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 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.

Multiple choice

Which of the following statements is/are correct in relation to the Gini Index?

  1. Gini Index measures the extent to which the distribution of income among individuals or households within an economy deviates from a perfectly equal distribution.
  2. A Gini Index of 0 (zero) represents perfect equality, while an index of 100 implies perfect inequality.

  1. Only 1

  2. Only 2

  3. Both of these

  4. Neither of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Gini Index measures the extent to which the distribution of income (or, in some cases, consumption expenditure) among individuals or households within an economy deviates from a perfectly equal distribution. The Gini Index measures the area between the Lorenz curve and a hypothetical line of absolute equality, expressed as a percentage of the maximum area under the line. Thus, a Gini Index of 0 represents perfect equality, while an index of 100 implies perfect inequality.

Multiple choice

The Atlas method of World Bank is used to estimate

  1. personal disposable income

  2. poverty head count ratio

  3. wholesale price index

  4. gross national income
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Atlas method is a method used by the World Bank to estimate the size of economies in terms of gross national income (GNI) in U.S. dollars. A country's GNI in local (national) currency is converted into U.S. dollars using the Atlas conversion factor, which uses a three-year average of exchange rates to smooth effects of transitory exchange rate fluctuations, adjusted for the difference between the rate of inflation in the country (using the country's GDP deflator), and that in a number of developed countries (using a weighted average of the countries' GDP deflators in SDR terms). The resulting GNI in U.S. dollars is divided by the country's midyear population to obtain the GNI per capita.

Multiple choice

What are 'acyclical indicators'?

  1. Indicators that move in the same direction as the general economy

  2. Indicators that move in the direction opposite to the general economy

  3. Indicators that have no correlation with the business cycles

  4. Indicators that are used to indicate a shift in the direction of growth of the economy
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Acyclical indicators are those with little or no correlation to the business cycle: they may rise or fall when the general economy is doing well, and may rise or fall when it is not doing well.

Multiple choice

Which of the following statements do(es) not define GDP correctly?

  1. The final value of goods and services produced
  2. By the national income of a nation
  3. In a calendar year

  1. 1 and 2

  2. 2 and 3

  3. 1 and 3

  4. Only 3
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

GDP is the final value of all goods and services produced within the domestic territory of a country in a fiscal (and not a calendar) year. GDP includes the value of goods and services produced by foreign nationals on the domestic territory of a country. Gross national product includes the final value of goods and services produced by the nationals of a nation, even those working abroad.

Multiple choice

What are ‘leading indicators’?

  1. Indicators that change before the economy as a whole changes

  2. Indicators that change after the economy as a whole changes

  3. Indicators that change along with the economy

  4. Indicators that themselves remain unchanged, but predict a change in the economy as a whole

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

 

Multiple choice

Implicit GDP deflator is a:

  1. current year weighted index

  2. base year weighted index

  3. arithmetic mean of A.and B.

  4. geometric mean of A. and B
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The implicit GDP deflator is calculated as the ratio of nominal GDP to real GDP. Real GDP uses base year prices to value current year output, making the deflator a base-year weighted index. Unlike CPI which uses a fixed basket of goods (Laspeyres index), the GDP deflator uses current output quantities valued at base year prices, allowing the basket to change over time.