CBSE 2025, Compartment, Set 1

Question

Read the following statements carefully:
Statement 1: Real National Income is always less than Nominal National Income.
Statement 2: Real National Income is the money value of all the final goods and services produced by the normal residents of an economy in an accounting year, measured at the base year prices.

In the light of the given statements, choose the correct alternative from the following: A). Statement 1 is true and Statement 2 is false. B). Statement 1 is false and Statement 2 is true. C). Both Statements 1 and 2 are true. D). Both Statements 1 and 2 are false.

Edvaya · Accepted Answer

The correct answer is Statement 1 is false and Statement 2 is true.. Statement 1 is false because Real National Income is not *always* less than Nominal National Income. If the current year prices are lower than the base year prices (deflation), Real National Income can be greater than Nominal National Income. Statement 2 is the correct definition of Real National Income.

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Economics > Introductory Macroeconomics > National Income Aggregates

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