Tag: measurement of national income

Quizzes (2) Questions (99)

Questions Related to measurement of 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

Which of the following is true?

  1. Gross national expenditure $=$ consumption expenditure $+$ net domestic investment $+$ net foreign investment $+$ Replacement expenditure
  2. Net National Expenditure $=$ Gross National Expenditure $-$ Replacement investment
  3. Net domestic expenditure $=$ consumption expenditure $+$$ net domestic investment

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

All the listed equations correctly represent components or derivations of national expenditure accounting.

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

In countries like India, in practice _________.

  1. contributions of different sectors are calculated by different methods

  2. one consistent method is used

  3. both above are true depending upon facts and circumstances

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

Due to the diverse nature of the Indian economy, different sectors are measured using the most appropriate method (e.g., production method for agriculture, income method for services).

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

When poverty is not related to income or consumption expenditure, it is ___________.

  1. absolute

  2. relative

  3. below poverty line

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

Absolute poverty is defined by a fixed standard, whereas relative poverty is defined in relation to the income distribution of the rest of the society.

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

The production method of calculating national income is also known as _________.

  1. income method

  2. subtraction method

  3. value added method

  4. repeated distribution method
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The production method calculates national income by summing the value added by each producing unit, hence it is also called the value-added method.

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).