Tag: methods of measuring national income

Questions Related to methods of measuring national income

Income method is of great use to developed countries in calculating national income.

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

  1. True

  2. False

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Correct Option: B

Difficulty of estimating mixed incomes is under:

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

  1. Income method

  2. Expenditure method

  3. Value added method

  4. Both A & B

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Correct Option: A

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

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

  1. Gross domestic product

  2. National income

  3. Gross domestic income

  4. Gross national income

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Correct Option: C
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. 

State the full form of GNP.

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

  1. Gross National Product

  2. Group Net Product

  3. Grand Nuclear Process

  4. Group Networking Process

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Correct Option: A
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.

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 ________.

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

  1. Consumption

  2. Production

  3. Distribution

  4. none of the above

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Correct Option: C

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

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

  1. measured

  2. excluded

  3. included

  4. none of the above

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Correct Option: B

National Income at factor cost includes __________.

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

  1. demand

  2. price

  3. subsidies

  4. cost

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Correct Option: C

Old age pension is _________ income.

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

  1. earned

  2. transfer

  3. increased

  4. none of the above

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Correct Option: B
Explanation:

Old age pension is paid to people after retirement who no longer provide any productive services in exchange. The government in this case collects taxes from working population and provide pension to older population in the form of government expenditure.

The pension is income for those who receive it, however, no new income is generated in the economy, hence it is a transfer payment.

Illegal income is _________ in  National Income.

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

  1. calculated

  2. included

  3. not included

  4. none of the above

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Correct Option: C
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.

National Income estimates are _______ in India.

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

  1. accurate

  2. not accurate

  3. rising

  4. none

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Correct Option: B