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

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

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

The National Income is equal to __________.

  1. NNP - Subsidies + Taxes

  2. NNP - Indirect Taxes + Subsidies

  3. NNP - Direct Taxes + Subsidies

  4. GNP - Subsidies + Taxes
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation


The phrase at factor cost is to be contrasted with the phrase at market prices.

Goods produced are sold at market prices which include the indirect taxes imposed by the Government. Indirect taxes are levied on commodities, such as excise duty on beer and cloth, etc.

Thus, the market value of the national product exceeds the income paid to the factors of production by the amount of indirect taxes. Hence, net national income at factor cost shows the income actually received by the factors of production.

On the other hand, a subsidy causes the market price to be less than the factor cost. The subsidy is an aid in money.

.’. NNI at Factor Cost = NNPat MP plus Subsidies minus Indirect Taxes.

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

National Income may be determined through ________.

  1. Income Approach

  2. Expenditure Approach

  3. Output Approach

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

The national income of a country can be measured by three alternative methods:
(i) Product Method
(ii) Income Method,
(iii) Expenditure Method. 

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

National Income of a country can be calculated by_______.

  1. $2$ methods
  2. $3$ methods
  3. $4$ methods
  4. $5$ methods
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
National Income is the total value of all services and goods that are produced within a country and the income that comes from abroad for a particular period, normally one year.
National income can be computed by three methods:
1) Value-Added Method by classifying Production Units in an economy as Primary, Secondary and Tertiary Sectors.
2)Income Method - on the basis of the combination of individuals and households indulged in different kinds of factors of production.
3)Final Expenditure Method - on the basis of a collection of units used for consumption, saving, and investment.
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 are the methods for measuring National Income?

  1. The Product or Value Added Method

  2. Expenditure Method

  3. Income Method

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

The three standard methods for measuring national income are the Product (Value Added) Method, the Expenditure Method, and the Income 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 in excluded in the calculation of net income.

  1. Factor

  2. Portable

  3. Movable

  4. Transfer
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Transfer incomes, such as pensions or scholarships, are payments made without any corresponding production of goods or services. Therefore, they are excluded from national income calculations.

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

Expenditure method is ________ used to calculate national income.

  1. widely

  2. rarely

  3. broadly

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

The expenditure method is generally considered more difficult to apply in many developing economies due to data limitations regarding private final consumption expenditure, making it less commonly used than the product method.

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

For studying the various national income components it is required that data should be collected on _______________.

  1. Expenditure

  2. Investments

  3. Income

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

To get a comprehensive view of national income, data on all three aspects (expenditure, investment, and income) are necessary to cross-verify and calculate the aggregates.

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

The net values added (NVA) method of measuring national income is also known as ______.

  1. net output method

  2. production method

  3. industry of origin method

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

The NVA method of measuring national income is also known as net output method, production method and industry of origin method.

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

Expenditure Method focusses on measurement of National Income at _____________________.

  1. phase of Production of Goods and Services

  2. phase of Income Distribution

  3. phase of Income Disposition

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

The expenditure method measures national income by summing up all final expenditures in the economy, which corresponds to the phase of income disposition (spending).