Economics

National Income and Poverty Measurement

1,142 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 economics theories of distribution unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

The two approaches to determination of the equilibrium level of income are:

  1. Aggregate demand-Aggregate supply approach

  2. Saving-Investment approach

  3. Demand-Supply approach

  4. Both A & B
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Two approaches are:

1) Aggregate demand-Aggregate supply approach-
An economy is in equilibrium when aggregate demand for goods and services is equal to aggregate supply during a period of time.

So, equilibrium is achieved when:

AD = AS … (1)

We know, AD is the sum total of Consumption (C) and Investment (I):

AD = C + I … (2)

Also, AS is the sum total of consumption (C) and saving (S):

AS = C + S … (3)

Substituting (2) and (3) in (1), we get:

C + S = C + I.....(4)

2)Saving-Investment approach 

According to this approach, the equilibrium level of income is determined at a level, when planned saving (S) is equal to planned investment (I).

from equation( 4)

 S = I

Multiple choice economics income determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

The ___________ net earning from foreign trade is added to the national income of the country.

  1. positive

  2. negative

  3. constant

  4. total
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Import refers to purchasing of goods and services from international market in the country and export refers to selling goods and services in the international market. So export is an income for the country whereas import is an expense for the country. Therefore, when export is higher than imports then the net earnings from the trade of a country is positive which in added to the national income of the economy. 

Multiple choice economics income determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

When the net earning from foreign trade is zero, it largely impacts the national income.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Import refers to purchasing of goods and services from international market in the country and export refers to selling goods and services in the international market. So export is an income for the country whereas import is an expense for the country. Therefore, when export is equal to imports then the net earnings from the trade of a country is zero which does not impact the national income as the earnings from foreign trade is added to the national income of an economy. 

Multiple choice economics income determination unemployment and employment generation the short run fixed price analysis of the product market liquidity preference and profit

Net earnings from foreign transactions is symbolically expressed as _____________.

  1. $X-M$
  2. $X-I$
  3. $G-M$
  4. $M-X$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Import refers to purchasing of goods and services from international market in the country and export refers to selling goods and services in the international market. So export(X) is an income for the country whereas import(M) is an expense for the country. Therefore, the net earnings from the trade of a country is the excess of exports over import which is symbolically expressed as X-M. 

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

If the total income of the country is divided by the total population, then the obtained total average income of an individual is known as _______.

  1. Annual income

  2. Per capita income

  3. Daily income

  4. Family income
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Per capita income is a measure of the amount of money earned per person in a certain area. It helps us address issues like the quality of life and the living conditions we can expect for specific areas.It can be calculated for a country by dividing the country's national income by its population.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

Per Capita consumption shows the standard of living.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The increase in consumption of goods and services by the people is measured in PCC. Example clothing, food, education, health etc. An increase in PCC shows  better standard of living,better quality of life of people and higher economic development of the country.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

An increase in national income does not represent improvement in the standard of living, since, if increase in ___________ surpasses the growth in national income, the per capita income will fall.

  1. employment level

  2. population

  3. income level

  4. number of industries
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Per capita income is calculated as national income divided by population. If the population grows faster than the national income, the average income per person decreases, even if the total national income has risen.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

Economic growth is an increase in the national income which is corrected for _____________, i.e, per capital income.

  1. population change

  2. employment level

  3. inflation

  4. poverty
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Economic growth is measured by per capita income, which adjusts the total national income by dividing it by the population to account for changes in the number of people sharing that income.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

The measure of economic growth is not limited to increase in the national income, rather it focuses on increase in ____________.

  1. per capita income

  2. employment level

  3. poverty

  4. both A & C
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Economic growth refers to the process of using natural resources for the development of the economy in order to increase the per capita income of the economy. The growth mainly measures the per capita income rather than the overall income of the economy. 

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

A mere increase in ____________ is not considered economic growth.

  1. per capita income

  2. GDP

  3. GNP

  4. both B & C
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

GDP and GNP are measures of total national output. Without accounting for population growth, an increase in these figures does not necessarily mean that the average citizen is better off, so they are not sufficient indicators of economic growth on their own.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

Economic growth is measured in terms of ____________ of the economy.

  1. employment aggregates

  2. national income aggregates

  3. both A & B

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

National Income refers to the income of the whole economy including all the sectors at a given point of time. It only estimates the income of all the sectors and does not say the exact figure as it is impossible to tell the exact income figure of an economy. Therefore, national income is only the imputed figure of the income of the economy. Economic growth of any nation is measured in national income aggregates of that nation.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

Which among the following is a limitation of per capita income?

  1. Neglects composition of national output.

  2. Ignores distribution of income.

  3. Social costs are not accounted for.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Per capita income is an average that hides income distribution, ignores the composition of goods produced, and fails to account for social costs like pollution or health outcomes.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

Per capita income fails to measure development in various aspects such as the ___________ dimensions of the country.

  1. social

  2. human

  3. institutional

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

Per capita income is a purely monetary metric. It fails to capture social, human, and institutional dimensions, such as literacy, life expectancy, and political freedom.

Multiple choice geography economic growth and development development and growth need for sustainable development economics of development

_____________ is the measure of output per head of population.

  1. Head-count ratio

  2. Per capita income (PCI)

  3. GNP

  4. Human development index (HDI)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Per capita income is calculated by dividing the total national income (or output) by the total population, providing a measure of average income per person.