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Economics · 2025 · 6 marks
National Income AccountingCircular Flow of Income and Methods of Calculating National Income6 marksAnalyselong answer
CBSE 2025 · Region 6 · Set 1 · Q17
(i)Suppose, there are only three firms in a hypothetical economy, viz. A, B and C. During a given period of time, the following transactions were under, taken by them :(I)Firm A sold goods worth ₹ $\displaystyle 2,000$ to firm B and ₹ $\displaystyle 1,200$ to Firm C.(II)Firm B sold goods worth ₹ $\displaystyle 1,100$ to Firm A and ₹ $\displaystyle 3,500$ to Firm C.(III)Firm C sold to households for final consumption, goods worth ₹ $\displaystyle 5$,700.Estimate the value of Net Domestic Product at Market Price (NDP$\displaystyle _{MP}$) assuming depreciation to be ₹ 120.(ii)Explain the likely impact of construction of $\displaystyle 2000$ new schools providing high-quality education in a nation on Gross Domestic Product and welfare in an economy.(i)Distinguish between Real Gross Domestic Product (GDP) and Nominal Gross Domestic Product.(ii)As per a news dated April $\displaystyle 11$, $\displaystyle 2023$ :“Electric Vehicle sales crossed one million mark in FY 2023.”Analyse its impact on Gross Domestic Product (GDP) and economic welfare.
(i)
Suppose, there are only three firms in a hypothetical economy, viz. A, B and C. During a given period of time, the following transactions were under, taken by them :
(I)
Firm A sold goods worth ₹ $\displaystyle 2,000$ to firm B and ₹ $\displaystyle 1,200$ to Firm C.
(II)
Firm B sold goods worth ₹ $\displaystyle 1,100$ to Firm A and ₹ $\displaystyle 3,500$ to Firm C.
(III)
Firm C sold to households for final consumption, goods worth ₹ $\displaystyle 5$,700.
Estimate the value of Net Domestic Product at Market Price (NDP$\displaystyle _{MP}$) assuming depreciation to be ₹ 120.
(ii)
Explain the likely impact of construction of $\displaystyle 2000$ new schools providing high-quality education in a nation on Gross Domestic Product and welfare in an economy.
(i)
Distinguish between Real Gross Domestic Product (GDP) and Nominal Gross Domestic Product.
(ii)
As per a news dated April $\displaystyle 11$, $\displaystyle 2023$ :
“Electric Vehicle sales crossed one million mark in FY 2023.”
Analyse its impact on Gross Domestic Product (GDP) and economic welfare.
Marking-scheme solution
(i)
| Firms | Value of Output (in ₹) (i) | Intermediate Consumption (in ₹) (ii) | Value Added (in ₹) {(i) – (ii)} |
| A | $\displaystyle 2,000$ + $\displaystyle 1,200$ | $\displaystyle 1,100$ | $\displaystyle 2,100$ |
| B | $\displaystyle 1,100$ + $\displaystyle 3,500$ | $\displaystyle 2,000$ | $\displaystyle 2,600$ |
| C | $\displaystyle 5,700$ | $\displaystyle 1,200$ + $\displaystyle 3,500$ | $\displaystyle 1,000$ |
| $\displaystyle 13,500$ | $\displaystyle 7,800$ | ||
| Gross Domestic Product at Market Price (GDP$\displaystyle _{MP}$) | $\displaystyle 5,700$ |
Net Domestic Product at Market Price (NDP$\displaystyle _{MP}$) = GDP$\displaystyle _{MP}$ – Depreciation
= $\displaystyle 5,700$ – $\displaystyle 120$
= ₹ $\displaystyle 5,580$
(ii)
The construction of $\displaystyle 2,000$ new schools may impact the Gross Domestic Product (GDP) positively as construction generally attracts higher investments in an economy and may lead to an increase in employment opportunities. It may lead to provision of high-quality education, enhancing knowledge, skills, efficiency and increasing civic engagement. Consequently, the well-being of citizens will increase.
(i)
Real Gross Domestic Product (GDP) is the money value of all the final goods and services produced in the domestic territory of an economy, measured at base year prices.
Whereas;
Nominal Gross Domestic Product (GDP) is the money value of all the final goods and services produced in the domestic territory of an economy, measured at current year prices.
(ii)
The increased sales of Electric Vehicles (EVs) is expected to have positive impacts on both Gross Domestic Product (GDP) and welfare. An increase in the sale of EVs directly contributes to the value addition, in turn GDP of an economy. Moreover, EVs are eco-friendly as they do not produce pollutants and are energy efficient. Consequently, the well-being of citizens will increase thereby creating positive externalities.
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CBSE Class 12 Economics past-paper question from the 2025board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.