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

______________ method is also called Value Added Method of computing National Income.

  1. Product

  2. Income

  3. Expenditure

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

The Product Method is fundamentally based on calculating the value added at each stage of production, which is why it is widely referred to as 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

Which of the following is /are NOT included in the national income estimation by income method?
(i)  Mixed income
(ii) Royalty
(iii) Rent
(iv) Profit

  1. Only (i)

  2. Only (i) and (ii)

  3. Only (ii) and (iv)

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

Mixed income, royalty, rent, and profit are all standard components of factor income and are included in the Income Method of calculating 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

Under Expenditure Method, Consumption Expenditure + Net Domestic Investment + Net Foreign Investment equals _____________.

  1. Gross Domestic Expenditure

  2. Gross National Expenditure

  3. Net Domestic Expenditure

  4. Net National Expenditure
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In the expenditure approach, the sum of consumption expenditure, net domestic investment, and net foreign investment (net exports) equals the total net expenditure on the nation's output, which is Net 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 Expenditure Method, Consumption Expenditure + Net Domestic Investment equals _____________.

  1. Gross Domestic Expenditure

  2. Gross National Expenditure

  3. Net Domestic Expenditure

  4. Net National Expenditure
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Consumption expenditure plus net domestic investment represents the total net expenditure made within the domestic territory, which is defined as Net Domestic Expenditure.

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

The three methods of calculating national income measure __________.

  1. the same thing from different angle

  2. different thing from different angle

  3. different thing at the same angle

  4. the same thing from the same angle
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The three methods (Product, Income, and Expenditure) are different ways of measuring the same circular flow of income in an economy. They look at the economy from the perspective of production, income distribution, and final expenditure, respectively.

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 sector, expenditure method is used in India for calculating national income?

  1. Agriculture sector

  2. Mining sector

  3. Construction sector

  4. Transportation sector
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In India, the expenditure method is specifically utilized for the construction sector because it is often more practical to estimate the total expenditure on construction projects than to aggregate the income of the many small, informal entities involved.

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

Under expenditure Method, Consumption Expenditure + Net Domestic Investment + Replacement Expenditure equals ______________.

  1. Gross Domestic Expenditure

  2. Gross National Expenditure

  3. Net Domestic Expenditure

  4. Net National Expenditure
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Gross Domestic Expenditure is the sum of consumption expenditure, net domestic investment, and replacement expenditure (depreciation).

Multiple choice economics measurement of national income methods of national income methods of measuring national income national income analysis

National income is the sum of factor incomes accruing to: 

  1. country

  2. Economic territory

  3. Residents

  4. Both residents and non-residents
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

National income is defined as the sum of factor incomes earned by the normal residents of a country, regardless of whether they are earned within or outside the domestic territory.

Multiple choice economics measurement of national income methods of national income methods of measuring national income national income analysis

Which of the following is a true statement?

i. National income refers to the income of individuals of a country

ii.The income at their disposal after paying direct taxes is called disposable income

 

  1. a. i only

  2. b. ii only

  3. c. both

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

Both the given statements are true which says that

National income refers to the income of individuals of a country

The income at their disposal after paying direct taxes is called disposable income

Multiple choice economics measurement of national income methods of national income methods of measuring national income national income analysis

There is no possibility of double counting while estimating national income.

  1. True

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

Double counting is a significant risk when estimating national income, especially in the Product Method, where the value of intermediate goods can be mistakenly included multiple times if not carefully accounted for.

Multiple choice economics measurement of national income methods of national income methods of measuring national income national income analysis

National income at constant price is an estimate on the basis of base prices.

  1. True

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

National income at constant prices (also known as real national income) is calculated by valuing current production at the prices of a chosen base year to eliminate the effects of inflation.

Multiple choice economics measurement of national income methods of national income methods of measuring national income national income analysis

Which of the following items are-not included in estimating National income?

  1. Salary income of artists, dancers and singers.

  2. Income of smugglers.

  3. Payments to farm workers in foodgrains.

  4. Payments of bank interest for capital borrowed.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

National income accounting only includes income generated from legal, productive economic activities. Income from illegal activities, such as smuggling, is excluded because it is not reported and does not contribute to the official flow of goods and services.

Multiple choice economics solution to basic economic problems under different economic systems supply curve and price determination in the market price mechanism and solutions supply

Factor incomes are used by the factors of production to purchase goods and services, which determines the distribution of the output produced.

  1. True

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

Factor income directs the flow of factors of production in the market but it also contributes to the consumption expenditure or aggregate demand in the economy as if factor income increases the aggregate demand also increases and if factor income decreases the aggregate demand also decreases.