Tag: methods of measuring national income

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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

Inter linked phases of product method is also known as:

  1. Net output method

  2. Net outflow method

  3. Gross outflow method

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

The production method is also referred to as the net output method because it focuses on the net value of output produced by various sectors.

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 focuses on measurement of national income at _________.

  1. phase of income disposition

  2. phase of income distribution

  3. phase of production of goods and services

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

The income method calculates national income by summing factor incomes generated during the production process. This corresponds to the phase of income distribution among the factors of production.

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

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

  1. Product Method

  2. Income Method

  3. Expenditure Method

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

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

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

  1. Public Services

  2. Price Changes

  3. Wages and Salaries paid in Kind

  4. All the above
Reveal answer Fill a bubble to check yourself
D Correct answer
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

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

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 __________.

  1. Product Method

  2. Income Method

  3. Expenditure Method

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
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).

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

The national income estimation is the responsibility of _______.

  1. NSSO

  2. Central Statistical Office

  3. Finance Ministry

  4. National Income Committee
Reveal answer Fill a bubble to check yourself
B Correct answer
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.

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

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

  1. Product Method

  2. Income Method

  3. Expenditure Method

  4. Value added Method
Reveal answer Fill a bubble to check yourself
B Correct answer
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.

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

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

  1. Net exports

  2. Private final consumption expenditure

  3. Government final consumption expenditure

  4. Expenditure on second hand goods
Reveal answer Fill a bubble to check yourself
D Correct answer
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.

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

Which of the following is included in factor payments?

  1. Rent and also royalty

  2. Interest

  3. Profits

  4. All the above
Reveal answer Fill a bubble to check yourself
D Correct answer
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.

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

Income disposal method is also called as _________.

  1. product method

  2. income method

  3. expenditure method

  4. value added method
Reveal answer Fill a bubble to check yourself
C Correct answer
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).