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

While calculating national income in India. National income is same as

  1. GDP at factor cost

  2. GNP at market price

  3. NNP at market price

  4. NNP at factor cost
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In India's national income accounting, National Income refers to NNP (Net National Product) at factor cost. This is because NNP at factor cost represents the total income earned by factors of production (land, labor, capital, entrepreneurship) within the economy, which is the true measure of national income.

Multiple choice

What does GDP stand for?

  1. Gross Development Programme

  2. Gross Domestic Product

  3. Gain Development Project

  4. Gross Disinvestment Product
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

GDP stands for Gross Domestic Product, which measures the total monetary value of all goods and services produced within a country's borders in a specific time period. It is a key indicator of economic health. The other options mix unrelated terms - 'Development' and 'Project' are not standard economic acronyms.

Multiple choice

Directions: Select the correct alternative from the given choices.

The term National Income represents

  1. Gross National Product at market prices minus depreciation

  2. Gross National Product at market prices minus net factor income from abroad

  3. Gross National Product at market prices minus depreciation and indirect taxes plus subsidies.

  4. Gross National Product at market prices minus depreciation plus net factor income from abroad.
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

National Income equals GNP at market prices minus depreciation, then adjusted for indirect taxes (subtract) and subsidies (add). This represents the net value of goods and services produced. Option B incorrectly subtracts net factor income from abroad (that's for NNP), and Option D adds factor income instead of adjusting for taxes/subsidies.

Multiple choice

National income of a country is also known as

  1. GNP

  2. GDP

  3. NNP

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

NNP (Net National Product) represents national income, calculated as GNP minus depreciation. National income accounting defines NNP at factor cost as the true measure of a country's national income.

Multiple choice

In calculating National Income which of the following is included?

  1. Services of housewives

  2. Pensions

  3. Income of smugglers

  4. Income of watchmen
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Pensions are included in National Income calculations as they represent transfer payments from one section of society to another. While transfer payments don't create new goods or services, they are part of the national income accounting system. Services of housewives, smugglers' income, and watchmen's income are excluded for various reasons - some being non-market activities or illegal.

Multiple choice

Which is the best measure of economic growth of a country?

  1. GDP

  2. GNP

  3. Net Revenue

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

GNP (Gross National Product) is considered the best measure of economic growth because it includes net factor income from abroad (remittances, profits from foreign investments, etc.), giving a more complete picture of a nation's economic welfare. GDP only measures domestic production. Net revenue and tax revenue are fiscal indicators, not comprehensive growth measures.

Multiple choice

Gross Domestic Product (GDP) is called ‘gross’ because its computation does not exclude

  1. depreciation of capital (consumption of capital in production process)

  2. subsidies on consumption of goods

  3. earnings of foreign factors in host country

  4. impact of price rise
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

GDP is 'gross' because it does not account for the wear and tear of capital assets used in production, known as depreciation. Net Domestic Product (NDP) is calculated by subtracting depreciation from GDP.

Multiple choice

'Green Accounting' means measuring the National Income of the country, taking into account estimation of

  1. the total forest area of the country

  2. the destruction of forest cover of the country

  3. pollution and environmental damage

  4. area of reclaimed fallow land
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Green Accounting incorporates environmental factors into national income accounting, specifically accounting for the depletion of natural resources and environmental degradation.

Multiple choice

GDP stands for

  1. Gross Domestic Product

  2. Group Domestic Product

  3. Ground Development Programme

  4. Group of Developed Ports
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

GDP is a standard economic measure of the value of final goods and services produced within a country during a specific period. It stands for Gross Domestic Product.

Multiple choice

To calculate the GDP growth across the globe, individual countries' growth rates are weighted in terms of their share of global output. Using Purchasing Power Parity, as the IMF does, the global economy has grown by an average of 5% over the past five years, its strongest pace since the early 1970s. This is primarily due to the emerging economies growing by 7.5% a year (as against only 2.3% witnessed in the developed economies), and they account for around 45% of global GDP.

Given the above information, which of the following would be definitely false?

  1. The percentage share of emerging economies in global GDP was less than that of developed ones till 1970s.

  2. If the developed economies and the emerging economies grow at the same pace each year, the global GDP growth rate would be much more than it is at present.

  3. The growth rate of emerging economies is bound to further increase in future too.

  4. There has been no significant change in terms of living standards of people in developing economies.

  5. There has been no significant change in terms of disposable income of people in developing economies.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Definitely incorrect. If purchasing power is used as a benchmark for growth rates, it stands to reason that disposable incomes and hence, living standards have gone up.

Multiple choice

The National Income of a country can be estimated by the

  1. income method

  2. value - added method

  3. expenditure method

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

National income can be calculated using the income method, the value-added (product) method, and the expenditure method. All three are standard approaches.

Multiple choice

What is Net National Product?

  1. The money value of final goods and services produced annually in the economy.

  2. The money value of annual service generated in the economy.

  3. The money value of tangible goods produced annually in the economy.

  4. The money value of tangible goods available in the economy.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Net National Product (NNP) is calculated by subtracting depreciation from Gross National Product (GNP). The provided options are vague, but A is the standard definition often used in introductory textbooks to describe the value of final goods and services.

Multiple choice

What is Gross National Product?

  1. The total output of goods and services produced by the country's economy

  2. The total domestic and foreign output claimed by residents of the country

  3. The sum of gross domestic products and investments

  4. National income minus national expenditure
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Gross National Product (GNP) measures the total value of all finished goods and services produced by a country's residents, regardless of their location.