Question 1

Which of the following best defines 'Inflation'?

Accepted Answer

Inflation is defined as a sustained increase in the general price level of goods and services in an economy over a period of time. As prices rise, each unit of currency buys fewer goods and services, effectively reducing the purchasing power of money. It is measured in India primarily through CPI (Consumer Price Index) and WPI (Wholesale Price Index).

Question 2

Which of the following best defines Gross Domestic Product (GDP)?

Accepted Answer

GDP is the total monetary value of all finished goods and services produced within a country's borders during a specific period, regardless of the nationality of the producers. It is the primary measure of a nation's economic output and is calculated using the formula: GDP = C + I + G + (X - M), where C is consumption, I is investment, G is government spending, and (X - M) is net exports. Option B correctly identifies this definition. Option A incorrectly includes only citizens' income (which defines GNP). Option C confuses GDP with national income by including only domestic factors. Option D incorrectly limits GDP to only goods, excluding services.

Question 3

Which of the following best describes the relationship between Gross Domestic Product (GDP) and Gross National Product (GNP)?

Accepted Answer

GDP measures the total monetary value of all final goods and services produced within a country's geographical boundaries in a specific period, regardless of who produces them. GNP measures the total monetary value of all final goods and services produced by a country's nationals, whether within or outside the country's borders. The key difference is that GDP is territory-based while GNP is nationality-based. GNP = GDP + Net Factor Income from Abroad (NFIA). Option B correctly identifies this relationship. Option A incorrectly suggests they are identical. Option C reverses the formula. Option D confuses GNP with National Income, which is a different measure. Therefore, the answer is B.

Question 4

In the context of macroeconomic indicators, which of the following statements about Gross Domestic Product (GDP) and Gross National Product (GNP) is correct?

Accepted Answer

GDP measures the total monetary value of all final goods and services produced within a country's geographical boundaries in a specific period, regardless of the nationality of the producers. GNP, on the other hand, measures the total monetary value of all final goods and services produced by the nationals of a country, regardless of where the production takes place. The key difference is that GDP is territory-based while GNP is nationality-based. India's GDP is calculated by the Central Statistics Office (CSO) and is the primary indicator used for measuring economic growth. As of 2023-24, India's nominal GDP was approximately USD 3.73 trillion, making it the 5th largest economy globally. Therefore, the correct answer is B.

RRB Group D Inflation, GDP, GNP

RRB Group D Inflation, GDP, GNP — Past Exam Questions

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Inflation, GDP, GNP — Practice Questions

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