Practicing Success

Target Exam

CUET

Subject

Economics

Chapter

Macro Economics: National Income Accounting

Question:

Match the following:

Column 1                                                             Column II

i. Injection example                                       a. GDP at Current Prices

ii. Nominal GDP                                             b. Exports, Investments

iii. Leakage Example                                      c. GDP at Constant Prices

iv. Real GDP                                                  d. Imports, Savings

Options:

i-b, ii-a, iii-c, iv-d

i-b, ii-d, iii-a, iv-c

i-b, ii-c, iii-a, iv-d

i-b, ii-a, iii-d, iv-c

Correct Answer:

i-b, ii-a, iii-d, iv-c

Explanation:

The correct answer is Option 4: i-b, ii-a, iii-d, iv-c

Here's why each pairing matches:
i. Injection example - This refers to an inflow of money into the economy, such as Exports (b) and Investments. Export and investment increase flow of income. Hence, they are considered as injections in circulars flow of income model.
ii. Nominal GDP - This represents the total market value of goods and services produced in an economy at current prices (a), reflecting inflation.
iii.  Leakage Example - This refers to an outflow of money from the economy, such as Imports (d) and Savings. Import and savings suck the money out of circular flow. Hence, they are leakages.

iv. Real GDP - This represents the total market value of goods and services produced in an economy adjusted for inflation (c), providing a clearer picture of actual growth.