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

'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.

Multiple choice

It is meant to capture a notion of extreme poverty. As such, it is calculated as the average poverty line of the poorest countries. What is it?

  1. The international poverty line

  2. The Indian poverty line

  3. The global poverty line

  4. The universal poverty line
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The international poverty line is a global standard set by the World Bank to measure extreme poverty, typically defined as living on less than a specific amount per day.

Multiple choice

GDP plus net property income from abroad equals what?

  1. GNP

  2. NNP

  3. Depreciation

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

Right answer because GNP is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country.

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 often considered a better measure of the economic growth of a country than GDP, as it accounts for the income earned by residents abroad and excludes income earned by foreigners within the country.

Multiple choice

Which of the following is not included in the National Income?

  1. Imputed rent of owner-occupied houses

  2. Government expenditure on making new bridges

  3. Winning a lottery

  4. Commission paid to an agent for sale of a house
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

National Income accounts for the value of goods and services produced. Lottery winnings are considered transfer payments or windfalls, not income generated from productive economic activity.

Multiple choice

Directions: A brief passage or a statement is given and a question is asked, based on the information provided in the passage/statement. Critically examine the five alternative answer options marked (1) to (5) and choose the best answer. So as 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 (vis a vis only 2.3% 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. <font size="2" face="Arial">There has been no significant change in terms of living standards of people in developing economies.</font>

  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

There is nothing given about the share of developing economies in global GDP till 1970s. It could correct or incorrect; we have simply no way of judging its accuracy. So option (1) is wrong. Options (2) and (3) are suppositions, about which it is not possible to say anything, given the information in hand. Option (5) is not necessarily false, as it talks of disposable income, which means the part of income left after meeting one’s expenses. It is not a definitive indicator of the truth or otherwise of the statements given. Option (4), which represents the best possible answer, highlights that there has been no change in the living standards of people in developing economies, which seems to be improbable given that they are growing by a much faster pace as compared to developed economies.