✓ Board-verified
Economics · 2026 · 3 marks
National Income AccountingCircular Flow of Income and Methods of Calculating National Income3 marksUnderstandshort answer
CBSE 2026 · Region 1 · Set 2 · Q12
Two friends, Devanshi and Harshit, were discussing whether prize money from lottery winnings, should be included in India's National income.Harshit was of the view that it should be included, while Devanshi did not agree with him.As their Economics teacher, guide them with correct treatment of the same with valid argument.Meera and Shahid are two classmates, who were comparing India's economic growth over the years.Meera referred to the increase in Gross Domestic Product (GDP) at current prices prevailing in market, while Sahid insisted on considering GDP after adjusting for inflation. Their debate on which of the two measures gives a true picture of people's well-being, remained inconclusive.Considering the above mentioned situation, elaborate with valid reason, which of the two variables is considered a better indicator of welfare and why ?
Two friends, Devanshi and Harshit, were discussing whether prize money from lottery winnings, should be included in India's National income.
Harshit was of the view that it should be included, while Devanshi did not agree with him.
As their Economics teacher, guide them with correct treatment of the same with valid argument.
Meera and Shahid are two classmates, who were comparing India's economic growth over the years.
Meera referred to the increase in Gross Domestic Product (GDP) at current prices prevailing in market, while Sahid insisted on considering GDP after adjusting for inflation. Their debate on which of the two measures gives a true picture of people's well-being, remained inconclusive.
Considering the above mentioned situation, elaborate with valid reason, which of the two variables is considered a better indicator of welfare and why ?
Marking-scheme solution
Devanshi is correct. Prize money from lottery winnings should not be included in the estimation of National Income of India as it is a windfall gain. It is the income generated without rendering any productive service in return. National income includes only those incomes that arise from the production of goods and services.
Gross Domestic Product (GDP) after adjusting for inflation (Real GDP) is a better measure of welfare than GDP at current prices (Nominal GDP).
Real GDP is a true indicator of economic growth of a country as it changes only with the change in physical output. Thus, it eliminates the effect of changes in prices, showing the real growth of the economy.
In contrast, Nominal GDP might change with the change in output or/and change in prices.
More from National Income Accounting
- Income generated from Aircrafts of Air India operating between Canada and England would be added to the…2026 · asked 3×
- Read the following passage carefully: The domestic product measures the value of all goods and services…2026 · asked 3×
- Read the following statements carefully: Statement I: Positive externalities refer to the benefits a firm/an…2026 · asked 3×
- Following are the steps to measure National Income (NNP FC ) by Value Added method: (i) Calculate Domestic…2026 · asked 3×
- Read the following Flow chart carefully and choose the correct option:2026 · asked 3×
- Read the following statements carefully: Statement 1: Final goods are those goods which normally lose their…2026 · asked 3×
- On the basis of the given table, estimate the value added by the Baker. (Amount in ₹ crore) Farmer Baker ---…2026 · asked 3×
- Estimate the value of ‘Income from Property and Entrepreneurship’ on the basis of the given data: S. No.…2026 · asked 3×
CBSE Class 12 Economics past-paper question from the 2026board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.