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 business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Net income from abroad should be added in the national income.

  1. True

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

National income (specifically GNP or GNI) includes net factor income from abroad, which is the difference between factor income earned by residents from abroad and factor income earned by non-residents domestically.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Income method is more reliable than expenditure method.

  1. True

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

The reliability of a method depends on the quality of data available. In many developed economies, the income method is considered more reliable due to better tax and payroll record-keeping.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

In which case, net income from abroad need to be added separately under the income method?

  1. If national income is calculated from incomes received by people

  2. If national income is calculated from data regarding incomes paid out by producers

  3. In both above methods, added separately

  4. In neither of the above methods, added separately
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When calculating national income via the income method, one must account for factor incomes paid out by producers to residents, which includes net factor income from abroad.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Transfer incomes are ___________ national income.

  1. included in

  2. excluded from

  3. sometimes included, sometimes excluded

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

Transfer incomes, such as pensions or scholarships, are not payments for current production of goods or services; therefore, they are excluded from national income.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Income method considers _________.

  1. only primary factors of production

  2. only secondary factors of production

  3. both (a) and (b)

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

The income method aggregates the factor incomes (wages, rent, interest, profit) generated by the primary factors of production (land, labor, capital, entrepreneurship).

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Expenditure on foreign financial assets is included in national income under the expenditure method on ________.

  1. gross basis

  2. net basis

  3. real time basis

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

In national income accounting, financial transactions are generally excluded, but when considering net flows, they are treated on a net basis to avoid double counting.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Goods produced in preceding periods are ___________ national income under expenditure method.

  1. excluded from

  2. included from

  3. no specific rule

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

National income measures the value of goods and services produced in the current period. Goods produced in previous periods were already counted in the year they were produced.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Expenditure on raw materials and intermediate goods and services is ___________ national income.

  1. excluded from

  2. included from

  3. no specific rule

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

Expenditure on intermediate goods is excluded from national income to avoid double counting, as their value is already embedded in the final product.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Net National Expenditure can also be calculated as __________.

  1. Gross National Expenditure $-$ Replacement expenditure
  2. Gross National Expenditure $+$ Replacement expenditure
  3. Gross National Expenditure $-$ depreciation
  4. Gross National Expenditure $+$ depreciation
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Net National Expenditure is derived by subtracting depreciation (replacement expenditure) from Gross National Expenditure.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

For developed economies which of the following methods is most suitable?

  1. Value Added Method

  2. Income Method

  3. Expenditure Method

  4. Product Method
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

In developed economies, comprehensive tax and income reporting systems make the income method a highly reliable and suitable way to measure national income.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

These days, an increasing proportion of national income is being measured by _______.

  1. Value Added Method

  2. Income Method

  3. Expenditure Method

  4. Product Method
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Modern national accounting systems increasingly rely on the expenditure method due to the availability of detailed consumption and investment data.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Gini co-efficient is used for measuring poverty in _____________ sense.

  1. absolute

  2. relative

  3. gross

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

The Gini coefficient is a measure of statistical dispersion intended to represent the income inequality within a nation, making it a relative measure of poverty.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Which of the following is true?

  1. Gross national expenditure $=$ consumption expenditure $+$ net domestic investment $+$ net foreign investment $+$ Replacement expenditure
  2. Net National Expenditure $=$ Gross National Expenditure $-$ Replacement investment
  3. Net domestic expenditure $=$ consumption expenditure $+$$ net domestic investment

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

All the listed equations correctly represent components or derivations of national expenditure accounting.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

When poverty is not related to income or consumption expenditure, it is ___________.

  1. absolute

  2. relative

  3. below poverty line

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

Absolute poverty is defined by a fixed standard, whereas relative poverty is defined in relation to the income distribution of the rest of the society.