MCQ EABD

1. The financial year in India is

a. April 1 to March 31
b. January 1 to December 31
c. March 1 to April 30
d. March 16 to March 15

ANSWER: a. April 1 to March 31 .National income

is calculated for a specific period of time. In India,
it is calculated for April 1 to March 31.
2. Consider the following statements and identify the right
ones.
i. National income is the monetary value of all final goods and
services produced.
ii. Depreciation is deducted from gross value to get the net
value
a. I only
b. ii only
c. both
d. none
ANSWER: c. both
National Income is the monetary value of all final goods and
services that are produced by the residents of the country.
3. Consider the following statements and identify the right
ones.
i. While calculating GDP, income generated by foreigners in a
country is taken into consideration
ii. While calculating GDP, income generated by nationals of a
country outside the country is taken into account
a. I only
b. ii only
c. both
d. none

ANSWER: a. I only
While calculating GDP, income generated by nationals of a
country outside the country is not taken into account.
• 4. The net value of GDP after deducting
depreciation from GDP is

a. Net national product

b. Net domestic product
c. Gross national product
d. Disposable income
ANSWER: b. Net domestic product
After deducting the depreciation charges of
plant and machinery from GDP, we get net
value of GDP which is called NDP.
• 5. Consider the following statements and identify the right ones.
i. While calculating GNP, income generated by foreigners in a
country is taken into consideration
ii. While calculating GNP, income generated by nationals of a
country outside the country is taken into account
a. I only
b. ii only
c. both
d. none
ANSWER: b. ii only
While calculating GNP, income generated by foreigners in a
country is not taken into consideration.
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• 6. When depreciation is deducted from GNP, the net
value is

a. Net national product

b. Net domestic product
c. Gross national product
d. Disposable income
ANSWER: a. Net national product

NNP is the net value of GNP after the depreciation of

plant and machinery is deducted.
• 7. The value of NNP at consumer point is

a. NNP at factor cost

b. NNP at market price
c. GNP at market price
d. GNP at factor cost

ANSWER: b. NNP at market price

NNP at market price is calculated by deducting

indirect taxes and subsidies from NNP at factor cost.
• 8. The value of NNP at production point is called

a. NNP at factor cost

b. NNP at market price
c. GNP at market price
d. GNP at factor cost

ANSWER: a. NNP at factor cost

NNP at factor cost is the value of the NNP when the
value of goods and services are taken at the
production point.
• 9. The value of national income adjusted for inflation
is called

a. Per capita income

b. Disposable income
c. Inflation rate
d. Real national income

ANSWER: d. Real national income

It is adjusted for inflation that is calculated from a

reference point which is a base year.
• 10. The average income of the country is

a. Per capita income

b. Disposable income
c. Inflation rate
d. Real national income

ANSWER: a. Per capita income

Per capita income is calculated by dividing the
total national income by the total population
of the year.
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• 11. Consider the following statements and identify the
right ones.
i. Personal income refers to the income of individuals of a
country.
ii. The income at their disposal after paying direct taxes is
called disposable income
a. I only
b. ii only
c. both
d. none
ANSWER: c. both
The income of the individuals at their disposal after paying
direct taxes like income tax is called disposable income.
• 12. Which of the following is added to national income
while calculating personal income?
a. Transfer payments to individuals
b. Social security contributions
c. Corporate taxes
d. Undistributed profits

ANSWER: a. Transfer payments to individuals

Personal income refers to the income of the individuals of a
country. While transfer payments are added, the other three
are subtracted.
• 13. Which of the following method/s is/are used to
calculate national income in India?

a. Production method
b. Expenditure method
c. Income method
d. All the above

ANSWER: d. All the above

Due to non-availability of the data, no single method

can solely be used in India. We use a mixture of all
the three.
• 14. The national income estimation is the
responsibility of

a. NSSO
b. CSO
c. Finance Ministry
d. National Income Committee

ANSWER: b. CSO
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15. Consider the following statements and identify the right
ones.
i. CSO is a premier statistical institution for collecting data in India
ii. It presents the national income estimates twice a year.
a. I only
b. ii only
c. both
d. none

ANSWER: a. I only
Central Statistical Organization was established in 1950 and is
vested with the responsibility of national income estimation. It
presents the estimates once in a year.
• 16. As per the CSO classification, which of the
following does not fall under the industrial
sector?
a. Construction
b. Manufacturing
c. Fisheries
d. Mining

ANSWER: c. Fisheries
As per the CSO classification, fisheries fall under
the category of agriculture sector.
• 17. As per the CSO classification, which of the
following does not fall under finance and real estate
category?
a. Banking
b. Construction
c. Insurance
d. Real estate
ANSWER: b. Construction
As per the CSO classification, construction falls
under the category of industrial sector.
• 18. As per the CSO classification, which of the
following does not fall under industrial sector?
a. Electricity
b. gas and water supply
c. transport and communication
d. manufacturing

• ANSWER: c. transport and communication

As per the CSO classification, transport and
communication falls under transport, communication
and trade category.
19. The most appropriate measure of a country's
economic growth is

a. GDP
b. NDP
c. Per capita real income
d. GNP

ANSWER: c. Per capita real income

Per capita income is the average income of the

country. Per capita real income takes inflation into
consideration.
20 Which of the following is a union tax?
a. Corporation tax
b. Taxes on agricultural income
c. Capitation taxes
d. Land revenues

ANSWER: a. Corporation tax

Union taxes are given in the list of 7th schedule in
the constitution.
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21. Which of the following is not a union tax?
a. Taxes on railway freights and fares
b. Stamp duties on financial documents
c. Tolls
d. A and b only

ANSWER: c. Tolls
Taxes on railway freights and fares and Stamp
duties on financial documents are union taxes
while tolls are state tax
• 22. Consider the following statements and identify the right ones.
i. Central government does not have exclusive power to impose tax
which is not mentioned in state or concurrent list.
ii. The constitution also provides for transferring certain tax
revenues from union list to states.
a. i only
b. ii only
c. both
d. none

ANSWER: b. ii only
Central government has exclusive power to impose tax which is
not mentioned in state or concurrent list.
• 23. The tax levied by the union government on
income of individuals is known as
a. Personal income tax
b. Interest tax
c. Wealth tax
d. Corporation tax

ANSWER: a. Personal income tax

It is based on the principle of ability to pay. The tax
levied by the union government on income of
individuals is known as income tax.

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24. The tax on net income of companies is
a. Personal income tax
b. Interest tax
c. Wealth tax
d. Corporation tax

ANSWER: d. Corporation tax

The tax on net income of companies is corporate
tax. Tax rates are uniform for all categories of
companies.
• 25. Consider the following statements and identify the right ones.
i. Wealth tax is collected from productive as well as unproductive
assets
ii. Estate duty was a type of inheritance tax of large estates
a. i only
b. ii only
c. both
d. none

ANSWER: b. ii only
Wealth tax is collected from unproductive assets only. Estate duty
was abolished in 1985.
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26. Which of the following taxes is/are withdrawn or
abolished?
a. Interest tax
b. Estate duty
c. Gift tax
d. All the above

ANSWER: d. All the above

Interest tax was withdrawn in 2000-01, estate duty
abolished in 1985 and gift tax in 1998-99.

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• 27. The most important source of revenue to the
states is

a. Sales tax
b. Service tax
c. Excise duty
d. None of the above

ANSWER: a. Sales tax

Sales tax is the tax on sale of goods and is

influenced by the value added tax system.
• 28. The tax levied on the interstate trade of
goods is

a. Sales tax
b. Excise tax
c. Service tax
d. Central sales tax

ANSWER: d. Central sales tax

The tax levied on the interstate trade of goods is

the central sales tax.
• 29. The difference between revenue expenditure and
revenue receipts is
a. Revenue deficit
b. Fiscal deficit
c. Budget deficit
d. Primary deficit

ANSWER: a. Revenue deficit

Revenue deficit= revenue expenditure –revenue
receipts
• 30. The difference between revenue deficit and
grants for creation of capital assets is called

a. Fiscal deficit
b. Budget deficit
c. Effective revenue deficit
d. Primary deficit

ANSWER: c. Effective revenue deficit

Effective revenue deficit= revenue deficit-grants

for creation of capital assets.
• 31. The difference between total expenditure
and total receipts is

a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit

ANSWER: b. Budget deficit

Budget deficit= total expenditure-total receipts

• 32. The difference between total expenditure
and total receipts except loans and other
liabilities is called
a. Fiscal deficit
b. Budget deficit
c. Primary deficit
d. Revenue deficit

ANSWER: a. Fiscal deficit

Fiscal deficit= total expenditure-total receipts
except loans and other liabilities.