Economics

National Income and Poverty Measurement

1,163 Questions

National income and poverty measurement involves calculating economic indicators like GDP, the Gini coefficient, and the Human Development Index. These metrics help gauge economic health, inequality, and poverty levels within a country. Practice these economics questions to understand the statistical methods used in macroeconomic analysis.

GDP calculationEconomic inequality indicesPoverty line conceptsNational income methods

National Income and Poverty Measurement Questions

Multiple choice national income identity for open economy open economy macroeconomics determination of income and employment economics

In an open economy GDP is composed of _______.

  1. consumption, government spending

  2. gross investment

  3. net exports

  4. sum of all
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In an open economy the GDP is calculated as the sum of the 4 sectors of the economy. 

GDP = C + I + G + (X-M) 
         =Consumption + Investment + Government spending + Net exports

Multiple choice national income identity for open economy open economy macroeconomics determination of income and employment economics

In an open economy GDP is the sum of ________.

  1. Consumption, Gross Investment, Government expenditure, Net export

  2. Consumption, Gross Investment, Government expenditure, Net import

  3. Consumption, Gross Investment, Government subsidy, Net export

  4. Consumption, Gross Investment, Net export, Personal saving
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The GDP is calculated using the formula

 $GDP = C + I + G + X - M$ 

Where: 
C = Consumption
I = Gross Investment
G = Government expenditure
X-M = Net export

Multiple choice population change population dynamics population : distribution, density and growth population, migration, settlements geography

Which of the following is incorrect?

  1. GDP at market price $=$ GDP at factor cost plus net indirect taxes
  2. NNP at factor cost $=$ NNP at market price minus indirect taxes
  3. GNP at market price $=$ GDP at market plus net factor income from abroad

  4. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

None of the above are incorrect because it should be always remember that, Market price $- NIT =$ Factor cost and Domestic Income $+ NFIA =$ National Income.

Multiple choice civics direct taxes black money and tax evasion meaning of tax public revenue : direct and indirect taxes income tax

National income differs from net national product at market price by the amount of ____________.

  1. current transfers from the rest of the world

  2. net indirect taxes

  3. national debt interest

  4. it does not differ
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Net National Product (NNP) at market price includes indirect taxes. National Income (NI) is equivalent to NNP at factor cost. To get from NNP at market price to NNP at factor cost, one must subtract net indirect taxes.

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

Break-even point is achieved when: 

  1. National Income = Consumption

  2. Consumption = Saving

  3. Consumption = Investment

  4. National Income > Consumption
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Break even point refers to the point where the income=consumption or savings= 0. It is the point where the consumption curve intersects the 45 degree line. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

Which of the following expression is correct? 

  1. $APC = \frac { Consumption }{National Income}$
  2. $APC = \frac { Change \, in \,Consumption }{ Change \, in \,National\, Income}$
  3. $APC = APS -1$
  4. $APC = \frac {National Income} { Consumption }$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

APC refers to Average Propensity to Consume which defines the amount of consumption in every 1 rupee of income for all level of income. Therefore,

APC= Consumption/ National Income= C/Y. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

AD curve is represented by ________ curve in the income determination analysis.

  1. Consumption + Saving + Investment

  2. Consumption + Saving

  3. Saving + Investment

  4. Consumption + Investment
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Aggregate Demand refers to the desired level of expenditure in the economy during an accounting year. It is what people wish to spend on the purchase of goods and services during an accounting year.

The Ad curve in income determination analysis represents a two sector economy which only includes the expenditure made by the consumer sector and the producer sector.
Therefore, aggregate demand = consumption + investment. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

___________ is the ratio of saving to income.

  1. Marginal propensity to save

  2. Average propensity to save

  3. Total propensity to save

  4. Income propensity to save
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

APS refers to Average Propensity to save which defines the amount of savings in every 1 rupee of income for all level of income. It is expressed as the ration of saving to income in an economy. 

Average propensity to save = S/Y where S is the savings and Y is the income in the economy. 

Multiple choice economics consumption and investment functions determinants of consumption function and savings function production, consumption, saving and economic units ex ante and ex post

If income in terms of wage rate ___________, consumption expenditure __________.

  1. increases, decreases

  2. increases, increases

  3. decreases, increases

  4. decreases, decreases
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

If income in terms of wage rate increases, then consumption expenditure also increases which is called the wage-price spiral where the wages are increased due to excessive price in the economy and price in increased due to excessive wage and consumption demand in the economy. 

Multiple choice business mathematics and statistics index numbers weighted methods to calculate index numbers construction of index numbers applied statistics

Calculate cost of living index from the following table of prices and weights.

Commodity Weight Price index
Food 35 108.5
Rent 9 102.6
Clothes 10 97
Fuel 7 100.9
MIscellaneous 39 103.7

  1. 104.4

  2. 106.5

  3. 126.5

  4. 128.5
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
 $Commodity$ $Weight$$w$  $Price\,index$$I$  $I.w$ 
 $Food$ $35$  $108.5$  $3797.5$ 
$Rent$  $9$  $102.6$  $923.4$ 
$Clothes$  $10$  $97$  $970$ 
$Fuel$  $7$  $100.9$  $706.3$ 
$Miscellaneous$  $39$  $103.7$  $4044.3$ 
$Total$  $\sum w=100$    $\sum I.w=10441.5$ 

$\Rightarrow$   Cost of living index = $\dfrac{\sum I.w}{\sum w}=\dfrac{10441.5}{100}=104.4$