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 among the following is not taken into consideration when income method is used to measure national income?

  1. Rent

  2. Net factor income earned from abroad

  3. Gross domestic private investment

  4. Compensation of employees
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The income method calculates national income by summing factor incomes (wages, rent, interest, profit). Gross domestic private investment is a component of the expenditure method, not the income method.

Multiple choice

GDP stands for

  1. Gross Direct Product

  2. Gross Domestic Product

  3. Gross Direct Premium

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

GDP is a standard measure of the value added created through the production of goods and services in a country during a certain period.

Multiple choice

GNP is different from GDP as GNP includes

  1. depreciation

  2. indirect taxes

  3. exports income

  4. net income from abroad
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

GDP measures the value of goods and services produced within a country's borders. GNP (Gross National Product) adds the net income earned by residents from investments or labor abroad to the GDP.

Multiple choice

Which among the following factors creates obstacles in measuring correct estimate of national income?

  1. Inflation

  2. Existence of non-monetised sector

  3. Under employment

  4. Low rate of savings
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Existence of non-monetised sector creates obstacles in measuring correct estimate of national income. A well organised system of exchange in an economy based on the use of money is described as monetisation.  So a non monetized sector affects the stability of national income. 

Multiple choice

Which of the following factors is considered while calculating national income?

  1. Income from lottery

  2. Income of gamblers, smugglers, thieves etc

  3. Pension

  4. Income from the sale of second hand goods
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

National income calculations typically include transfer payments like pensions, as they are considered part of the income flow, whereas lottery winnings and illegal activities are excluded.

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.