Tag: methods of measuring national income

Quizzes (3) Questions (114)

Questions Related to methods of measuring national income

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Income method is more reliable than expenditure method.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The reliability of a method depends on the quality of data available. In many developed economies, the income method is considered more reliable due to better tax and payroll record-keeping.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

In which case, net income from abroad need to be added separately under the income method?

  1. If national income is calculated from incomes received by people

  2. If national income is calculated from data regarding incomes paid out by producers

  3. In both above methods, added separately

  4. In neither of the above methods, added separately
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

When calculating national income via the income method, one must account for factor incomes paid out by producers to residents, which includes net factor income from abroad.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Transfer incomes are ___________ national income.

  1. included in

  2. excluded from

  3. sometimes included, sometimes excluded

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

Transfer incomes, such as pensions or scholarships, are not payments for current production of goods or services; therefore, they are excluded from national income.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Income method considers _________.

  1. only primary factors of production

  2. only secondary factors of production

  3. both (a) and (b)

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

The income method aggregates the factor incomes (wages, rent, interest, profit) generated by the primary factors of production (land, labor, capital, entrepreneurship).

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Expenditure on foreign financial assets is included in national income under the expenditure method on ________.

  1. gross basis

  2. net basis

  3. real time basis

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

In national income accounting, financial transactions are generally excluded, but when considering net flows, they are treated on a net basis to avoid double counting.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Aggregate of factor incomes of all the factors of production of all the producing units form the subject matter of _______.

  1. Value Added Method

  2. Income method

  3. Expenditure Method

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

The income method calculates national income by summing all factor incomes earned by the factors of production within the economy.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Goods produced in preceding periods are ___________ national income under expenditure method.

  1. excluded from

  2. included from

  3. no specific rule

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

National income measures the value of goods and services produced in the current period. Goods produced in previous periods were already counted in the year they were produced.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Expenditure on raw materials and intermediate goods and services is ___________ national income.

  1. excluded from

  2. included from

  3. no specific rule

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

Expenditure on intermediate goods is excluded from national income to avoid double counting, as their value is already embedded in the final product.

Multiple choice business economics and quantitative methods measurement of national income methods of national income methods of measuring national income national income analysis

Net National Expenditure can also be calculated as __________.

  1. Gross National Expenditure $-$ Replacement expenditure
  2. Gross National Expenditure $+$ Replacement expenditure
  3. Gross National Expenditure $-$ depreciation
  4. Gross National Expenditure $+$ depreciation
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Net National Expenditure is derived by subtracting depreciation (replacement expenditure) from Gross National Expenditure.