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

Which of the following is/are not the major indicator(s) of economic development?

(a) Net National Product (NNP) (b) Purchasing Power Parity (PPP) (c) Human Literacy Index (d) Human Poverty Index (e) Per Capita Income

  1. Only (a), (b) and (c)

  2. Only (c)

  3. Only (c), (d) and (e)

  4. Only (c) and (e)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

There is no such index as Human Literacy Index. Rather, there is one Human Development Index. Others are the major indicators of economic development.

Multiple choice

Which of the following statements is/are incongruous with national income? (a) It measures net value of goods and services produced in a country during a year. (b) It includes net earned foreign income. (c) It measures the stock of commodities held by the nationals at a point of time.

  1. Only (a)

  2. Only (b)

  3. Only (c)

  4. Both (b) and (c)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A measure of stock of commodities held by the nationals at a point of time is national wealth and not national income.

Multiple choice

When we talk of Gross National Product (GNP), we talk of the following: (a) It measures money value of all the goods and services produced by the nationals of a country in a year. (b) It includes the money value of goods and services produced by nationals outside the country. (c) It also includes the income received by foreign nationals within the boundary of the country.

Which of the above is/are correct?

  1. Only (a)

  2. Only (b)

  3. Both (a) and (b)

  4. Both (b) and (c)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Statement (3) is incorrect. Income received by foreign nationals within the boundary of countries is excluded from GNP while arriving at GDP.

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

Transfer payments refer to payment which are made

  1. without any exchange of goods and services

  2. to workers on transfer from one job to another

  3. as compensation to employees

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

Transfer payments are one-way payments where no good or service is exchanged in return. Examples include subsidies, welfare benefits, and grants. Options B and C incorrectly suggest transfer payments are related to job changes or employee compensation, which are exchanges for labor services.

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 year is known as 'year of great divide' for India's population?

  1. 1921

  2. 1951

  3. 1991

  4. 1981
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

1921 is known as the 'year of great divide' in India's demographic history because it marked the point where India's population growth rate changed from negative/very low to consistently positive. Before 1921, population growth was stagnant or declining due to famines, epidemics, and colonial policies. After 1921, population began growing steadily. Options B, C, and D are not recognized as the year of great divide.

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.