This page provides complete NCERT Class 12 Introductory Macroeconomics Chapter 2 questions, including MCQs, one-word and descriptive questions. All questions are extracted line-by-line from NCERT for full syllabus coverage and exam preparation.
The chapter explains the critical distinction between stocks (variables measured at a point in time, like capital stock) and flows (variables measured over a period, like income, output, or profits). The concept of depreciation (wear and tear of capital) is introduced, leading to the relationship: Net Investment = Gross Investment – Depreciation.
The chapter also explains inventory changes : planned versus unplanned :and how change in inventory equals production minus sales. The core of the chapter presents the three methods of calculating GDP, all of which yield the same value due to the circular flow of income.
The product (value added) method sums the gross value added of all firms (value of output minus value of intermediate goods). The expenditure method sums final expenditures: GDP = C + I + G + (X – M) (Private Final Consumption Expenditure, Investment Expenditure, Government Expenditure, and Net Exports). The income method sums factor payments: GDP = Wages + Profits + Interest + Rent.
The chapter then builds the hierarchy of national income aggregates: GDP, GNP (adds net factor income from abroad), NNP (subtracts depreciation), and National Income (NNP at factor cost, subtracting net indirect taxes). Further derivations include Personal Income (adjusting for undistributed profits, corporate tax, transfer payments) and Personal Disposable Income (subtracting personal taxes).
The distinction between nominal GDP (current prices) and real GDP (constant prices) is explained, along with price indices: GDP Deflator, Consumer Price Index (CPI), and Wholesale Price Index (WPI). Finally, the chapter critically examines why GDP is an imperfect measure of welfare : due to unequal distribution, non-monetary exchanges (barter, domestic work), and externalities (pollution, etc.).
Tables from the Reserve Bank of India show that India’s GDP at constant 2024-25 prices was approximately Rs 1,87,96,955 crore, with Private Final Consumption Expenditure being the largest component.
Get MCQs, One-Liners, and Descriptive Questions mapped to exact page numbers. Designed for effortless memorization for Boards & Civil Services.
Get MCQs, One-Liners, and Descriptive Questions mapped to exact page numbers. Designed for effortless memorization for Boards & Civil Services.
Who named his most influential work “An Enquiry into the Nature and Cause of the Wealth of Nations”?
Which of the following is NOT a final good?
Which of the following is an example of a capital good?
Which of the following is a consumer durable?
In the farmer-baker example, if farmers produce Rs 100 worth of wheat and bakers produce Rs 200 worth of bread using Rs 50 worth of wheat, the GDP is
Gross value added of a firm is equal to
Net value added is equal to
Change in inventories of a firm during a year is equal to
If a firm starts with inventory of 100 shirts, produces 1000 shirts, and sells only 600 shirts, the unplanned accumulation of inventories is
In the expenditure method, GDP is equal to
In the income method, GDP is equal to
In the numerical example with firms A and B, if A pays Rs 20 wages and keeps Rs 30 profits, and B pays Rs 60 wages and keeps Rs 90 profits, GDP by income method is
GNP is equal to
NNP at market prices is equal to
National Income (NNP at factor cost) is equal to
If nominal GDP is Rs 1,650 and real GDP is Rs 1,100, the GDP deflator is
In the CPI example with rice and cloth, if base year cost is Rs 1,400 and current year cost is Rs 1,950, the CPI is approximately
Which of the following is NOT a reason why GDP may not be a good index of welfare?
According to Table 2.5, India’s GDP at constant (2024-25) prices was approximately
According to Table 2.6, the largest component of GDP in India (2024-25) is
Get MCQs, One-Liners, and Descriptive Questions mapped to exact page numbers. Designed for effortless memorization for Boards & Civil Services.
What is the term used for the net contribution made by a firm? Page 17
What is the payment for the service of entrepreneurship called? Page 14
What is the payment for capital called? Page 14
What is the stock of unsold finished goods a firm carries from one year to the next called? Page 18
What is the term for addition to the stock of capital of a firm? Page 19
What is the term for rise in the value of inventories of a firm over a year? Page 19
What is the full form of GDP? Page 20
What is the full form of GNP? Page 25
What is the full form of NNP? Page 25
What is the full form of NI? Page 25
What is the full form of PI? Page 26
What is the full form of PDI? Page 26
What is the full form of CPI? Page 29
What is the full form of WPI? Page 30
What is the full form of CSO? Page 24
What is the full form of NFIA? Page 25
In which year did the CSO replace GDP at factor cost with GVA at basic prices? Page 24
What is the term for unexpected fall in sales leading to unsold stock? Page 19
What is the term for a pollution-creating factory harming others without penalty (in economics)? Page 31
Get MCQs, One-Liners, and Descriptive Questions mapped to exact page numbers. Designed for effortless memorization for Boards & Civil Services.
This post was last modified on May 8, 2026 7:57 pm