Tag: methods of measuring national income

Questions Related to methods of measuring national income

Inter linked phases of product method is also known as:

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

  1. Net output method

  2. Net outflow method

  3. Gross outflow method

  4. None of the above

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Correct Option: A

Income method focuses on measurement of national income at _________.

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

  1. phase of income disposition

  2. phase of income distribution

  3. phase of production of goods and services

  4. all of the above

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Correct Option: B

If the national income is measured as an aggregate value of all final goods and services produced by all the firms it is called _______.

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

  1. Product Method

  2. Income Method

  3. Expenditure Method

  4. None of the above

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Correct Option: A
Explanation:

National income is measured as an aggregate value of all final goods and services produced by all the firms it is called product method.

Product method: in this method national income is measured as money value of all final goods and services produced in an economy during a year. Final goods here refer to those goods which are directly consumed and not used in further production process.

Which of the following poses a problem in calculating national income?

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

  1. Public Services

  2. Price Changes

  3. Wages and Salaries paid in Kind

  4. All the above

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Correct Option: D
Explanation:

There are few difficulties associated with calculation of national income which include

  • Public Services
  • Price changes
  • Wages and salaries paid in kind

Apart from these the other problems involved are

  • Lack of Adequate Data
  • Non-availability of Reliable Information
  • Choice of Method
  • Double Counting

The method used to calculate the income by adding all the expenditures on the purchase of final goods and services produced during an accounting year is __________.

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

  1. Product Method

  2. Income Method

  3. Expenditure Method

  4. None of the above

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Correct Option: C
Explanation:

The method used to calculate the income by adding all the expenditures on the purchase of final goods and services produced during an accounting year is called expenditure method

Expenditure method: national income is measured as a flow of expenditure. Includes sum total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

The national income estimation is the responsibility of _______.

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

  1. NSSO

  2. Central Statistical Office

  3. Finance Ministry

  4. National Income Committee

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Correct Option: B
Explanation:

Central statistical organisation is responsible for statistical activities in India. The CSO was set up in the cabinet secretariat on 2 May 1951.

The national income estimation is the responsibility of central statistical office.

Which of the following method uses adding up of factor payments received during a year to calculate national income?

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

  1. Product Method

  2. Income Method

  3. Expenditure Method

  4. Value added Method

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Correct Option: B
Explanation:

Income method uses adding up of factor payments received during a year to calculate national income.

Income method: according to this method income is measured as flow of factors income. There are generally four factors of production labour, capital, land and entrepreneurship. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profit as their remuneration.

Which of the following is not included in expenditure method of calculating national income?

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

  1. Net exports

  2. Private final consumption expenditure

  3. Government final consumption expenditure

  4. Expenditure on second hand goods

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Correct Option: D
Explanation:

Expenditure method: national income is measured as a flow of expenditure. Includes sum total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).

It does not include expenditure on second hand goods.

Which of the following is included in factor payments?

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

  1. Rent and also royalty

  2. Interest

  3. Profits

  4. All the above

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Correct Option: D
Explanation:

Factor payments include Interest, Profits, Rent and also royalty

There are generally four factors of production labour, capital, land and entrepreneurship. Labour gets wages and salaries, capital gets interest, land gets rent and entrepreneurship gets profit as their remuneration.

Income disposal method is also called as _________.

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

  1. product method

  2. income method

  3. expenditure method

  4. value added method

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Correct Option: C
Explanation:

Expenditure method is also called as income disposal method

Expenditure method: National income is measured as a flow of expenditure. Includes sum total of private consumption expenditure. Government consumption expenditure, gross capital formation (Government and private) and net exports (Export-Import).