# Kerala Syllabus 9th Standard Social Science Solutions Part 2 Chapter 3 National Income

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## Kerala State Syllabus 9th Standard Social Science Solutions Part 2 Chapter 3 National Income

### National Income Textual Questions and Answers

Question 1.

(Source: IMF World Economic Outlook October-2015)
The above table shows the national incomes of a few
countries during three years. Observe the table and
a) Find out the countries which have the highest and the lowest national income in 2014.
b) Compared to 2013, which countries have achieved economic growth in 2014?
c) Compared to 2013, which countries have failed in achieving economic growth in 2014?
d) What change can be seen in the economic growth of India from 2010 to 2014?
a) The country USA has the highest national income and Brazil has the lowest national income in 2014.
b) Compared to 2013, the USA, China, and India have achieved economic growth in 2014.
c) Compared to 2013, Japan, Germany, United Kingdom, France, and Brazil have failed in achieving economic growth in 2014. (The national income of Italy in 2013 given in the textbooks is not correct.)
d) The National income of India in 2010 was 1875.20 billion dollars. In 2013, it was 2051.20 billion dollars and in 2014 it was 2182.60 billion dollars. Compared to 2013, India has achieved better economic growth in 2014.

Question 2.
Gross National product considers only the final product. Find out more examples.
Gross National Product is an important concept of national income. It is calculated on the basis of the final goods and services produced in a country. The products that are available for consumption are called the final product. For example, we manufacture shirts using raw materials such as cloth, thread, and buttons. Here, the shirt is the final product for consumption. The money value of final products is taken into account for calculating the Gross National Product. While calculating the money value of the shirt, the value of raw materials such as buttons and clothes are included.

Question 3.

(Source: Central Statistical Office)
Answer the following questions based on the above table
a) Which sector has made the highest contribution to India’s GDP in 2011 – 2012? What is the contribution of the same sector in 2013-14?
b) Which sector has contributed the least to national income in 2012 – 2013 and 2013 -14?
c) What is the position of the industrial sector in 2011 -12,2012 -13 and 2013 -14?
d) What other information can be drawn from the table?
a) In 2011 – 2012, the service sector made the highest contribution to India’s GDP. The contribution of the service sector in 2013 – 2014 was 57%
b) Agriculture and allied sectors contributed the least to national income in 2012-2013 and 2013 -2014.
c) The position of the industrial sector is second in 2011 – 2012, 2012 – 2013 and 2013 – 2014.
d) The share from the industrial sector is slowly decreasing every year. The share of the agricultural sector to India’s GDP shows a slight decrease in 2012 -2013 compared to 2011 – 2012. But it increased in 2013-2014. The service sector made the highest contribution to India’s GDP in all the three periods.

### National Income Model Questions and Answers

Question 4.
Define national income
National income is the money value of all goods and services produced in a country during a financial year.

Question 5.
What are the objectives of calculating national income?

• To calculate the economic growth of a country.
• To compare the economic growth of different countries.
• To asses the contribution of different sectors in the economy.
• To study the problems faced by the economy.
• To help the government in planning and implementing different projects.
• To find out the limitations and advantages of economic activities like production, consumption and
• distribution.

Question 6.
Name the three sectors of an economy

• Agriculture sector
• Industrial sector
• Service sector

Question 7.
Prepare a table for understanding the activities that come under each sector.

Question 8.
Match the following

 A B Primary sector Construction Secondary sector Banking Tertiary sector Mining

 A B Primary sector Mining Secondary sector Construction Tertiary sector Banking

Question 9.
In India, the financial year is
a) From January 1 to December 31
b) From June 1 to May 31
c) From April 1 to March 31
d) From March 1 to December 31
c) From April 1 to March 31

Question 10.
What is Net National Product
When we deduct depreciation charges from the Gross National Product, we get the Net National Product. Technically, the Net National Product is considered as national income.

Question 11.
What is per capita income? What is its importance?
When we divide the national income by population, we get per capita income. It helps to know the economic position of a country and compare it with other countries.

Percapita income = $$\frac{\text { National income }}{\text { Total population }}$$

Question 12.
Percapita income =

b) \frac{\text { National income }}{\text { Total population }}[/latex

Question 13.

Question 14.
Match the following

 A B Land Profit Labour Interest Capital Wage Organization Rent

 A B Land Rent Labour Wage Capital Interest Organization Profit

Question 15.
Prepare a flow chart showing interest between production, income, and expenditure.

Question 16.
Explain the income method for estimating national income.
Income method is the reward received for the factors of production. In income method, national income is calculated based on rent, wages, interest, and profit, which are the rewards for factors of production. This method is helpful in analyzing the contribution of each factor of production to the national income.

Question 17.
What is the product method for estimating national income?
Under the product method, the national income is calculated by adding up the money value of goods and services produced by the primary, secondary and tertiary sectors. It is useful for assessing the contribution of each of these sectors towards the national income. It is also used to analyze which sector contributes the most to national income.

Question 18.
What are the functions of the Central Statistical Office in India?
income of India. The estimation is done mainly for the purpose of planning and development activities of the government. It also helps to understand the nature of the employment sectors and the types of employment of the people are engaged in.

Question 19.
Define a knowledge sector
The knowledge sector in the sector which efficiently uses knowledge and technology to attain economic growth.

Question 20.
Point out factors forming basis of knowledge
economy

• Education
• Innovation
• Information and communication technology

Question 21.
Prepare a note on intellectual capital.
Intellectual capital is the collective knowledge of all the people in an enterprise or a society. It is an invisible asset.

Question 22.
Today, as a part of the tertiary sector, growth of services based on knowledge is happening on a large scale. Substantiate this statement.
People giving expert advice on shares and taxes, software experts, etc. are part of this sector. Top business executives, researchers, scientists, expert policymakers, economic experts, etc. strengthen this sector. The government also gives priority to the development of the knowledge sector. Initiatives of Govt, of Kerala like the Infopark and Technopark, are examples for this.

Question 23.
India has achieved immense progress in information and communication technology. There are some favorable factors which can help India grow further in this sector. What are they?

• Human resource, including technical experts who are well versed in the English language.
• Wide domestic market.
• Strong private sector.
• Development of science and technology.
• Favourable attitude of the government.
• Increase of foreign investment.
• Better employment opportunities.

Question 24.
What do you mean by depreciation charges?
The cost incurred to remedy the wear and tear of machinery is termed as depreciation charges.

Question 25.
Which among the following is not included in national income.
a) Services of teachers
b) Services of migrant workers
c) Services of housewives
d) Services of domestic servants
c) Services of housewives

Question 26.
The income of people working abroad and the profit of institutions and firms operating abroad will not be included while calculating the Gross Domestic Product. Why? Explain with an example.
The GDP of a country is the total money value of the final goods and services produced within the domestic territory during a financial year. The income of people working abroad and the profit of institutions and firms operating abroad will not be included while calculating the Gross Domestic Product.

Let Us Assess

Question 27.
Which among the following is not an important objective in estimating national income?
a) To study the economic problems
b) To help in formulating government plans
c) To calculate the population of a country
d) To analyze the contribution of different sectors
c) To calculate the population of a country

Question 28.
Which among the following concepts of national income considers the domestic territory of a country?
a) GNP
b) GDP
c) Per capita income
d) NNP
b) GDP

Question 29.
Write short notes on the following
a) Main concepts of national income
b) CSO
c) Knowledge economy and India
a) Main concepts of national income Gross National Product: Gross National Product is an important concept of national income. It is calculated on the basis of the final goods and services produced in a country. The products that are available for consumption are called the final product. For example, we manufacture shirts using raw materials such as cloth, thread, and buttons. Here, the shirt is the final product for consumption. The money value of final products is taken into account for calculating the Gross National Product. While calculating the money value of the shirt, the value of raw materials such as buttons and clothes are included.

Gross Domestic Product – GDP Gross Domestic Product is the most suitable concept of national income to analyze the contribution of sectors in an economy. The GDP of a country is the total money value of the final goods and services produced within the domestic territory during a financial year. The income of people working abroad and the profit of institutions and firms operating abroad will not be included while calculating the Gross Domestic Product. For example, suppose an Indian firm operates in America. The profit of that institution will be included in the Gross Domestic Product of America but in the Gross National Product of India. That is to say while calculating the GDP of India, such income will be excluded.

Net National Product – NNP If you purchase a computer and sell it the next year, will you get the same amount that you spent while purchasing it? Why? Similarly, with time, machinery and other things suffer from wear and tear. The cost incurred to remedy this wear and tear is termed as depreciation charges. The depreciation charges are taken into consideration while calculating the national income. When we deduct depreciation charges from the Gross National Product we get the Net National Product. Technically, the Net National Product is considered as national income.

Net National Product = Gross National Product – Depreciation charges

Per Capita Income:
When we divide the national income by population, we get per capita income. It helps to know the economic position of a country and to compare it with other countries.
b) The Central Statistical Office (CSO) is the official agency that estimates the national income of India. The estimation is done mainly for the purpose of planning and development activities of the government. It also helps to understand the nature of the employment sectors and the types of employment the people are engaged in. In India, we make use of the product, income, and expenditure methods to estimate the national income.

c) Knowledge economy and India: The knowledge sector is the sector which efficiency uses knowledge and technology to attain economic growth. Today, modern technology and information & communication possibilities have grown and developed into knowledge economy. Education, innovation, and Information & Communication Technology (ICT) form the basis of knowledge economy. In knowledge economy, production and consumption of intellectual capital take place.

Question 30.
Explain the main methods of estimating National Income.
There are three methods for estimating national income. They are:

• Product method
• Income method
• Expenditure method

Product method:
. Under the product method, the national income is calculated by adding up the money value of goods and services produced by the primary, secondary, and tertiary sectors. It is useful for assessing the contribution of each of these sectors towards the national income. It is also used to analyze which sector contributes the most to national income.
Income method:
You know that income is the reward received for the factors of production. In income method, national income is calculated based on rent, wages, interest, and profit, which are the rewards for factors of production. This method is helpful in analyzing the contribution of each factor of production to the. national income.
Expenditure method:
The expenditure method is used to estimate the national income by calculating the expenditure incurred by individuals, firms, and government in a particular year. In Economics, just like consumption expenditure. The summation of consumption expenditure, investment expenditure, and government expenditure, gives the total expenditure. Estimation of national income using any of the above three methods will give the same results.

Question 31.
Write four limitations in estimating the national income of India.