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

The indicator of economic prosperity is

  1. increase in gross national product at current prices

  2. increase in net national product at current prices

  3. increase in gross national product at fixed prices

  4. increase in net national product at fixed prices
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Gross National Product (GNP) at fixed prices (or constant prices) is considered a better indicator of economic prosperity because it adjusts for inflation, showing real growth.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

Difficulty of estimating mixed incomes is under:

  1. Income method

  2. Expenditure method

  3. Value added method

  4. Both A & B
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Mixed income refers to the income of self-employed persons, which is difficult to separate into wages, rent, and profit. This is a specific challenge associated with the Income method of calculating national income.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

The sum of total of incomes received for the services of labour, land or capital in a country is called _______.

  1. Gross domestic product

  2. National income

  3. Gross domestic income

  4. Gross national income
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The gross domestic income is the total income earned by the county in one year, it is calculated as the sum of consumption, investment, government spending and net exports. 

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

State the full form of GNP.

  1. Gross National Product

  2. Group Net Product

  3. Grand Nuclear Process

  4. Group Networking Process
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Gross National Product (GNP) is defined as the sum of the gross domestic product (GDP) and net factor incomes from abroad. Thus, in order to estimate the gross national product of India, we have to add net factor income from abroad, i.e., income earned by Indian residents abroad minus income earned by non-residents in India to the gross domestic product of India. Symbolically, GNP = GDP + NFIA; where NFIA is the net factor income from abroad.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

Study of how the national income arising from what has been produced in the country is distributed through wages, profits and interest is called the study of ________.

  1. Consumption

  2. Production

  3. Distribution

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The distribution of national income among the factors of production (land, labor, capital, and entrepreneurship) is known as the study of distribution in economics.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

Income from second hand sale of goods is _______ from National Income.

  1. measured

  2. excluded

  3. included

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Income from the sale of second-hand goods is excluded from National Income because the value of the good was already counted in the year it was produced as a new good.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

Illegal income is _________ in  National Income.

  1. calculated

  2. included

  3. not included

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Illegal income is not recorded or reported to the government or authorities since it has not been generated through legal economic activities. Thus, it is not accounted for when national income is calculated.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

National Income is the ________ of all goods and services produced by a country during a period of year.

  1. physical quantity

  2. money value

  3. value

  4. all the three
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

National Income is defined as the total money value of all final goods and services produced within a country during a given period.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

"The national income consists of a collection of goods and services reduced to common basis by being measured in terms of money."- who says this?

  1. Samuelson

  2. Kuznets

  3. Hicks

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

This specific definition of national income, emphasizing the reduction of goods and services to a common monetary basis, is attributed to the economist J.R. Hicks.

Multiple choice economics circular flow of income and methods of calculating national income expenditure method and income method methods of measuring national income national income accounting

To avoid double counting in national income GDP is calculated by summing up ________.

  1. the value of all goods and services

  2. the value of final goods only

  3. the value of producers goods only

  4. the value of non-durable goods
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

To avoid double counting, only the value of final goods and services is included in the GDP calculation, as the value of intermediate goods is already embedded in the final price.

Multiple choice national income identity for open economy open economy macroeconomics determination of income and employment economics

Which of the following defines balanced growth?

  1. The state of an economy in which there is a constant relationship between the components of aggregate rational income

  2. The effect upon the national income of equal changes in Government expenditure and revenue

  3. A situation in which the Government planned expenditure equals its expected income

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

Balanced growth in the context of the balanced budget multiplier refers to the effect on national income when government expenditure and tax revenue are increased by the same amount, which typically results in an increase in national income equal to the change in expenditure.