1 · GDP, GNP, NDP and NNP

Q2. Which of the following is a flow variable?

  1. (a) National income
  2. (b) Money supply
  3. (c) Share capital
  4. (d) Foreign exchange reserves
Answer & solution

Answer: (a) National income

Correct Answer: National income (Option 1)
In economics, a flow variable is measured over a period of time (e.g., per year, per month). National income is a flow variable because it measures the total value of goods and services produced in a country over a specific time period (usually a year).
Stock variables are measured at a specific point in time:
- Money supply: Measured at a given point in time (e.g., M1, M2 on a particular date).
- Share capital: The total capital raised by a company — measured at a point in time.
- Foreign exchange reserves: The holdings of foreign currency at a specific point in time.
Other examples of flow variables: National savings, Investment, GDP, Exports, Imports.
SSC GD 2026 – 19 May 2026 Shift 2 · GDP, GNP, NDP and NNP

Q3. What is the national income measured at constant prices called?

  1. (a) Real income
  2. (b) Nominal income
  3. (c) Disposable income
  4. (d) Net factor income
Answer & solution

Answer: (a) Real income

Correct Answer: Real income — Option (a)
National income measured at constant prices (base year prices) is called Real National Income (or Real GDP). When prices of a base year are used to measure output, the effect of inflation is eliminated, making it possible to compare actual growth in the quantity of goods and services produced over different years. In contrast, Nominal National Income (measured at current prices) includes the effect of both price changes and actual output changes. Real income is a more accurate indicator of actual economic growth than nominal income. For example, if nominal GDP grows by 10% but inflation is 6%, real GDP grows by approximately 4%.
Option (b) Nominal income — Incorrect: Nominal income (or Nominal GDP) is measured at current prices and includes the effect of inflation; it is NOT national income measured at constant prices.
Option (c) Disposable income — Incorrect: Disposable income refers to the income available to individuals for spending and saving after paying taxes (Personal Disposable Income); it is not the term for national income at constant prices.
Option (d) Net factor income — Incorrect: Net factor income from abroad (NFIA) is the difference between factor income earned by residents abroad and factor income paid to non-residents; adding NFIA to GDP gives GNP — it is not the term for income at constant prices.
SSC GD 2026 – 9 May 2026 Shift 2 · GDP, GNP, NDP and NNP

Q4. In the context of the Indian economy, which of the following statements about Personal Disposable Income (PDI) is correct?

  1. (a) PDI = Personal Income − Personal Tax Payments + Non-tax Payments
  2. (b) PDI = Personal Income − Personal Tax Payments − Non-tax Payments
  3. (c) PDI = National Income − Personal Tax Payments + Non-tax Payments
  4. (d) PDI = National Income − Personal Tax Payments − Non-tax Payments
Answer & solution

Answer: (b) PDI = Personal Income − Personal Tax Payments − Non-tax Payments

Correct Answer: PDI = Personal Income − Personal Tax Payments − Non-tax Payments — Option (b)
Personal Disposable Income (PDI) is the income available to individuals and households for final consumption expenditure and saving, after all mandatory deductions. The formula is: PDI = Personal Income (PI) − Personal Tax Payments − Non-tax Payments. Personal Tax Payments include income tax, wealth tax, gift tax, etc. Non-tax Payments include fees paid to the government (court fees, registration fees, fines, penalties, etc.). PDI represents the actual spending power in the hands of individuals after fulfilling all obligatory payments to the government.
Option (a) PDI = Personal Income − Personal Tax Payments + Non-tax Payments — Incorrect: Non-tax payments should be subtracted (not added); they are payments made FROM income, reducing disposable income.
Option (c) PDI = National Income − Personal Tax Payments + Non-tax Payments — Incorrect: PDI is calculated from Personal Income (not National Income), and non-tax payments should be subtracted, not added.
Option (d) PDI = National Income − Personal Tax Payments − Non-tax Payments — Incorrect: PDI is derived from Personal Income, not National Income. National Income includes corporate income, government income, etc., whereas PDI relates only to income received by individuals/households.
RRB JE CBT-1 2025-26 – 19 February 2026 · Economic growth and development

Q5. The 'Middle-Income Trap' refers to ____________.

  1. (a) Rapid transition to high-income status
  2. (b) Struggle to attain high income status
  3. (c) Over-reliance on foreign aid
  4. (d) Exclusive focus on agriculture
Answer & solution

Answer: (b) Struggle to attain high income status

The 'Middle-Income Trap' is an economic condition.
It describes the difficulty countries face after achieving middle-income levels but fail to progress to high-income status.
Countries struggle to sustain growth and upgrade industries or move up the value chain.
Hence, the trap is the struggle to reach high income status after initial growth.
Option 2 is correct.
SSC MTS 2025 – 18 February 2026 Shift 1 · GDP, GNP, NDP and NNP

Q6. If the real gross domestic product (GDP) increases, what does it imply?

  1. (a) Volume of production increases
  2. (b) Volume of production decreases
  3. (c) Currency has depreciated
  4. (d) Trade deficit has widened
Answer & solution

Answer: (a) Volume of production increases

Real GDP is GDP adjusted for inflation (calculated at constant prices). An increase in real GDP implies that the actual volume (quantity) of goods and services produced has increased, not merely a rise in prices. It does not directly indicate currency depreciation, decrease in production, or a widened trade deficit.
SSC MTS 2025 – 17 February 2026 Shift 3 · GDP, GNP, NDP and NNP

Q7. In the context of Indian economy, which of the following is included in gross domestic product at market price?
I. Production done by national residents in the country
II. Production done by non-residents in the country

  1. (a) Only I
  2. (b) Only II
  3. (c) Both I and II
  4. (d) Neither I nor II
Answer & solution

Answer: (c) Both I and II

GDP (Gross Domestic Product) at market price measures the total value of all goods and services produced within a country's geographic boundary, regardless of whether the producer is a national resident or a non-resident. Hence, Both I and II are included in GDP. Only I would describe GNP (Gross National Product); Only II and Neither are incorrect.
SSC MTS 2025 – 16 February 2026 Shift 1 · GDP, GNP, NDP and NNP

Q8. The nominal gross domestic product (GDP) is calculated at the ____.

  1. (a) constant set of prices
  2. (b) current prevailing prices
  3. (c) prices fixed by the Reserve Bank of India
  4. (d) prices fixed by the World Bank
Answer & solution

Answer: (b) current prevailing prices

Nominal GDP is calculated at current prevailing market prices — it measures the monetary value of all goods and services produced in a country during a specific period at the prices that prevailed during that period. It does not adjust for inflation. In contrast, Real GDP is calculated at constant prices (base year prices) to remove the effect of inflation.
Why other options are incorrect:
- Constant set of prices: This describes Real GDP, not Nominal GDP.
- Prices fixed by the Reserve Bank of India: The RBI does not fix prices for GDP calculation; it regulates monetary policy.
- Prices fixed by the World Bank: GDP is calculated using market prices, not prices set by the World Bank.
SSC MTS 2025 – 16 February 2026 Shift 1 · Economic growth and development

Q9. In which year did the GDP of India cross the 2 trillion-dollar mark?

  1. (a) 2012
  2. (b) 2014
  3. (c) 2016
  4. (d) 2018
Answer & solution

Answer: (b) 2014

India's GDP crossed the 2 trillion US dollar mark in 2014, making it the 10th largest economy in the world at that time. This milestone reflected India's rapid economic growth driven by the services sector, manufacturing, and a large consumer market.
Why other options are incorrect:
- 2012: India's GDP was approximately 1.8 trillion dollars in 2012, still below the 2 trillion mark.
- 2016: By 2016, India's GDP had already grown well beyond 2 trillion dollars.
- 2018: Correct milestone year for India crossing 2.7 trillion, but the 2 trillion mark was crossed earlier in 2014.
SSC MTS 2025 – 11 February 2026 Shift 3 · Economic growth and development

Q10. In which year did the GDP of India crossed the 1 trillion-dollar mark?

  1. (a) 2007
  2. (b) 2008
  3. (c) 2009
  4. (d) 2006
Answer & solution

Answer: (a) 2007

The correct answer is 2007 (Option 1). India's GDP crossed the 1 trillion US dollar mark for the first time in 2007, making it one of the fastest-growing economies at the time. This milestone was achieved during a period of rapid economic growth in India following post- liberalisation reforms. Option 2 (2008), Option 3 (2009), and Option 4 (2006) are incorrect years.
SSC MTS 2025 – 4 February 2026 Shift 3 · GDP, GNP, NDP and NNP

Q11. The real gross domestic product (GDP) is calculated in a way such that, the goods and services are evaluated at _____.

  1. (a) Some constant set of prices
  2. (b) Prices set by world trade organisation
  3. (c) Prices set by International monetary fund
  4. (d) The lowest prices observed in the economy
Answer & solution

Answer: (a) Some constant set of prices

Correct Answer: Some constant set of prices
Real GDP measures the value of goods and services produced in an economy using constant prices of a base year, removing the effect of inflation or deflation. This allows meaningful comparison of economic output across different time periods.
Why other options are wrong:
WTO - Sets international trade rules, not prices used for GDP calculation.
IMF - Monitors global economies but does not set prices for GDP calculation.
Lowest prices - The base-year fixed price set is used, not the lowest observed prices.
Delhi Police Head Constable (Ministerial) 2025-26 – 12 January 2026 Shift 1 · GVA, factor cost and market price

Q12. Which of the following best describes the distinction between Gross Value Added (GVA) and Net Value Added (NVA)?

  1. (a) Value added
  2. (b) Depreciation
  3. (c) Production flow
  4. (d) Investment
Answer & solution

Answer: (b) Depreciation

Depreciation is correct. The key distinction between GVA (Gross Value Added) and NVA (Net Value Added) is depreciation (also called Consumption of Fixed Capital). The formula is: NVA = GVA − Depreciation. GVA includes the full value of output minus intermediate consumption, while NVA further subtracts the wear and tear (depreciation) of capital assets used in production.
• Value added: This is what both GVA and NVA measure — the value added at each stage of production; it is not the distinction between them.
• Production flow: This is a concept in economics related to the movement of goods through production stages; it is not what separates GVA from NVA.
• Investment: Investment (capital formation) is related to GDP measurement but is not the distinguishing factor between GVA and NVA.
Delhi Police Head Constable (Ministerial) 2025-26 – 9 January 2026 Shift 1 · Economic growth and development

Q13. In the context of India's economic growth and investment trends in 2025, which of the following statements best explains the significance of Gross Fixed Capital Formation (GFCF) and the factors influencing its recent fluctuations?

  1. (a) GFCF only measures government expenditure on infrastructure and does not include private sector investments.
  2. (b) A rising GFCF as a percentage of GDP reflects increased investment in fixed assets like machinery, buildings, and infrastructure, indicating higher productive capacity; however, fluctuations in 2025 are influenced by global supply chain disruptions, private sector risk aversion, and policy reforms aimed at boosting capital expenditure.
  3. (c) GFCF primarily tracks changes in financial assets like stocks and bonds and is unrelated to physical capital investment.
  4. (d) GFCF growth in 2025 is solely driven by agricultural output improvements and rural credit expansion.
Answer & solution

Answer: (b) A rising GFCF as a percentage of GDP reflects increased investment in fixed assets like machinery, buildings, and infrastructure, indicating higher productive capacity; however, fluctuations in 2025 are influenced by global supply chain disruptions, private sector risk aversion, and policy reforms aimed at boosting capital expenditure.

Correct Answer: Option 2 – Rising GFCF reflects investment in fixed assets; 2025 fluctuations due to supply chain disruptions, risk aversion, and policy reforms
Gross Fixed Capital Formation (GFCF) measures the net investment in fixed assets — machinery, buildings, transport equipment, and infrastructure — by businesses, households, and the government. Key points:
• GFCF includes BOTH public and private sector investments (not just government).
• A rising GFCF-to-GDP ratio indicates growing productive capacity of the economy.
• In 2025, GFCF fluctuations in India were influenced by:
- Global supply chain disruptions (post-COVID, geopolitical tensions)
- Private sector risk aversion (cautious investment amid uncertainty)
- Policy reforms aimed at boosting capital expenditure (India's capex push, PLI schemes)
Why other options are wrong:
Option 1 (Only government expenditure): GFCF includes BOTH government AND private sector investments.
Option 3 (Financial assets like stocks/bonds): GFCF measures PHYSICAL capital investment — not financial assets. Changes in stocks and bonds are captured in financial accounts, not GFCF.
Option 4 (Solely agricultural): GFCF growth is driven by multiple sectors — not solely agriculture.
Delhi Police Head Constable (Ministerial) 2025-26 – 8 January 2026 Shift 2 · Per capita income

Q14. India's real GDP growth in 2025 is reported at 6.8%, but per capita NNP at factor cost grows only by 4.2%. What could be the most plausible reason for this divergence?

  1. (a) Rapid depreciation of physical capital and population growth reduced per capita net income despite healthy GDP growth.
  2. (b) Increase in exports and FDI inflows artificially suppressed GNP.
  3. (c) The divergence is statistically irrelevant and reflects a normal economic pattern.
  4. (d) Reduction in public investment increased fiscal surplus and lowered factor cost calculations.
Answer & solution

Answer: (a) Rapid depreciation of physical capital and population growth reduced per capita net income despite healthy GDP growth.

Correct Answer: Option 1 – Rapid depreciation and population growth reduced per capita NNP
The divergence between GDP growth (6.8%) and per capita NNP growth (4.2%) can be explained by two key factors:
1. Depreciation: NNP = GNP - Depreciation of capital. If physical capital depreciates rapidly (due to aging infrastructure, high usage), NNP will be significantly lower than GDP.
2. Population growth: Per capita NNP = NNP / Population. Even if NNP grows, if population grows faster, per capita NNP growth will be lower.
Together, high depreciation reduces NNP from GDP, and population growth further dilutes per capita NNP, resulting in only 4.2% growth despite 6.8% GDP growth.
Why other options are wrong:
Option 2 (Exports and FDI suppressed GNP): Exports and FDI inflows actually boost GNP, not suppress it. They do not explain the divergence.
Option 3 (Statistically irrelevant): A difference of 2.6 percentage points between GDP growth and per capita NNP growth is significant and not merely statistical noise.
Option 4 (Reduced public investment lowered factor cost): Reduced public investment would decrease GDP growth, not explain why NNP grows slower than GDP.
Delhi Police Constable (Exe) 2025-26 – 5 January 2026 Shift 1 · GDP, GNP, NDP and NNP

Q15. What specific economic activity does Gross Domestic Product (GDP) measure?

  1. (a) The total income of all citizens
  2. (b) The total value of final goods and services produced in a country
  3. (c) The total savings in a country
  4. (d) The total exports of a country
Answer & solution

Answer: (b) The total value of final goods and services produced in a country

The correct answer is (b) The total value of final goods and services produced in a country.
GDP is the monetary value of all final goods and services produced within a country's borders during a specific time period (usually a year or quarter). It measures the size and health of an economy.
(a) Total income of all citizens: This is closer to GNP (Gross National Product) which includes income from abroad; GDP measures production within borders.
(c) Total savings: Not what GDP measures; national savings is a separate indicator.
(d) Total exports: Only one component of GDP (net exports = exports minus imports); not the complete definition.
Delhi Police Constable (Exe) 2025-26 – 3 January 2026 Shift 3 · GDP, GNP, NDP and NNP

Q16. What is the full form of the economic term 'GDP'?

  1. (a) Gross Domestic Price
  2. (b) Gross Domestic Product
  3. (c) Government Dues Paid
  4. (d) General Development Plan
Answer & solution

Answer: (b) Gross Domestic Product

GDP stands for Gross Domestic Product, which measures the total monetary value of all finished goods and services produced within a country's borders in a specific time period. It is a key indicator of economic health.
(a) Incorrect: Gross Domestic Price is not an established economic term or acronym.
(b) Incorrect: Government Dues Paid is not what GDP stands for; it is unrelated to macroeconomic measurement.
(c) Incorrect: General Development Plan is not the expansion of GDP, which is strictly an economic output measure.
Delhi Police Constable (Exe) 2025-26 – 2 January 2026 Shift 3 · GDP, GNP, NDP and NNP

Q17. What does GDP measure?

  1. (a) The total income of all citizens
  2. (b) The total value of final goods and services produced in a country
  3. (c) The total savings in a country
  4. (d) The total exports of a country
Answer & solution

Answer: (b) The total value of final goods and services produced in a country

GDP (Gross Domestic Product) measures the total monetary value of all final goods and services produced within a country's borders in a specific time period (usually a year or a quarter). It is the broadest measure of a country's economic output.
(a) Incorrect: Total income of all citizens regardless of location describes GNI/GNP, not GDP.
(b) Incorrect: Total savings is measured by the national savings rate, not GDP.
(c) Incorrect: Total exports is only one component (net exports) in GDP calculation, not its full definition.
Delhi Police Constable (Exe) 2025-26 – 2 January 2026 Shift 3 · GDP, GNP, NDP and NNP

Q18. What does 'GNP' stand for in economics?

  1. (a) Gross National Product
  2. (b) Gross National Price
  3. (c) Government National Plan
  4. (d) General Needs Product
Answer & solution

Answer: (a) Gross National Product

GNP stands for Gross National Product. It measures the total monetary value of all goods and services produced by a country's nationals (residents), regardless of their location — inside or outside the country.
(a) Incorrect: Gross National Price is not a standard economic term used in macroeconomics.
(b) Incorrect: Government National Plan is not an economic measurement term.
(c) Incorrect: General Needs Product is not a recognised economic concept or indicator.
Delhi Police Constable (Exe) 2025-26 – 29 December 2025 Shift 3 · GDP, GNP, NDP and NNP

Q19. GDP at current prices is calculated using:

  1. (a) Constant base-year prices
  2. (b) Prices of the current year
  3. (c) International market rates
  4. (d) Wholesale price index
Answer & solution

Answer: (b) Prices of the current year

GDP at current prices (Nominal GDP) is calculated using the prices prevailing in the current year itself. This reflects the actual market values in that period, including inflationary effects. In contrast, GDP at constant prices (Real GDP) uses prices of a fixed base year to measure actual growth after removing inflation.
(a) Incorrect: Constant base-year prices are used for calculating Real GDP (GDP at constant prices), not GDP at current prices.
(c) Incorrect: International market rates are not used to calculate domestic GDP.
(d) Incorrect: Wholesale Price Index measures inflation; it is not directly used to calculate GDP at current prices.
Delhi Police Constable (Exe) 2025-26 – 22 December 2025 Shift 2 · Per capita income

Q20. What does "per capita income" refer to in economic terms?

  1. (a) Average family income
  2. (b) Total income of a country
  3. (c) Total income divided by population
  4. (d) Government income
Answer & solution

Answer: (c) Total income divided by population

Per capita income refers to the total national income (GDP or National Income) divided by the total population of a country. It is a measure of the average income earned per person in a given area over a specified period and is used to compare the economic performance and living standards across countries or regions. Option 3 is correct.
Option 1 is wrong: Average family income refers to the mean income of households, not individuals; per capita income is calculated per person (capita = head/person), not per family unit.
Option 2 is wrong: Total income of a country refers to the aggregate national income (GDP/GNP) without dividing by population; per capita income requires dividing this total by the number of people.
Option 4 is wrong: Government income refers to the revenue earned by the government through taxes, fees, and other sources; this is a component of fiscal policy, not what 'per capita income' measures.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 1 · Economic growth and development

Q21. What is the term used when the economy experiences negative growth for two consecutive quarters?

  1. (a) Depression
  2. (b) Stagflation
  3. (c) Recession
  4. (d) Inflation
Answer & solution

Answer: (c) Recession

Recession is the technical term for two consecutive quarters of negative GDP growth. Option 3 is correct.
Option 1 is wrong: Depression is a more severe and prolonged economic downturn, typically lasting years, not just two quarters.
Option 2 is wrong: Stagflation refers to a situation of high inflation combined with stagnant economic growth and high unemployment — not specifically two quarters of negative growth.
Option 4 is wrong: Inflation refers to a general rise in the price level, which can occur even during periods of positive growth.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 1 · GDP, GNP, NDP and NNP

Q22. Which of the following will increase the Gross Domestic Product but not the Gross National Product of a country?

  1. (a) Interest received from foreign government bonds
  2. (b) Profits of domestic companies earned abroad
  3. (c) Profits earned by a foreign company operating within the country
  4. (d) Increase in remittances from abroad
Answer & solution

Answer: (c) Profits earned by a foreign company operating within the country

Profits earned by a foreign company operating within the country increase the country's GDP (which counts all production within territorial boundaries) but not GNP (which counts only production by nationals/residents). Option 3 is correct.
Option 1 is wrong: Interest received from foreign government bonds is income earned abroad by nationals, so it increases GNP but not GDP.
Option 2 is wrong: Profits of domestic companies earned abroad increase GNP (income of nationals) but are not counted in GDP (which excludes income earned outside the country's borders).
Option 4 is wrong: Remittances from abroad are transfer payments received by nationals from overseas; they increase national income (GNP) but are not counted as GDP since no production occurs within the country.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 2 · Keynesian income determination and multiplier

Q23. As per the Keynesian framework, unemployment can exist due to:

  1. (a) Insufficient aggregate demand
  2. (b) Rigid prices
  3. (c) Flexible wages
  4. (d) Excessive supply of labour
Answer & solution

Answer: (a) Insufficient aggregate demand

According to Keynes, unemployment (especially involuntary unemployment) exists primarily because of insufficient aggregate demand in the economy. When businesses face low demand for goods and services, they reduce production and employment, causing unemployment. Option 1 is correct.
Option 2 is wrong: Rigid prices are not the Keynesian explanation for unemployment; in fact, Keynes acknowledged wage and price rigidities, but the root cause is demand deficiency, not price rigidity per se.
Option 3 is wrong: Flexible wages are associated with classical economics, which argued that flexible wage adjustments would eliminate unemployment; Keynes criticized this view by arguing that even with wage flexibility, demand deficiency causes unemployment.
Option 4 is wrong: Excessive supply of labour (structural oversupply) is a supply-side explanation; Keynesian economics focuses on the demand side — insufficient aggregate demand is the central cause of unemployment in the Keynesian framework.
Delhi Police Constable (Exe) 2025-26 – 20 December 2025 Shift 3 · Keynesian income determination and multiplier

Q24. What is the concept of the "Paradox of Thrift"?

  1. (a) Savings and investment are always equal
  2. (b) Savings reduce consumption but increase Gross Domestic Product
  3. (c) High savings always lead to high investment
  4. (d) Increased savings during a recession deepens the recession
Answer & solution

Answer: (d) Increased savings during a recession deepens the recession

The Paradox of Thrift (formulated by John Maynard Keynes) states that when all individuals in an economy try to save more during a recession (a rational individual response), aggregate demand falls because spending drops. This leads to lower income, higher unemployment, and a deeper recession — making the economy as a whole worse off even though each person was trying to be prudent. Option 4 is correct.
Option 1 is wrong: While savings equal investment in a closed economy at equilibrium (in national income accounting), 'savings and investment are always equal' is not the definition of the Paradox of Thrift.
Option 2 is wrong: This is the opposite of what the Paradox of Thrift states; increased savings REDUCE consumption, which REDUCES GDP (not increases it), especially during a recession.
Option 3 is wrong: The Paradox of Thrift specifically challenges this view — higher savings do not automatically lead to higher investment. During a recession, increased savings can depress demand and actually reduce investment by reducing the incentive to produce.
Delhi Police Constable (Exe) 2025-26 – 19 December 2025 Shift 1 · Methods of measuring national income

Q25. Which of the following components is excluded from Gross Domestic Product?

  1. (a) Imports
  2. (b) Net exports
  3. (c) Government spending
  4. (d) Investment
Answer & solution

Answer: (a) Imports

Imports are excluded from (subtracted in) the Gross Domestic Product calculation. The expenditure approach to GDP uses the formula: GDP = C + I + G + (X - M), where C = Private Consumption, I = Investment, G = Government Spending, X = Exports, and M = Imports. Imports are subtracted because they represent goods/services produced abroad and consumed domestically, not domestic production.
Option 2 is incorrect: Net exports (X - M) ARE included in GDP; they represent the external sector's contribution to domestic production.
Option 3 is incorrect: Government spending (G) IS included in GDP as it represents government's contribution to domestic output.
Option 4 is incorrect: Investment (I) IS included in GDP as it represents capital formation, a key component of domestic production.
Delhi Police Constable (Exe) 2025-26 – 18 December 2025 Shift 2 · Keynesian income determination and multiplier

Q26. If the investment-saving curve (IS curve) is vertical, monetary policy is:

  1. (a) Effective
  2. (b) Highly effective
  3. (c) Ineffective
  4. (d) Unpredictable
Answer & solution

Answer: (c) Ineffective

In the IS-LM model, if the IS curve is vertical, it means investment is completely interest-inelastic (investment does not respond to changes in interest rates). Monetary policy works by shifting the LM curve, which changes interest rates. However, if the IS curve is vertical, a change in interest rate caused by shifting LM does not affect investment or output/income. Therefore, monetary policy becomes completely ineffective when the IS curve is vertical.
Option 1 is incorrect: Monetary policy is NOT effective when the IS curve is vertical; output does not change regardless of how much the LM curve shifts.
Option 2 is incorrect: Monetary policy being 'highly effective' would require a flat IS curve (highly interest-elastic investment), not a vertical IS curve.
Option 4 is incorrect: The outcome is not unpredictable - economic theory clearly shows that with a vertical IS curve, monetary policy has zero effect on output, making it definitively ineffective.
SSC CPO Paper-1 2025 – 12 December 2025 Shift 2 · GDP, GNP, NDP and NNP

Q27. The difference between the Gross National Product (GNP) and the Net National Product (NNP) is:

  1. (a) Taxes
  2. (b) Interest
  3. (c) Depreciation
  4. (d) Dividend
Answer & solution

Answer: (c) Depreciation

Correct: Depreciation.
NNP = GNP − Depreciation (also called Capital Consumption Allowance). Depreciation accounts for the wear and tear of capital assets. Taxes, interest, and dividends are not the difference between GNP and NNP.
SSC Stenographer 2025 – 8 December 2025 Shift 1 · Keynesian income determination and multiplier

Q28. According to John Maynard Keynes, what is the most effective tool for reviving an economy during a depression?

  1. (a) Reducing private investment
  2. (b) Increasing public savings
  3. (c) Expanding government expenditure
  4. (d) Raising income tax on corporations
Answer & solution

Answer: (c) Expanding government expenditure

John Maynard Keynes, a famous British economist, argued that during a depression, private investment and demand fall drastically, leading to unemployment and underutilisation of resources. He suggested that the most effective remedy is expansion of government expenditure . By increasing public spending on infrastructure, welfare, and services, the government can stimulate demand, create jobs, and revive economic growth. This is the essence of Keynesian economics , which emphasises the role of active government intervention in the economy during downturns.
SSC Stenographer 2025 – 8 December 2025 Shift 2 · GDP, GNP, NDP and NNP

Q29. A factory purchases machinery worth ₹50 lakh. At the end of the year, depreciation is ₹5 lakh. What is the Net Investment made by the firm?

  1. (a) ₹5 lakh
  2. (b) ₹55 lakh
  3. (c) ₹50 lakh
  4. (d) ₹45 lakh
Answer & solution

Answer: (d) ₹45 lakh

Net Investment = Gross Investment − Depreciation = ₹50 lakh − ₹5 lakh = ₹45 lakh → Option 4 .
SSC Stenographer 2025 – 8 December 2025 Shift 2 · GDP, GNP, NDP and NNP

Q30. Identify the correct interpretation of Gross National Product (GNP).

  1. (a) Income earned by Indians at home and abroad
  2. (b) Income of foreigners in India
  3. (c) Income earned by residents and non-residents within India
  4. (d) Income earned by Indians only within India
Answer & solution

Answer: (a) Income earned by Indians at home and abroad

The correct interpretation of Gross National Product (GNP) is the total income earned by Indians at home and abroad . Unlike Gross Domestic Product (GDP) , which measures the value of goods and services produced within a country’s borders, GNP focuses on the income generated by the nationals of a country, regardless of whether they are living in the country or abroad. Thus, GNP = GDP + Net Factor Income from Abroad (NFIA). For example, if an Indian engineer working in the USA sends his earnings home, it is included in India’s GNP, but not in its GDP.
SSC Stenographer 2025 – 6 December 2025 Shift 3 · Keynesian income determination and multiplier

Q31. According to Keynesian theory, during recession, what should the government ideally do?

  1. (a) Reduce spending
  2. (b) Increase spending and cut taxes
  3. (c) Promote imports
  4. (d) Increase interest rates
Answer & solution

Answer: (b) Increase spending and cut taxes

According to Keynesian theory , recessions occur because of a lack of aggregate demand in the economy. Keynes argued that during a downturn, the government should increase spending and cut taxes to boost demand. By spending more on public works, infrastructure, and welfare schemes, the government creates jobs and income, which further stimulates consumption. Cutting taxes leaves more disposable income in people’s hands, encouraging them to spend and invest, which helps pull the economy out of recession. On the other hand, reducing spending or raising interest rates would worsen the recession.
SSC Stenographer 2025 – 6 December 2025 Shift 3 · Economic growth and development

Q32. What does the term ‘capital formation’ refer to in macroeconomics?

  1. (a) Decrease in foreign direct investment
  2. (b) Increase in financial savings
  3. (c) Growth in production capacity through investment
  4. (d) Expansion of consumer credit
Answer & solution

Answer: (c) Growth in production capacity through investment

In macroeconomics, capital formation refers to the process of increasing a country’s stock of physical and productive assets through investment. It means using savings and investments to create new machines, factories, infrastructure, and technology that enhance production capacity. Simply saving money does not count as capital formation unless it is invested to generate future production. Thus, capital formation directly contributes to economic growth by expanding the ability of the economy to produce goods and services.
SSC CHSL Tier-1 2025 – 27 November 2025 Shift 2 · GDP, GNP, NDP and NNP

Q33. Personal Disposable Income is the part of the aggregate income which belongs to the _____.

  1. (a) households
  2. (b) firm
  3. (c) government
  4. (d) foreign banks
Answer & solution

Answer: (a) households

Personal Disposable Income (PDI) is the income available to the household sector after paying personal taxes. It represents the portion of aggregate (national) income that belongs to households and can be used for consumption expenditure or personal savings.
Firms retain corporate profits as undistributed income.
Government earns revenue through taxes and other sources.
Foreign banks do not have a claim on personal disposable income.
SSC CHSL Tier-1 2025 – 26 November 2025 Shift 2 · GVA, factor cost and market price

Q34. In the context of Indian economy, which of the following is included in the factor cost?

  1. (a) Production taxes only
  2. (b) Only the payment to factors of production
  3. (c) Product tax only
  4. (d) Both the product and production taxes
Answer & solution

Answer: (b) Only the payment to factors of production

Factor cost refers to the actual cost incurred by producers in producing goods and services, which includes only the payments made to factors of production — wages, rent, interest, and profit. It excludes indirect taxes (product taxes and production taxes) but includes subsidies.
Factor cost = Market price - Net indirect taxes (product taxes + production taxes - subsidies). Hence, Only the payment to factors of production is correct.
SSC CHSL Tier-1 2025 – 25 November 2025 Shift 2 · Methods of measuring national income

Q35. In the context of economy, which of the following is an example of Intermediate good?

  1. (a) Shirt
  2. (b) Copper used for making utensils
  3. (c) Television purchase by household
  4. (d) Refrigerator
Answer & solution

Answer: (b) Copper used for making utensils

Copper used for making utensils is an intermediate good — it is used as a raw material in the production process (making utensils) and not consumed directly.
A shirt is a final consumer good; Television purchased by a household is a final consumer durable good; Refrigerator is also a final consumer durable. Intermediate goods are those used in the production of other goods and services. The candidate incorrectly selected Television.
SSC CHSL Tier-1 2025 – 22 November 2025 Shift 2 · GDP, GNP, NDP and NNP

Q36. Which of the following statement regarding income is correct?
I. Out of private income, what finally reaches the households is known as personal income.
II. The total national income of the country is composed of two parts private income and public income.

  1. (a) Only I
  2. (b) Only II
  3. (c) Both I and II
  4. (d) Neither I nor II
Answer & solution

Answer: (c) Both I and II

Both statements are correct:
I. Personal income is the portion of private income that finally reaches households after deducting undistributed profits, corporate taxes, and adding transfer payments. This is the standard economic definition.
II. National Income consists of private income (earned by private individuals/firms) and public income (earned by the government from productive activities).
Hence, Both I and II are correct.
SSC CHSL Tier-1 2025 – 18 November 2025 Shift 1 · GVA, factor cost and market price

Q37. In the context of economy, if _____ is deducted from the gross value added to obtain the Net value added obtained.

  1. (a) Depreciation
  2. (b) Net indirect tax
  3. (c) Subsidy
  4. (d) Wage
Answer & solution

Answer: (a) Depreciation

In economics, Net Value Added (NVA) = Gross Value Added (GVA) - Depreciation (also called Consumption of Fixed Capital or CFC). Depreciation refers to the wearing out of fixed assets used in the production process. Subtracting depreciation from GVA gives the net contribution to production after accounting for capital consumption. Why other options are wrong: Option 2 - Net indirect tax: Net indirect tax is added to (or subtracted from) NVA to get NDP/GDP at market price, not used to calculate NVA from GVA. Option 3 - Subsidy: Subsidies affect the relationship between factor cost and market price, not the GVA to NVA conversion. Option 4 - Wage: Wages are a component of factor income/NVA, not something deducted from GVA.
SSC CHSL Tier-1 2025 – 18 November 2025 Shift 3 · GDP, GNP, NDP and NNP

Q38. In the context of wear and tear in production process, the replacement investment is same as _____.

  1. (a) depreciation of capital
  2. (b) subsidy given by government
  3. (c) wage of total staffs
  4. (d) entrepreneurship cost
Answer & solution

Answer: (a) depreciation of capital

Correct Answer: depreciation of capital (Option 1)
In economics, replacement investment refers to investment made to replace worn-out, obsolete, or depreciated capital equipment. It equals the depreciation of capital (also called Capital Consumption Allowance). The relationship is: Net Investment = Gross Investment - Depreciation (Replacement Investment). When a firm replaces old machinery with new machinery to maintain the existing productive capacity (without expanding it), it is making replacement investment equal to the depreciation of that capital.
Subsidy given by government is a financial assistance to reduce costs — not related to replacement investment. Wage of total staffs and entrepreneurship cost are different categories of cost in production.
SSC CHSL Tier-1 2025 – 14 November 2025 Shift 1 · Methods of measuring national income

Q39. The sum of the gross value added of all the firms in an economy in a year is called ________.

  1. (a) Gross Domestic Product
  2. (b) Net National Product
  3. (c) Gross Disposable Income
  4. (d) Net National Income
Answer & solution

Answer: (a) Gross Domestic Product

Gross Domestic Product (GDP) is the total monetary value of all goods and services produced within a country's borders in a given year. It is equivalent to the sum of the gross value added by all firms/producers in the economy. Net National Product (NNP) accounts for depreciation; Gross Disposable Income includes transfers; Net National Income is NNP minus indirect taxes — all differ from GDP.
SSC CGL Tier-1 2025 – 24 September 2025 Shift 3 · Methods of measuring national income

Q40. Consider the following statements about the impact of foreign trade on aggregate demand in India:
Statement1: Imports by Indian consumers act as a leakage from the circular flow of income hence reducing aggregate demand.
Statement2: Exports from India to foreign markets act as an injection into the circular flow, increasing aggregate demand.

  1. (a) Only Statement 1 is correct
  2. (b) Only Statement 2 is correct
  3. (c) Both Statement 1 and Statement 2 are correct
  4. (d) Neither Statement 1 nor Statement 2 is correct
Answer & solution

Answer: (c) Both Statement 1 and Statement 2 are correct

In the circular flow of income, imports represent payments going out of the domestic economy — a leakage that reduces aggregate demand.
Exports represent foreign payments coming into the economy — an injection that increases aggregate demand.
Hencebothstatements are correct.
SSC CGL Tier-1 2025 – 22 September 2025 Shift 1 · Methods of measuring national income

Q41. Which of the following is usually excluded when measuring a country's Gross Domestic Product (GDP)?

  1. (a) Consumer spending on final goods and services.
  2. (b) Government expenditure on public services.
  3. (c) The value of intermediate goods used in production.
  4. (d) Net exports (Exports - Imports).
Answer & solution

Answer: (c) The value of intermediate goods used in production.

GDP counts only the value of final goods and services to avoid double counting.
The value of intermediate goods is excluded because it is already embedded in the price of final goods.
Consumption, government spending and net exports are all included components of GDP.
Hence the answer is the value of intermediate goods.
SSC CGL Tier-1 2025 – 21 September 2025 Shift 1 · Keynesian income determination and multiplier

Q42. Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option:
Assertion (A): Increase in autonomous investment leads to a multiplied rise in national income.
Reason (R): This happens because of the marginal propensity to save being less than one.

  1. (a) Both A and R are true, and R is the correct explanation of A.
  2. (b) Both A and R are true, but R is not the correct explanation of A.
  3. (c) A is true, but R is false.
  4. (d) A is false, but R is true.
Answer & solution

Answer: (a) Both A and R are true, and R is the correct explanation of A.

Investment multiplier k = 1/MPS. Since MPS < 1, k > 1, so investment leads to multiplied rise in national income.
Both A and R are true; R correctly explains A.
SSC CGL Tier-1 2025 – 21 September 2025 Shift 3 · Economic growth and development

Q43. Read the below statements marked as Assertion (A) and Reason (R). Mark the correct option:
Assertion (A): GDP doesn't really tell the whole story when it comes to how well people in a country are actually doing.
Reason (R): That's mainly because it doesn't take into account stuff like wear and tear of machines, pollution, or even how the money is divided among people.

  1. (a) Both A and R are true, and R is the correct explanation of A.
  2. (b) Both A and R are true, but R is not the correct explanation of A.
  3. (c) A is true, but R is false.
  4. (d) A is false, but R is true.
Answer & solution

Answer: (a) Both A and R are true, and R is the correct explanation of A.

Assertion (A) is true: GDP is a quantitative measure of output and does not reflect well-being, inequality or environmental degradation.
Reason (R) is true: depreciation (wear and tear), pollution (negative externalities) and income distribution are precisely the limitations of GDP as a welfare indicator — and they correctly explain why GDP is inadequate.
Hence both are true and R correctly explains A.
SSC CGL Tier-1 2025 – 19 September 2025 Shift 2 · Base year and NSO

Q44. Who became the Chairperson of the National Statistical Commission (NSC) in 2022?

  1. (a) Pronab Sen
  2. (b) Bimal Jalan
  3. (c) Arvind Virmani
  4. (d) Rajeeva Laxman Karandikar
Answer & solution

Answer: (d) Rajeeva Laxman Karandikar

Rajeeva Laxman Karandikar, a well-known statistician, was appointed Chairperson of the National Statistical Commission in 2022.
Hence the correct answer is Rajeeva Laxman Karandikar.
RRB NTPC UG CBT-1 2024-25 – 1 September 2025 Shift 2 · Base year and NSO

Q45. Which of the following is a classification of economic activities undertaken by the Central Statistical Organisation (CSO) in India?

  1. (a) Classification Code of India-2000
  2. (b) Industrial Classification Structure-2005
  3. (c) National Industrial Classification-1998
  4. (d) National Code for Agriculture and Industrial Classification-2009
Answer & solution

Answer: (c) National Industrial Classification-1998

RRB NTPC UG CBT-1 2024-25 – 19 August 2025 Shift 3 · Per capita income

Q46. What has been the trend in India’s per capita income since the 1991 reforms?

  1. (a) Fluctuating without a pattern
  2. (b) Constant decline
  3. (c) No significant change
  4. (d) Gradual increase
Answer & solution

Answer: (d) Gradual increase

SSC Selection Post 2025 (Phase XIII) – 30 July 2025 Shift 2 · Methods of measuring national income

Q47. Which of the following statements is/are correct?
Statement I: Intermediate goods are goods used as inputs in the production of other goods.
Statement II: Capital goods are durable goods used in production that do not get transformed into the final product.

  1. (a) Both statements I and II are correct
  2. (b) Both statements I and II are incorrect
  3. (c) Statement I is correct, Statement II is incorrect
  4. (d) Statement I is incorrect, Statement II is correct
Answer & solution

Answer: (a) Both statements I and II are correct

Correct Answer: Option 1 – Both statements I and II are correct
Statement I (TRUE): Intermediate goods are goods (raw materials, semi-finished products, components) used as inputs in the production of other goods. They are consumed in the production process (transformed or used up). Examples: steel used in car manufacturing, flour used in bread baking, cotton used in textile production. Intermediate goods are NOT counted separately in GDP (to avoid double counting — only value added is counted).
Statement II (TRUE): Capital goods (also called investment goods or producer durables) are durable goods used in the production of other goods or services, and they are NOT transformed into the final product. They are used repeatedly over time. Examples: machinery, factory buildings, tools, equipment, computers used in production. Capital goods maintain their physical form and contribute to productive capacity over multiple production cycles.
Both statements correctly define intermediate goods and capital goods respectively.
SSC Selection Post 2025 (Phase XIII) – 29 July 2025 Shift 1 · GDP, GNP, NDP and NNP

Q48. What does GDP stand for in economics?

  1. (a) Gross Domestic Product
  2. (b) Government Domestic Plan
  3. (c) General Development Plan
  4. (d) Gross Demand Process
Answer & solution

Answer: (a) Gross Domestic Product

Correct Answer: Option 1 – Gross Domestic Product
GDP (Gross Domestic Product) is the total monetary value of all final goods and services produced within a country's geographic boundaries during a specific time period (usually a year or a quarter). It is the most widely used measure of an economy's size and health. GDP = C + I + G + (X–M) [Expenditure method]. India's GDP is measured by the Central Statistics Office (CSO) using 2011–12 as the base year. India is the 5th largest economy by nominal GDP.
Option 2 (Government Domestic Plan): Not a real economic term.
Option 3 (General Development Plan): Not a standard economic acronym.
Option 4 (Gross Demand Process): Not a recognized economic concept.
SSC Selection Post 2025 (Phase XIII) – 28 July 2025 Shift 2 · Economic growth and development

Q49. Which is the First country to introduce the idea of prioritizing happiness over economic growth?

  1. (a) India
  2. (b) USA
  3. (c) Bhutan
  4. (d) China
Answer & solution

Answer: (c) Bhutan

Correct Answer: Option 3 – Bhutan
Bhutan was the first country to formally introduce the concept of Gross National Happiness (GNH) as an alternative to Gross Domestic Product (GDP) as a measure of national progress. The concept was introduced by the 4th King of Bhutan, Jigme Singye Wangchuck, in the 1970s. GNH measures wellbeing across nine domains: psychological wellbeing, health, education, culture, governance, ecology, time use, living standards, and community vitality. Bhutan's GNH Commission oversees all national policies through this lens.
Option 1 (India): India follows GDP-based growth measurements; has not formally adopted GNH as national policy framework.
Option 2 (USA): GDP-centric economic framework; no national happiness-first policy.
Option 4 (China): Measures success through GDP, industrial output, and development targets; not a pioneer of happiness-first economics.
RRB NTPC GL CBT-1 2024-25 – 19 June 2025 Shift 2 · Methods of measuring national income

Q50. Which of the following options is a final good in the context of Indian economy?

  1. (a) Biscuits
  2. (b) Wheat
  3. (c) Sugar
  4. (d) Flour
Answer & solution

Answer: (a) Biscuits

RRB NTPC GL CBT-1 2024-25 – 12 June 2025 Shift 1 · Per capita income

Q51. Per capita income is an indicator of economic development. What happened to India’s per capita income post 1991 economic reforms?

  1. (a) Became negative
  2. (b) Remained stagnant
  3. (c) Declined sharply
  4. (d) Rose significantly
Answer & solution

Answer: (d) Rose significantly

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