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

Suppose that a firm had an unsold stock worth of Rs 100 at the beginning of a year. During the year it had produced Rs 1,000 worth of goods and managed to sell Rs 800 worth of goods. Calculate inventory for the year ___________.

  1. 100

  2. 200

  3. 300

  4. 400
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Inventory at the end of the year is calculated as: Opening Stock + Production - Sales. Here, 100 + 1000 - 800 = 300.

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

A sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves) is called __________.

  1. profits

  2. taxes

  3. dividends

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

A sum of money paid regularly (typically annually) by a company to its shareholders out of its profits (or reserves) is called a dividend

A dividend is a distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.

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 is equal to __________.

  1. NNP - Subsidies + Taxes

  2. NNP - Indirect Taxes + Subsidies

  3. NNP - Direct Taxes + Subsidies

  4. GNP - Subsidies + Taxes
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation


The phrase at factor cost is to be contrasted with the phrase at market prices.

Goods produced are sold at market prices which include the indirect taxes imposed by the Government. Indirect taxes are levied on commodities, such as excise duty on beer and cloth, etc.

Thus, the market value of the national product exceeds the income paid to the factors of production by the amount of indirect taxes. Hence, net national income at factor cost shows the income actually received by the factors of production.

On the other hand, a subsidy causes the market price to be less than the factor cost. The subsidy is an aid in money.

.’. NNI at Factor Cost = NNPat MP plus Subsidies minus Indirect Taxes.

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

National Income may be determined through ________.

  1. Income Approach

  2. Expenditure Approach

  3. Output Approach

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

The national income of a country can be measured by three alternative methods:
(i) Product Method
(ii) Income Method,
(iii) Expenditure Method. 

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

National Income of a country can be calculated by_______.

  1. $2$ methods
  2. $3$ methods
  3. $4$ methods
  4. $5$ methods
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
National Income is the total value of all services and goods that are produced within a country and the income that comes from abroad for a particular period, normally one year.
National income can be computed by three methods:
1) Value-Added Method by classifying Production Units in an economy as Primary, Secondary and Tertiary Sectors.
2)Income Method - on the basis of the combination of individuals and households indulged in different kinds of factors of production.
3)Final Expenditure Method - on the basis of a collection of units used for consumption, saving, and investment.
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 are the methods for measuring National Income?

  1. The Product or Value Added Method

  2. Expenditure Method

  3. Income Method

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

The three standard methods for measuring national income are the Product (Value Added) Method, the Expenditure Method, and the Income Method.

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

Total revenue $\div$ Number of units sold $=$ ____________.

  1. Average revenue

  2. Average cost

  3. Marginal cost

  4. Total cost
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Average means value derived by way of dividing the total value by the total number of units. Whenever any goods are sold or services are provided to any consumer then amount so received from the consumer is termed as revenue or receipts.

Therefore Total revenue / Number of Units sold gives Average Revenue.

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

________ income in excluded in the calculation of net income.

  1. Factor

  2. Portable

  3. Movable

  4. Transfer
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Transfer incomes, such as pensions or scholarships, are payments made without any corresponding production of goods or services. Therefore, they are excluded from national income calculations.

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

Income from sale of second hand property should be included in national income.

  1. True

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

The sale of second-hand goods is not included in national income because the value was already counted when the item was originally produced. Including it again would lead to 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

Income method is known as ______ method.

  1. factor cost

  2. market price

  3. output

  4. expenditure
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The income method is often referred to as the factor cost method because it sums up the factor incomes (wages, rent, interest, profit) earned by factors of production.