Archives Answers

True, An increase in income inequalities will not lead to an increase in the welfare of people in spite of a rise in GDP.

False, It is a negative externality as it affect the health and negatively impacts the welfare of the society.

False, Gross Domestic Product is the result of sum of Gross Value added by all the producing units/firms in an economy, during an accounting year.

False, It also includes goods sold to buyers abroad (i.e., exports).

False, National Income exceeds Domestic Income when factor income from abroad is more than factor income to abroad. Exports or imports have nothing to do with this.

True, Higher GDP will promote welfare only if increased output comprises of goods of mass consumption. Proportion of more defence goods (as compared to consumption goods) does not lead to any direct increase in the welfare of people.

True, Purchase of plant and machinery (whether new or old) from abroad is a part of domestic capital formation as it adds to the existing stock of capital in the domestic economy.

True, It is the demand by foreign countries for goods purchased within the domestic territory of the country. Explanation:- Goods exported are produced within the domestic territory of the country. Thus it is the domestic production.

False, Imports are considered as a negative item in the estimation of domestic income as imports are expenditure on the goods produced abroad and not an item of expenditure on domestically produced goods.

Solution:- Capital Employed = Shareholders Funds + Long-term Debts Capital Employed = ₹ 10,00,000 + ₹ 20,00,000 Capital Employed = ₹ 30,00,000 Gross Profit = 20 % on cost ₹ 20,00,000 = 20% on Cost Cost of Revenue from operation…