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

Which of the following is/are correct?

  1. GDP at market price = GDP at factor cost plus net indirect taxes

  2. NNP at factor cost = GNP at market price

  3. GNP at market price = NNP at market price plus net income from abroad

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

GDP at market price equals GDP at factor cost plus net indirect taxes (indirect taxes minus subsidies). This is because market prices include indirect taxes paid to the government, while factor costs represent actual payments to factors of production. Option B is incorrect because NNP at factor cost = GNP at market price - depreciation - net indirect taxes. Option C is incorrect because GNP at market price = NNP at market price + depreciation.

Multiple choice

Net National Product at factor cost is

  1. equal to national income

  2. more than national income

  3. less than national income

  4. always more than gross national product
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Net National Product at factor cost is exactly equal to National Income by definition. NNP at factor cost represents the total income earned by factors of production (land, labor, capital, enterprise) after accounting for depreciation. Option B is incorrect because NNP cannot exceed National Income when they are the same measure. Option C is incorrect for the same reason.

Multiple choice

The net value added 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 net value added method is indeed known by multiple names: net output method (A), production method (B), and industry of origin method (C). Since all three are valid alternative names, option D 'all of the above' is correct.

Multiple choice

Which of the following is incorrect?

  1. GDP at market price = GDP at factor cost plus net indirect taxes

  2. NNP at factor cost = NNP at market prices minus net indirect taxes

  3. GNP at market prices = GDP at market prices plus net factor income from abroad

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

This question asks for the INCORRECT statement. Options A, B, and C are all correct formulas: GDP at market price = GDP at factor cost + net indirect taxes; NNP at factor cost = NNP at market prices - net indirect taxes; GNP at market prices = GDP at market prices + net factor income from abroad. Since all A, B, and C are correct, option D 'None of the above' (meaning none are incorrect) is the right answer.

Multiple choice

Which of the following statements is incorrect?

  1. National income is a flow, not a stock.

  2. National income measures only the net value of goods and services produced in a country during a year; not the net earned foreign income.

  3. In India, national income estimates are related with the financial year (April 1 to March 31).

  4. In India, Central Statistical Organisation (CSO) regularly publishes national income data.
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

National income measures the net value of goods and services produced in a country during a year and it also includes net earned foreign income.

Multiple choice

Which of the following statements is/are correct regarding Human Development Index (HDI)? (a) HDI is calculated by the United Nations Development Programme (UNDP). (b) The value varies between 0 and 1; 0 being the most developed and 1 being the least developed. (c) It was started by an economist from Pakistan.

  1. Only a

  2. Both a and b

  3. Both a and c

  4. Both b and c

  5. All of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

HDI being 1 means highly developed, while 0 means least developed. But here, the opposite statement is written.

Multiple choice

Gini coefficient, an indicator, measures inequality. Which of the following statements is/are correct? (a) Gini coefficient measures the deviation of distribution of income (or consumption) among the individuals within a country from a perfectly equal distribution. (b) For India, the numerical value of Gini coefficient is more than Brazil and South Africa. (c) It also measures average income of the richest 20 percent of the population to that of the poorest 20 percent.

  1. Only a

  2. Only a and c

  3. Only b and c

  4. All of these

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Gini coefficient measures the deviation of distribution of income (or consumption) among the individuals within a country from a perfectly equal distribution. For India, the income Gini coefficient was 36.8 in 2010 - 11, while that of Brazil was 53.9 and South Africa's was 57.8. The second indicator is the quintile income ratio, which is a measure of average income of the richest 20 per cent of the population to that of the poorest 20 per cent. The quintile income ratio for India was 5.6 in 2010 - 11. REF: Economic Survey.

Multiple choice

Poverty line is calculated on the basis of monthly per capita consumption expenditure (MPCE). Which of the follwing is/are wrong statements? (a) For the year 2009 - 10, MPCE value for rural and urban areas is 673 and 860 respectively. (b) The Ministry of Rural Development updates the poverty ratios. (c) Tendulkar Committee recommended the methodology for its calculation.

  1. Only a and c

  2. Only b

  3. Only b and c

  4. All of these

  5. Only c
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Planning Commission  estimated poverty ratios for the year 2009 - 10 as per the recommendations of the Tendulkar Committee at all India level as an MPCE of Rs 673 for rural areas and Rs 860 for urban areas in 2009 - 10. Here, it is given Ministry of Rural Development but actually it is Planning Commission which estimates poverty ratio. Therefore, the statement is wrong. Thus, the option is correct.

Multiple choice

Which of the following components are included for HDI calculation? (a) Life expectancy at birth (b) Mean years of schooling (c) Standard of living (ppp terms) (d) Women empowerment

  1. Only a and b

  2. Only c and d

  3. Only a, b and c

  4. Only b, c and d

  5. All of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

3 basic parameters on which HDI is calculated:

  1. To live a long and healthy life (Life Expectancy )
  2. To be educated and knowledgeable (Means years of schooling)
  3. To enjoy a decent economicstandard of living(at ppp terms)
Multiple choice

Which consumer price index is indexed to wages under MGNREGA?

  1. Consumer price index for industrial labour (CPI - IW)

  2. Consumer price index for agricultural labour (CPI - AL)

  3. Consumer price index for urban non-manual employee (CPI - UNME)

  4. Consumer price index for rural labour (CPI - RL)

  5. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Ref. consumer price index - economic survey or MoRD site. CPI - AL is used to index wages under MGNREGA.