About this quiz
50 questions covering every section of the note.
This Lok Sewa practice set has 50 multiple-choice questions (Subject: Economics and Planning · For: Kharidar, Nayab Subba, Section Officer · Level: Easy). Take the quiz above first; after that, use the study list below to revise every question with its correct answer and a short explanation.
Study list: all 50 questions with answers and explanations
GDP measures the value of goods and services produced:
- A) By citizens anywhere
- B) Within the country's borders ✔
- C) Only by the government
- D) Only in agriculture
Why: GDP (Gross Domestic Product) measures the value of all final goods and services produced within a country's borders in a year.
GNI is equal to:
- A) GDP + net factor income from abroad ✔
- B) GDP − depreciation
- C) GDP + indirect taxes
- D) GDP ÷ population
Why: GNI = GDP + net factor income from abroad (income earned abroad by residents minus income earned here by foreigners).
NNP is equal to:
- A) GNP − depreciation ✔
- B) GDP + subsidies
- C) GNP + depreciation
- D) GDP − taxes
Why: NNP (Net National Product) = GNP − depreciation (wear and tear of capital).
Per capita income is:
- A) National income ÷ population ✔
- B) Population ÷ national income
- C) GDP × population
- D) GNI − GDP
Why: Per capita income = national income ÷ population, the average income per person.
Real GDP is measured at:
- A) Current prices
- B) Constant prices ✔
- C) Black market prices
- D) World prices
Why: Real GDP uses constant (base-year) prices, so it shows real growth without inflation.
Nominal GDP is measured at:
- A) Constant prices
- B) Current prices ✔
- C) Factor cost only
- D) Base-year prices
Why: Nominal GDP uses current prices, so it rises with both output and inflation.
Who is called the father of national income accounting?
- A) Adam Smith
- B) Simon Kuznets ✔
- C) Amartya Sen
- D) J. M. Keynes
Why: Simon Kuznets developed national income accounting and won the 1971 Nobel Prize in Economics.
In the expenditure method, GDP equals:
- A) C + I + G + (X − M) ✔
- B) Rent + Wage + Interest + Profit
- C) Output − input
- D) GNP − depreciation
Why: GDP = C (consumption) + I (investment) + G (government spending) + (X − M) (net exports).
Adding rent, wages, interest and profit is the:
- A) Production method
- B) Income method ✔
- C) Expenditure method
- D) Value added method
Why: The income method adds all factor incomes: rent, wages, interest and profit.
Counting only final goods avoids:
- A) Inflation
- B) Double counting ✔
- C) Depreciation
- D) Deflation
Why: Counting only final goods avoids double counting; for example, wheat sold to a baker is counted inside the bread.
Which of these is NOT included in GDP?
- A) Pensions and old-age allowance ✔
- B) Rice production
- C) Bus services
- D) House construction
Why: Pensions and old-age allowances are transfer payments, not payment for production, so they are not included in GDP.
Which sector has the largest share in Nepal's GDP?
- A) Primary
- B) Secondary
- C) Tertiary (service) ✔
- D) Mining
Why: The tertiary (service) sector, such as trade, transport, banking and tourism, has the largest share of Nepal's GDP.
Agriculture belongs to which sector?
- A) Primary ✔
- B) Secondary
- C) Tertiary
- D) Quaternary
Why: Agriculture is in the primary sector, which uses natural resources directly.
Manufacturing belongs to the:
- A) Primary sector
- B) Secondary sector ✔
- C) Tertiary sector
- D) Public sector only
Why: Manufacturing is in the secondary sector, which turns raw materials into goods.
HDI is published by:
- A) World Bank
- B) IMF
- C) UNDP ✔
- D) WTO
Why: UNDP publishes the Human Development Index in its yearly Human Development Report.
The first Human Development Report was released in:
- A) 1980
- B) 1990 ✔
- C) 2000
- D) 1975
Why: The first Human Development Report was released in 1990.
HDI was developed by Mahbub ul Haq along with:
- A) Amartya Sen ✔
- B) Milton Friedman
- C) Adam Smith
- D) Paul Samuelson
Why: Pakistani economist Mahbub ul Haq developed HDI with Amartya Sen.
Which is NOT a dimension of HDI?
- A) Health
- B) Education
- C) Standard of living
- D) Military strength ✔
Why: HDI has three dimensions: health, education and standard of living. Military strength is not one.
Which country measures Gross National Happiness?
- A) Nepal
- B) Bhutan ✔
- C) India
- D) Sri Lanka
Why: Bhutan measures progress by Gross National Happiness (GNH).
Who publishes the Economic Survey of Nepal?
- A) Nepal Rastra Bank
- B) Ministry of Finance ✔
- C) National Planning Commission
- D) Office of the Auditor General
Why: The Ministry of Finance publishes the Economic Survey each year, just before the budget.
GDP stands for:
- A) Gross Domestic Product ✔
- B) General Development Plan
- C) Gross Daily Production
- D) Government Debt Payment
Why: GDP is Gross Domestic Product.
GNP stands for:
- A) Gross National Product ✔
- B) General National Plan
- C) Gross Net Profit
- D) Government National Policy
Why: GNP is Gross National Product, now usually called GNI.
If GDP is Rs 100 billion and net factor income from abroad is Rs 5 billion, GNI is:
- A) Rs 105 billion ✔
- B) Rs 95 billion
- C) Rs 100 billion
- D) Rs 500 billion
Why: GNI = 100 + 5 = Rs 105 billion.
Depreciation means:
- A) Wear and tear of capital goods ✔
- B) Increase in prices
- C) Export earnings
- D) Tax revenue
Why: Depreciation is the wear and tear of capital goods, such as machines, during production.
National income at factor cost equals NNP at market price minus:
- A) Net indirect taxes ✔
- B) Depreciation
- C) Exports
- D) Subsidies only
Why: NNP at factor cost = NNP at market price − net indirect taxes (indirect taxes − subsidies).
The value-added method is also called the:
- A) Production method ✔
- B) Income method
- C) Expenditure method
- D) Tax method
Why: The value-added method is also called the production (output) method.
In C + I + G + (X − M), 'I' stands for:
- A) Investment ✔
- B) Income
- C) Interest
- D) Imports
Why: I stands for investment, such as spending on machines, buildings and stock.
In C + I + G + (X − M), 'M' stands for:
- A) Imports ✔
- B) Money
- C) Manufacturing
- D) Market
Why: M stands for imports, which are subtracted because they are produced abroad.
Transfer payments like pensions are:
- A) Not counted in GDP ✔
- B) Counted in GDP
- C) Counted twice
- D) Counted as exports
Why: Transfer payments are not counted in GDP, because no new goods or services are produced in return.
Sale of second-hand goods is:
- A) Not included in GDP ✔
- B) Included in GDP
- C) Counted as investment
- D) Counted as export
Why: Second-hand goods were counted when first produced, so selling them again is not added to GDP.
Services such as banking and tourism belong to the:
- A) Tertiary sector ✔
- B) Primary sector
- C) Secondary sector
- D) Informal sector only
Why: Banking, tourism, trade and transport are services in the tertiary sector.
Mining belongs to the:
- A) Primary sector ✔
- B) Tertiary sector
- C) Secondary sector
- D) Quaternary
Why: Mining takes resources directly from nature, so it is in the primary sector.
Construction belongs to the:
- A) Secondary sector ✔
- B) Primary sector
- C) Tertiary sector
- D) None
Why: Construction is in the secondary (industry) sector.
The national statistics office of Nepal is:
- A) National Statistics Office (formerly CBS) ✔
- B) NRB
- C) NPC
- D) Ministry of Finance
Why: The National Statistics Office (formerly the Central Bureau of Statistics) produces national statistics, including GDP estimates and the census.
Bhutan measures progress by:
- A) Gross National Happiness ✔
- B) GDP only
- C) HDI only
- D) GNI only
Why: Bhutan measures progress by Gross National Happiness.
HDI value ranges between:
- A) 0 and 1 ✔
- B) 0 and 100
- C) 1 and 10
- D) −1 and 1
Why: HDI ranges from 0 to 1; closer to 1 means higher human development.
Life expectancy is a measure of which HDI dimension?
- A) Health ✔
- B) Education
- C) Income
- D) Environment
Why: Life expectancy at birth measures the health dimension.
Mean and expected years of schooling measure:
- A) Education ✔
- B) Health
- C) Income
- D) Inequality
Why: Mean and expected years of schooling measure the education dimension.
GNI per capita (PPP) measures which HDI dimension?
- A) Standard of living ✔
- B) Health
- C) Education
- D) Gender
Why: GNI per capita (PPP) measures the standard of living dimension.
Economic Survey of Nepal is published by the:
- A) Ministry of Finance ✔
- B) NPC
- C) NRB
- D) NSO
Why: The Ministry of Finance publishes the Economic Survey.
Nepal's fiscal year begins on:
- A) 1 Shrawan ✔
- B) 1 Baisakh
- C) 1 Magh
- D) 1 Asar
Why: Nepal's fiscal year begins on 1 Shrawan (mid-July).
Nepal's budget is presented in Parliament on:
- A) 15 Jestha ✔
- B) 1 Shrawan
- C) 1 Baisakh
- D) 3 Asoj
Why: The federal budget is presented on 15 Jestha.
Inflation reduces:
- A) Purchasing power of money ✔
- B) Population
- C) Exports always
- D) GDP to zero
Why: Inflation reduces the purchasing power of money: the same rupees buy less.
The GDP deflator is used to convert nominal GDP into:
- A) Real GDP ✔
- B) GNI
- C) NNP
- D) Per capita income
Why: Real GDP = nominal GDP ÷ GDP deflator × 100.
Economic growth rate refers to the change in:
- A) Real GDP ✔
- B) Population
- C) Exports only
- D) Prices
Why: The growth rate is the percentage change in real GDP from one year to the next.
PPP stands for:
- A) Purchasing Power Parity ✔
- B) Public Private Partnership only
- C) Per capita Production Price
- D) Primary Product Price
Why: PPP is Purchasing Power Parity, which adjusts for price differences between countries.
Which index measures income inequality?
- A) Gini coefficient ✔
- B) HDI
- C) CPI
- D) GDP
Why: The Gini coefficient measures income inequality, from 0 (equal) to 1 (unequal).
Amartya Sen won the Nobel Prize in Economics in:
- A) 1998 ✔
- B) 1990
- C) 2001
- D) 1985
Why: Amartya Sen won the Nobel Prize in Economics in 1998 for welfare economics.
Who is called the father of economics?
- A) Adam Smith ✔
- B) Keynes
- C) Marx
- D) Kuznets
Why: Adam Smith, author of 'The Wealth of Nations' (1776), is the father of economics.
The informal economy is difficult to include in GDP because:
- A) Its transactions are often unrecorded ✔
- B) It has no workers
- C) It is illegal always
- D) It is foreign
Why: Informal work, such as small street trade and household farming, is often unrecorded, so it is hard to measure in GDP.