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 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

Under the expenditure method _________.

  1. expenditure on financial assets which are produced and owned within the country is excluded

  2. expenditure on financial assets of foreign countries is included

  3. both above are true

  4. none is true
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The expenditure method excludes purely financial transactions (like buying stocks or bonds) because they do not represent current production of goods or services.

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

The production method of calculating national income is also known as _________.

  1. income method

  2. subtraction method

  3. value added method

  4. repeated distribution method
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The production method calculates national income by summing the value added by each producing unit, hence it is also called the value-added method.

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 focuses on measurement of national income at _________.

  1. phase of income disposition

  2. phase of income distribution

  3. phase of production of goods and services

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

The income method calculates national income by summing factor incomes generated during the production process. This corresponds to the phase of income distribution among the factors of production.

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

If the national income is measured as an aggregate value of all final goods and services produced by all the firms it is called _______.

  1. Product Method

  2. Income Method

  3. Expenditure Method

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

National income is measured as an aggregate value of all final goods and services produced by all the firms it is called product method.

Product method: in this method national income is measured as money value of all final goods and services produced in an economy during a year. Final goods here refer to those goods which are directly consumed and not used in further production process.

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 poses a problem in calculating national income?

  1. Public Services

  2. Price Changes

  3. Wages and Salaries paid in Kind

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

There are few difficulties associated with calculation of national income which include

  • Public Services
  • Price changes
  • Wages and salaries paid in kind

Apart from these the other problems involved are

  • Lack of Adequate Data
  • Non-availability of Reliable Information
  • Choice of Method
  • 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

The national income estimation is the responsibility of _______.

  1. NSSO

  2. Central Statistical Office

  3. Finance Ministry

  4. National Income Committee
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Central statistical organisation is responsible for statistical activities in India. The CSO was set up in the cabinet secretariat on 2 May 1951.

The national income estimation is the responsibility of central statistical office.

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 method uses adding up of factor payments received during a year to calculate national income?

  1. Product Method

  2. Income Method

  3. Expenditure Method

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

Income method uses adding up of factor payments received during a year to calculate national income.

Income method: according to this method income is measured as flow of factors income. There are generally four factors of production labour, capital, land and entrepreneurship. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profit as their remuneration.

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 not included in expenditure method of calculating national income?

  1. Net exports

  2. Private final consumption expenditure

  3. Government final consumption expenditure

  4. Expenditure on second hand goods
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Expenditure method: national income is measured as a flow of expenditure. Includes sum total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

It does not include expenditure on second hand goods.

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 included in factor payments?

  1. Rent and also royalty

  2. Interest

  3. Profits

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

Factor payments include Interest, Profits, Rent and also royalty

There are generally four factors of production labour, capital, land and entrepreneurship. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profit as their remuneration.

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

Income disposal method is also called as _________.

  1. product method

  2. income method

  3. expenditure method

  4. value added method
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Expenditure method is also called as income disposal method

Expenditure method: National income is measured as a flow of expenditure. Includes sum total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).