Read the following hypothetical text and answer the given questions:
The Budget Estimate of total spending for 2021-22 is Rs.34.83 lakh crore. The Revised Estimate (RE) for total central spending in 2020-21 is Rs.34.5 lakh crore. The Gross Domestic Product (GDP) deflator — if one takes 14.4% nominal GDP growth projection for 2021-22 given in the budget and 11% real GDP forecast given in the latest Economic Survey — comes to 3.4%. This means that central spending should have increased to at least Rs.35.7 lakh crore to keep it unchanged in real terms. The fact that it has not happened implies that the 2021-22 budget entails a negative fiscal stimulus to the economy.
To be sure, one could argue that 2020-21 was an abnormal year — and, therefore, the government is justified in rolling back its welfare spending push, as the economy gets unlocked and vaccination gains momentum.
1 With the rise in real national income, the economic welfare of the people__________(rises/falls).
2 If GDP Deflator = 125, Nominal GDP= Rs.15000crs. then Real GDP is equal to Rs.___________ (fill up the blank with correct answer)
3 Read the following statements - Assertion (A) and Reason ( R)
Assertion (A): Real GDP is always equal to Nominal GDP.
Reason (R): Real GDP is a better measure to make periodic comparison in the physical output of goods and services over different years. Select the correct alternative from the following:
a) Assertion (A) is true and Reason (R) is false.
b) Assertion (A) is false and Reason (R) is true.
4 State the significance of GDP Deflator.
