# Samacheer Kalvi 10th Social Science Economics Solutions Chapter 1 Gross Domestic Product and its Growth: an Introduction

## Tamilnadu Samacheer Kalvi 10th Social Science Economics Solutions Chapter 1 Gross Domestic Product and its Growth: an Introduction

### Gross Domestic Product and its Growth: an Introduction Textual Exercise

Question 1.
GNP equals …………
(c) GDP plus net property income from abroad
(d) NNP plus net property income or abroad
(c) GDP plus net property income from abroad

Question 2.
National Income is a measure of:
(a) Total value of money
(b) Total value of producer goods
(c) Total value of consumption goods
(d) Total value of goods and services
(d) Total value of goods and services

Question 3.
Primary sector consist of ………………
(a) Agriculture
(b) Automobiles
(d) Banking
(a) Agriculture

Question 4
………………….. approach is the value added by each intermediate good is summed to estimate the value of the final good.
(a) Expenditure approach
(c) Income approach
(d) National Income

Question 5.
Which one sector is highest employment in the GDP?
(a) Agricultural sector
(b) Industrial sector
(c) Service sector
(d) None of the above.
(c) Service sector

Question 6.
Gross value added at current prices for services sector is estimated at …………………..
(a) 91.06
(b) 92.26
(c) 80.07
(d) 98.29
(b) 92.26

Question 7.
India is …………… larger producer in agricultural product.
(a) 1st
(b) 3rd
(c) 4th
(d) 2nd
(d) 2nd

Question 8.
India’s life expectancy at birth is ………………. years.
(a) 65
(b) 60
(c) 70
(d) 55
(a) 65

Question 9.
Which one is a trade policy?
(a) irrigation policy
(b) import and export policy
(c) land-reform policy
(d) wage policy
(b) import and export policy

Question 10.
Indian economy is:
(a) Developing Economy
(b) Emerging Economy
(c) Dual Economy
(d) All the above
(d) All the above

II. Fill in the Blanks.

1. …………….. sector is largest sector in India.
2. GDP is the indicator of ………………. economy.
3. Secondary sector otherwise called as …………..
4. ……………… sector is the growth engine of Indian economy.
5. India is …………….. largest economy of the world.
6. India is ………………. fastest growing nation of the world.
7. ………………. policy envisages rapid industrialization with modernization for attaining rapid economic growth of GDP.
1. Service
2. a country’s
3. industry sector
4. Service
5. sixth
6. fifth
7. Industrial

III. Choose the Correct Statement.

Question 1.
The rate of saving is low in India for the following reason
(i) Low per capita income.
(ii) Poor performance and less contribution of public sector.
(iii) Poor contribution of household sector.
(iv) Savings potential of the rural sector not tapped fully.

(a) i, ii and iv are correct
(b) i, ii and iii are correct
(c) i, ii, iii and iv are correct
(d) i, iii and iv are correct
(a) i, ii and iv are correct

IV. Match the Following.

1. (c)
2. (d)
3. (e)
4. (a)
5 .(b)

Question 1.
Define National Income.
National Income is a measure of the total value of goods and services produced by an economy over a period of time, normally a year. Commonly National Income is called a Gross National product (or) National Dividend.

Question 2.
What is meant by Gross domestic product?
The GDP is the market value of all the final goods and services produced in the country during a time period.

Question 3.
Write the importance of Gross Domestic product.

1. It helps in the study of economic growth of an economy.
2. To understand to unequal distribution of wealth in an economy.
3. To analyse the problem of inflation and deflation.
4. To compare domestic country with the developed countries of the world.
5. To estimate the purchasing power of the economy.
6. Helps public sector to frame suitable policies for development.
7. It acts as a guide to economic planning.

Question 4.
What is per capita income?
Per capita income or PCI is an indicator to show the living standard of people in a country. It is obtained by dividing the National Income by the population of a country.

Question 5.
Define the value added approach with example.
The value of each intermediate good is added together to estimate the value of the final good. It is called as value added approach. Eg: In order to find the value of a cup of tea, we need to add the value of tea powder plus milk plus sugar. Here Tea powder, milk and sugar are intermediate goods, whereas tea is the final good. Eg: Tea powder – ₹ 3 /-, Milk – ₹ 5 /-, Sugar – ₹ 2 /- Market price of one cup of tea is ₹ 10 /- (3 + 5 + 2).

Question 6.
Name the sectors contribute to the GDP with examples.
Name of the sectors are: (i) Primary sector, (ii) Secondary sector and (Hi) Tertiary sector.

Question 7.
Write the sector wise Indian GDP composition in 2017.
Sector wise contribution in GDP of India for the year 2016 – 2017
Primary Sector – 17.09%
Secondary Sector – 29.03%
Tertiary Sector – 52.08%

Question 8.
What are the factors supporting to develop the Indian Economy?

1. A fast growing working age population
2. Strong Legal system
3. Many English language speakers
4. Low wage cost
6. External economics of scale.

Question 9.
Write the name of economic policies in India.
Name of economic policies in India are:

• Agriculture Policy
• Industrial Policy
• New Economic Policy
• Employment Policy
• Currency and Banking Policy
• Fiscal and Monetary Policy
• Wage Policy
• Population Policy

Question 10.
Write a short note on
(i) Gross National Happiness (GNH)
(ii) Human Development Index (HDI).
(i) Gross National Happiness: This term was introduced in 1972, by the King of Bhutan Jigme Wang chuck. It is an index which is used to measure the collective happiness and well-being of a population.
(ii) Human Development Index: This term was introduced in 1990 by a Pakistani Economist at the United Nations. It is a composite index of life expectancy at birth, adult literacy rate and standard of living measured in terms of GDP adjusted to purchasing power parity.

Question 1.
Briefly explain various terms associated with measuring of national income.
Various terms associated with measuring of national income.
(i) Gross National Product or GNP is the total value of goods and services produced and income received in a year by domestic residents of a country. It excludes profits earned from capital invested abroad.

(ii) Gross Domestic Product or GDP is the total value of output of goods and services produced by the factors of production within the geographical boundaries of the country.

(iii) Net National Product or NNP refers to gross national product, i.e., the total market value of all final goods and services produced by the factors of productions of a country or other polity during a given time period, minus depreciation.

(iv) Net Domestic Product or NDP is a part of Gross Domestic Product. It is obtained from the Gross Domestic Productby deducting the Quantum of ten wear and tear expenses (depreciation).
NDP = GDP – Depreciation

(v) Per Capita Income or PCI is an indicator to show the living standard of people in a country. It is obtained by dividing the National Income by the population of a country.
Per Capita Income = $$\frac{\text { National Income }}{\text { Population }}$$

(vi) Personal Income or PI is the total money income received by individuals and households of a country from all possible services before direct taxes. Personal income can be expressed as follows:
PI = NI Corporate Income Texes – Undistributed Corporate Profits – Social Security Contributions + Transfer payment.

(vii) Disposable Income or DI means actual income which can be spent on consumption by . individuals and families. It can expressed as DPI = PI – Direct Taxes.

Question 2.
What are the methods of calculating Gross Domestic Product?
Explain it.
There are three methods to calculate Gross Domestic Product.
(i) Expenditure Approach
(ii) Income Approach

(i) Expenditure Approach: According to this method, the expenditure on all the final goods and services produced in the country during a specific period are added together, to get the GDP.
Y = C + I + G + (X – M)
Y – National Income
C – Consumption Expenditure,
I – Investment Expenditure
G – Government Expenditure,
X – Exports
M – Imports.

(ii) The Income Approach: In this method, the earnings of all the men and women who are involved in producing goods and services are added together to measure GDP.
Y = W + R + I + π
Y = National Income, W- Wages,
R – rent, I – interest, π – profit

(iii) Value-Added Approach: In this method, the value of each intermediate good is added together to estimate the value of final goods. The sum of the value of all the final goods gives us the total value of the final goods produced in the economy, which is Measured as GDP.

GDP = Sum of final goods produced in the economy Sf
Sf = Sum of Intermediate goods produced in the economy.

Question 3.
Write about the composition of GDP in India.
Indian economy is broadly divided into three sectors which contribute to the GDP –
(i) Primary Sector – It includes agriculture-based allied activities, production of raw materials such as cattle farm, fishing, mining, forestry etc. It is also called agricultural sector.

(ii) Secondary Sector – It includes industries that produce a finished, usable product or are involved in construction. This sector generally takes the output of the primary sector and manufactures finished goods. It is also called industrial sector.

(iii) Tertiary Sector – It is known as service sector and includes transport, insurance, banking, trade, education, health care etc. ’

Question 4.
Write the differences between the growth and development.
Differences between the Economic growth and Economic development

 Economic Growth Economic Development (i) It is the positive quantitative change in the output of an economy in a particular time period (i) It consider the rise in the output in an economy along with the advancement of HDI index which considers a rise in living standards, advancement in technology and overall happiness index of a nation. (ii) Economic growth is the ‘narrower’ concept. (ii) Economic development is the ‘broader’ concept. (iii) Quantitative in nature. (iii) Qualitative in nature. (iv) Rise in parameters like, GDP, GNP, FDI, FII etc. (iv) Rise in life expectancy rate, infant, improvement in literacy fate, infant mortality rate and poverty rate etc. (v) Short term in nature. (v) Long-term in nature. (vi) It is applicable in developed nations. (vi) It is applicable in developing co countries. (vii) It is measured by increase in national income.                    , (vii) It is measured by increase in real national income, i.e., per capita income. (viii) It occurs in a certain period of time. (viii) It is a continuous process.

Question 5.
Explain the development path based on GDP and employment.

1. In the earlier stages of Indian Independence, India remained as closed economy and the interaction with the outside world remained limited.
2. The reason for closed trade was to give importance to domestic industries and reduce the dependence on foreign products and companies.
3. Later in the year 1991, India adopted free trade policy, and liberalised the economy.
4. It has given permission for the foreign companies to enter into the Indian economy.
5. To give employment to the increasing size of work force, a thrust was given to employment generation under the Five year plans.
6. Rural Development was also given special importance.
7. Eradication of poverty became a very important part in context of Rural Development.
8. The private companies and Industries were subject to strict rules and regulations.
9. It was believed that the social welfare of the people could be possible only by the government, therefore it gained importance.
10. India’s Per Capita Income have doubled in 12 years.
11. India falls under Middle Income country category.
12. There is reduction in poverty percentage and the life expectancy at birth is 65 years.
13. 44% of children under 5 are malnourished.
14. The literacy rate for the population of 15 years of age is only 63% compared to 71% of other middle income countries.
15. India has followed a different path of development by moving from agricultural sector to service sector very quickly. This help India to expect emerging Industrialists in Indian Economy.

Question 6.
Explain the following the economic policies
1. Agricultural Policy
2. Industrial policy
3. New economic policy.
Many economic policies have been framed by the Government of India since independence for increasing rate of economic growth and economic development. The important economic policies are :
(i) Agricultural Policy – This policy is the set of Government decisions and actions relating to domestic agriculture and imports of foreign agricultural products. Governments usually implement agricultural policies with the goal of achieving a specific outcome in the domestic agricultural product markets. Some agricultural policies are price policy, land reform policy, irrigation policy, food policy etc.

(ii) Industrial Policy – It is a very important aspect of any economy. It create employment, promotes research and development, leads to modernisation and ultimately make the economy self sufficient. Several industrial policies since 1948 have come into existence – textile industrial policy, sugar industry policy, price policy of industrial growth etc.

(iii) New Economic Policy – The economy of India had undergone a significant policy shifts in the beginning of the 1990s. This new model of economic reforms is commonly known as the LPG or Liberalisation, Privatisation and Globalisation model. The primary objective of this model was to make the economy of India the fastest developing economy in the globe with capabilities that help at match up with the biggest economies of the world. These economic reforms influenced the overall economic growth of the country in a significant manner.

### Gross Domestic Product and its Growth: an Introduction Additional Questions

Question 1.
What is ‘H’ in GNH?
(a) Holislic
(b) Happiness
(c) Human
(d) Hazardous
(b) Happiness

Question 2.
Goods are …………………
(a) Tangible
(b) Intangible
(c) Both (a) and (b)
(d) services
(a) Tangible

Question 3.
What is India’s world rank in industrial sector?
(a) 6
(b) 7
(c) 8
(d) 9
(a) 6

Question 4.
…………………. is the market value of all goods and services produced in the country.
(a) GNP
(b) GDP
(c) NNP
(d) NDP
(b) GDP

Question 5.
India finally decided to liberalise its economy in the year …………..
(a) 1991
(b) 1995
(c) 2000
(d) 2001
(a) 1991

Question 6.
The Goods and Services are measured in terms of ………………… of that country.
(a) wealth
(b) currency
(c) type
(d) size
(b) currency

Question 7.
Income method sums all forms of …………
(a) Expenditure
(b) Income
(c) Savings
(b) Income

Question 8.
Only those goods and services that has a market value are included in the …………………
(a) GNP
(b) GDP
(c) NNP
(d) NDP
(b) GDP

Question 9.
The primary function of the Government is …………….
(a) to maintain law and order
(b) Military defence
(c) Social Security measures
(a) to maintain law and order

Question 10.
According to Economists Tyler and Alex, Final goods and services a part of other goods and services ………………… a part of other goods and services
(a) will be
(b) will not be
(c) fully
(d) None
(b) will not be

Question 11.
Economic development is the process as well as an increase in real …………. income.
(a) individual
(b) family
(c) national
(c) national

II. Fill in the Blanks:

1. Economic development focuses on balanced and ……….. distribution of wealth among all individuals and tries to uplift the downgrade society.
2. The GDP of the United States of America is 19.3 trillion USD and ranked ………….
3. Human development Index is apt tool to measure the real development in an …………….
4 ………….. has emerged as a hub of global software business.
5. In India the GDP is measured both annually and …………….
6. Economic growth means an increase in ……………. and …………. in an economy.
7. Human Resources are ……………. for economic development.
8. Per capita income is calculated by dividing National Income by ……………
9. Per capita income is an indicator of …………… in a country.
10. Economic development is economic growth and allocation of resources from primary sector ………… to sector.
11. Tertiary sector is known as ……………
1. equitable
2. one
3. economy
4. Bangalore
5. quarterly
6. production of good, services
7. instruments
8. population
9. living standard of people
10. tertiary
11. service sector

III. Match the Following.

1. (d)
2. (a)
3. (e)
4. (c)
5. (b)

Question 1.
What are the four pillars of Gross National Happiness Index?
The four pillars of GNHI are

1. Sustainable and equitable socio-economic development
2. Environmental conservation
3. Preservation and Promotion of culture
4. Good Governance

Question 2.
“India has followed a different path of development from many other countries”. Explain.
India has gone more quickly from agriculture to services that tend to be less tightly regulated than heavy industry. There are some emerging manufacturing giants in the Indian economy.

Question 3.
What do you understand by the term ‘double counting’?
The value of final goods are included in the calculation of GDP, but not the value of Intermediate goods. This is because the value of the Intermediate goods is already included in the final good. So, if it is added again it will result in double counting.

Question 4.
What are the nine domains of Gross National Happiness or GNH?
The nine domains of GNH are – psychological well-being, health, time use, education, cultural diversity and resilience, good governance, community vitality, ecological diversity and resilience, and living standards.

Question 5.
What is meant by Market value?
The price at which the goods and services are sold in the market is called as Market value.

Question 6.
Write a note on Income method.

• Income method is one of the methods of calculating National Income.
• In this method, the income and payments received by all the people in the country are calculated.

Question 7.
What are the key parameters of Economic Growth?
The key parameters of Economic Growth in an economy are its Gross Domestic Product (GDP) and Gross National Product (GNP) which helps in measuring the actual size of an economy.

Question 8.
What is Net Domestic Product?
Net Domestic Product is obtained from the Gross Domestic Product by deducting the Quantum of tear and wear expenses (depreciation).
NDP = GDP (-) Depreciation.

Question 9.
What are the nine domains of GNHI?

1. Psychological well-being
2. health
3. time-use
4. Education
5. Cultural diversity and Resilience
6. Good governance
7. Community vitality
8. Ecological diversity
9. Living standards.

Question 10.
What are the basic concepts of National Income?

1. Gross National Product (GNP)
2. Gross Domestic Product (GDP)
3. Net National Product (NNP)
4. Net Domestic Product (NDP)
5. Per Capita Income (PCI)
6. Personal Income (PI)
7. Disposable Income (DI)

Question 11.
What is meant by GNP Deflator?
It means the change in the Gross National Product (GNP) with the change in the price levels symbolically.$$\frac{\Delta \mathrm{GNP}}{\Delta \mathrm{P}}$$

Question 12.
What are called sectors?
Sectors are the groups of various economic activities that produced goods and services.

Question 13.
Why is the primary sector also called agricultural and related sector?
Since most of the natural products we get are from Agriculture based allied activities. Production of raw materials such as cattle farm, dairy, fishing, mining, forestry, com and coal. The primary sector is also called agriculture and related sector.

Question 14.
Why is the tertiary sector also called the ‘Service Sector’?
Since the activities that fall under the tertiary sector generate services rather than goods, this sector is also called the service sector.

Question 1.
What are the limitations of the Gross Domestic Product?
The GDP is the most widely used measure of the state of the economy. While appreciating its usefulness, we should be aware of some of its limitations –
(i) Several important goods and services are left out of the GDP – The GDP includes only the goods and services sold in the market. Clean air. which is vital for a healthy life, has no market value and is left out of the GDP.

(ii) GDP measures only quantity but not quality – In the 1970s schools and banks were not allowed to use ball point pens r because of their poor quality. Since then, not only has these been a substantial increase in the quantity of ballpoint pens produced in India but their quality has also improved a lot. The improvement in quality of goods is very important but it is not captured by the GDP.

(iii) GDP does not tell us about the way income is distributed in the country – The GDP of a country’ may be growing rapidly but income may be distributed to unequally that only a small percentage of people may be benefiting from it.

(iv) GDP does not tell us about the kind of life people are living – A high level of per capita real GDP can go hand – in – hand with very low health condition of people, an undemocratic political system, high pollution and high suicide rate.

Question 2.
Write a detailed note on the measurement of GDP.
(i) The GDP Gross Domestic Product of a country measures the market value of goods and services produced during a particular period of time.

(ii) In the measurement of GDP, the GDP of the previous years are not included. Eg: the GDP of 2018 will include the market value of goods and services produced only during 2018.

(iii) In India, GDP is measured both annually and in quarterly.

(iv) The Annual GDP financial year (2017-18) is from 1st April 17 to 31st March 18.

(v) The quarterly GDP for any financial year is calculated by dividing the year into 4 quarters with 3 months each.

1st Quarter – April, May, June (Q1)
2nd Quarter – July, Aug, Sept (Q2)
3rd Quarter – Oct, Nov ,Dec (Q3)
4th Quarter – Jan, Feb, March (Q4)
(vi) The GDP of Q2 will not include GDP of Q1 and vice versa. This means, only the goods and services produced in that quarter is included for the measurement of GDP.