Tag: methods of national income

Questions Related to methods of national income

Which of the following is true?

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

  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

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Correct Option: D

In countries like India, in practice _________.

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

  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

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Correct Option: A

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

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

  1. absolute

  2. relative

  3. below poverty line

  4. none of the above

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Correct Option: A

India's per capita income is showing a year on year ___________.

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

  1. increase

  2. decrease

  3. constant

  4. none of above

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Correct Option: A

The production method of calculating national income 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. income method

  2. subtraction method

  3. value added method

  4. repeated distribution method

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Correct Option: C

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).