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Economics · 2022 · 3 marks
National Income AccountingCircular Flow of Income and Methods of Calculating National Income3 marksApplyshort answer
CBSE 2022 · Region 5 · Set 1 · Q6
(a) Giving valid reasons, explain how the following would be treated while estimating domestic income? (i) Payment made by a Japanese tourist for…
(a)
Giving valid reasons, explain how the following would be treated while estimating domestic income ?
(i)
Payment made by a Japanese tourist for goods purchased in India.
(ii)
Broker's commission on the sale of second hand goods.
OR
(b)
"Gross Domestic Product (GDP) as an indicator of welfare loses its significance if the distribution of income turns unequal."
Justify the given statement with valid reason.
Marking-scheme solution
(i)
It will be included in domestic income as goods purchased by Japanese tourist is the expenditure made by him in India. It will be considered as exports.
(ii)
It will be included in domestic income because it is the income received by the broker in return for providing his factor services.
A rise in Gross Domestic Product (GDP) may not benefit all the sections of the society in the same dimension. This is because a given rise in GDP may be concentrated in the hands of very few individuals or firms. For the rest, the income may not vary or may have fallen. In such a case, the welfare of the entire country may not increase despite the increase in GDP.
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CBSE Class 12 Economics past-paper question from the 2022 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.