Tag: national income aggregates

Quizzes (1) Questions (23)

Questions Related to national income aggregates

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

The concept of normal resident applies to individuals only. 

  1. True

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

A person is treated as resident of a country in the country in which his interest actually lies. It can be an individual living in the same country or in another country. If a person lives in foreign country he should live in other country for less than a year. It not only involves individuals but also involves institutions. Hence, the concept of normal residents applies not only to individuals but also to institutions.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

If factor cost is greater than market price, then it means that ____________________.

  1. Indirect Taxes$ >$ Subsides
  2. Indirect Taxes $=$ Subsidies
  3. Indirect Taxes $<$ Subsides
  4. Indirect Taxes $\ge$ subsidies
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

If factor cost is greater than market price, then it means Indirect taxes < Subsidies. Market price can be less than factor cost when subsidies will be more than the indirect tax.

Formula: Market price - indirect tax + subsidies = Factor cost

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

Which of the following constitute the reason for difference between Market Prices and Factor Cost?

  1. Indirect Taxes

  2. Subsidies

  3. Both (a) and (b)

  4. Neither (a) nor (b)
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Market price is basically the current price at which an asset is bought or sold in the market. It includes the cost of production in the  form of wages,rent,interest,profit.etc. whereas factor cost may not reflect the effect of taxes and subsidies unlike market price. It takes into account only of the actual cost of production including the profit. Hence, the reason for difference between market price and factor cost is indirect taxes and subsidies.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

Mixed income refers to the income of: ______.

  1. small enterprises

  2. traders

  3. self employed persons

  4. all the three
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Mixed income refers to the combined income of self-employed individuals, which includes elements of wages, rent, interest, and profit that are difficult to separate in small-scale operations.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

In Dx$=$f(Px, T, Y)Y is?

  1. Income level of consumer

  2. Tastes of consumer

  3. Quantity of demand of goods

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

In the demand function Dx = f(Px, T, Y), Px is the price of the good, T represents consumer tastes, and Y represents the income level of the consumer.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

Personal income distribution is relatively ___________________.

  1. More unequal in urban areas than in rural areas

  2. More equal in urban areas than in rural areas

  3. More or less the same in rural and urban areas

  4. More unequal in rural areas than in urban areas
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Personal income distribution is generally more unequal in urban areas due to the higher concentration of wealth, diverse employment opportunities, and significant income gaps compared to rural areas.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

Which of these is/are not included in net domestic product at factor cost?

  1. Wages or compensation of employees

  2. Rent, interest, profit or operating surplus

  3. Mixed income

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

Net Domestic Product at factor cost (NDPfc) includes wages, rent, interest, profit, and mixed income. Therefore, none of these items are excluded.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

For most economies which of these statement is true?

  1. National income accounts and national output accounts are equal to each other.

  2. Estimation of national income is just impossible

  3. National output is less than national Income

  4. National income is less than national output
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In macroeconomic accounting, the total value of national income (sum of factor incomes) is equal to the total value of national output (sum of final goods and services produced) due to the circular flow of income.

Multiple choice economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

GNP at MP=Rs. 99,000 Net factor income abroad=(-) 560
Capital consumption allowance= Rs. 6100, Net indirect tax=Rs. 8470
From the above, estimate of GNP at factor cost.

  1. Rs. 90,530

  2. Rs. 91,000

  3. Rs. 89,990

  4. Rs. 93,100
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

GNPfc = GNPmp - Net Indirect Taxes. GNPfc = 99000 - 8470 = 90530. The other values (NFIA, CCA) are already accounted for in the GNPmp figure.