Private Final Consumption Expenditure refers to consumption expenditure incurred by households only
False, It includes consumption expenditure by the households as well as private non-profit institutions serving households.
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There are no exports in a closed economy
True, In case of closed economy, exports are nil as the economy has no economic relations with the rest of the world.
Real GDP may increase without any increase in the quantity of output in the economy
False, Real GDP will increase only when there is an increase in the quantity of output in the economy as Real GDP is measured at constant prices (base Year Prices)
Increase in GDP does not indicate increase in welfare of people if there is deep economic divide in the economy.
True, An increase in income inequalities will not lead to an increase in the welfare of people in spite of a rise in GDP.
Industrial waste driven into rivers is an example of positive externality.
False, It is a negative externality as it affect the health and negatively impacts the welfare of the society.
Gross Value Added at market price and Gross Domestic Product at market price are one and the same thing
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.
Sales by a Firm includes goods sold to domestic buyers only
False, It also includes goods sold to buyers abroad (i.e., exports).
National Income exceeds Domestic Income by the amount of excess of exports over imports
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.
Proportion of more defence goods as compared to consumption goods in GDP is a limitation of GDP as an index of welfare.
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.
Purchase of plant and machinery from abroad is a part of domestic capital formation
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.