National Income Multiple Choice Questions and Answers pdf

National Income Multiple Choice Questions and Answers pdf
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Multiple choice questions of Subject Commerce MCQs Topic National Income Multiple Choice Questions and Answers pdf ( MCQ on National Income Multiple Choice Questions and Answers pdf Quiz ) for Entrances (Entrance Exam) Conducted by different Central and State Universities are given below.

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MCQ on National Income pdf | National Income Multiple Choice Questions and Answers pdf

1. Comparisons of GDP levels across countries are most accurate when

(a) the value of non-market activities is the same across countries

(b) prices are the same across countries

(c) prices and the value of non-market activities are the same across countries

(d) prices for non-market activities are the same across countries

Ans. c

2. The value of output produced by residents located within the country, before depreciation and including the influence of taxes and subsidies, is known as

(a) GNP at matket prices

(b) GNP at factor cost

(c) GDP at factor cost

(d) GDP at market prices

Ans. d

3. The. can be utilised to measure the direct and indirect effects on the entire economy of any sectoral change in input-output of final demand,

(a) output coefficient table

(b) input coetficient table

(c) transactions

(d) None of the above

Ans. b

4. Which of the following is an example of an intermediate product?

(a) A pair of skise sold by a sporting goods retailer to a skier

(b) A share of IBM stock

(c) The lumber produced by Boise Cascade and sold to builder of new houses

(d) An antique car sold to the highest bidder

Ans. c

5. Social accounts help to form the basis for economic models for the purpose

(a) of analysing the behaviour of the economy as a whole

(b) of hiding the problems of the economy

(c) to control papulation and illiteracy

(d) None of the above

Ans. a

6. Which one of the following are excluded when measuring national income?

(a) Consumer spending in the expenditure method

(b) Value added in the output method

(c) Tranister payments in the income method

(d) None of the above

Ans. c

7. Investment is the purchase of capital equipment, inventories, and

(a) structures

(c) depreciation

(b) non-durable goods

(d) import investment

Ans. a

8. Which of the following would not be counted as a final good for inclusion in GDP?

(a) A piece of glass bought by a consumer to fix a broken window

(b) A sheet of glass purchased by a commercial builder of a new home

(c) A sheet of glass produced this year and ending up in the inventory of a retail store

(d) A home that is built this year but is not sold

Ans. b

9. In an economy, the total income derived from all economic activities in a given year is

(a) greater than the sum of gross nationial product

(b) equal to the sum of gross national product

(c) equal to national income

(d) greater than the national income Nominal GNP

Ans. c

10. GNP deflator= Nominator GNP/?x100

(a) Real GNP

(b) Consumer price index

(c) Current price index

(d) None of the above

Ans. a

11. Wealth

(a) is a stock variable, measured per unit of time

(b) is a stock variable, measured at a point in time

(c) is a flow variable, measured per unit of time

(d) is a flow variable, measured at a point in time

Ans. b

12. The nominal interest rate is equal to

(a) Real interest rate / Inflation rate

(b) Real interest rate x Inflation rate

(c) Real interest rate – Inflation rate

(d) Real interest rate + Inflation rate

Ans. b

13. Per capita real output product is best defined as

(a) the market value of all final goods and services produced in an economy in current prices

(b) the market value of all final goods and services produced in an economy in current prices divided by the population

(c) the market value of all final goods and services produced in an economy in the prices of a given year

(d) the market value of all final goods and services produced in an economy in the prices of a given year divided by the population

Ans. c

MCQ on National Income pdf | National Income Multiple Choice Questions and Answers pdf

14. Real GDP is obtained by

(a) Nominal GDP + CPI

(b) Nominal GDP + GDP deflator

(c) Nominal GDP – GDP deflator

(d) Nominal GDP x Price level

Ans. b

15. ….. constitutes a coherent body of factual information regarding the performance of the economy during a specified period.

(a) Detailed accounting

(b) Balance accounting

(c) Social accounting

(d) Income accounting

Ans. c

16. Other things held constant, private disposable income would increase if

(a) government transfer payments increase

(b) consumption increase

(c) government purchases increase

(d) taxes increase

Ans. a

17. W Leontief won…… in 1973 for ……..

(a) nobel prize, input and output analysis

(b) nobel prize, balance of payment

(c) nobel prize, flow of funds

(d) nobel prize, economic analysis

Ans. a

18. According to input-output accounting, inputs of one industry are the. . of other industries.

(a) profits

(c) output

(b) losses

(d) transactions

Ans. c

19. According to the fundamental identity of national income accounting,

(a) Total production = Total income – Total expenditure

(b) S = (Y + NFP-T+ TR+ INT-C

(c) Y =C +/+ G+ NX

(d) GDP = GNP – NFP

Ans. c

20. Which of the following would be counted in the calculation of GDP?

(a) The sale of a rare coin to a coin collector

(b) Homes that are rebuilt after being completely destroyed by a hurricane

(c) The sale of a 1966 Ford Fairmont

(d) The sale of cocaine in the black market

Ans. b

21. Mobin and Mona just bought their new house. In the national income accounting, this transaction is considered as

(a) consumption on durable goods

(b) consumption on semi-durable goods

(c) inventory investment

(d) fixed investment

Ans. d

22. Why is the balance of payments of interest to business and policymakers?

(a) Changes in the balance of payments have no influence on the performance of the economy

(b) International trade is a declining component of GDP

(c) The balance of payments is an important component of GDP

(d) A country’s interactions with the world economy have no influence on financial markets

Ans. c

23. According to the social accounting system adopted by the national income committee in India, the economy is classified into

(a) four sectors

(c) three sectors

(b) two sectors

(d) five sectors

Ans. c

24. Which one of the following is not a part of the classification of economy according to national income committee in India?

(a) Government

(c) Households

(b) Enterprise

(d) Rest of the world

Ans. d

25. Which among the following will be treated as ‘normal resident’ of a country?

(a) Citizens of other countries who visit our country for recreation

(b) The diplomats of Russia posted of India

(c) Crew of foreign ships and aircrafts

(d) Citizens of our country working in foreign embassies located in India

Ans. d

26. Which of the following is an example of a final good or service?

(a) Unemployment compensation

(b) A CD player purchased as a gift

(c) Steel used in the production of appliances

(d) Vegetables purchased by local restaurants to make soup

Ans. b

27. If a used car dealer buys a car for ? 60,000 and resells it for rs. 60,500, how much has been added to GDP?

(a) Nothing

(b) rs. 500

(c) rs. 60,000

(d) rs. 60,500

Ans. b

28. Which of the following is not a government transfer?

(a) Government spending on education

(b) Welfare payments

(c) Public pensions

(d) Unemployment insurance benefits

Ans. a

29. Which one of the following is not an important theorem about input-output analysis?

(a) Marshall substitution theorem

(b) Samuelson substitution theorem

(c) The Hawkins-Simon condition

(d) Series approximation to the solution

Ans. a

30. The various concepts of national income and the practice of national income accounting was developed by

(a) Keynes

(b) Marshal

(c) Simon Kuznets

(d) None of the above

Ans. c

31. Which of the following is a widely used measure of the standard of living?

(a) Real output (income) per unit of capital

(b) Real output (income) per ermpioyed person

(c) Real output (income) per head of population

(d) Nominal output (income) per head of population

Ans. c

32. The sale of illegal drugs

(a) is included in GDP under services

(b) is included in GDP under investment

(c) is included in GDP as a component of home production (non-market activity)

(d) is not included in GDP

Ans. d

33. The GDP deflator is

(a) the difference between the current year GDP growth and previous year GDP growth

(b) average rate of inflation over a 10 year period

(c) a number that shows the relationship between real GDP and money GDP

(d) a number that shows relationship between interest rates and inflation

Ans. c

34. Gross National Product (GNP) represents

(a) the total income that residents country earn within the year

(b) GDP less depreciation (c) all income earned through Indian owned factors

(d) personal income less personal taxes

Ans. a

35. Which of the following would be included in the expenditure method?

(a) Employment insurance payment to an unempioyed construction worker Suisn

(b) A city worker’s pay cheque

(c) A pension cheque to the widow of a deceased school teacher

(d) A welfare payment to a single parent

Ans. b

36. The expenditure method of computing national income is also known as

(a) factor payment method

(b) consumption and investment method

(c) saving and investment method

(d) value added method

Ans. b

37. Which of the following is considered to be investment in fixed assets in the national income accounts?

(a) Increases in inventories of unsold goods

(b) Money deposited in a bank

(c) Purchases of land

(d) Purchases of treasury bills

Ans. c

38. Suppose an economy’s expenditures are equal to rs.7,000 billion. Income in the economy is

(a) less than rs. 7,000 billion

(b) more than rs. 7,000 billion

(c) exactiy rs. 7,000 billion

(d) somewhere between rs. 7,000 billion and rs. 8,000 billion

Ans. Ac

39. To move from GDP to GNP, we must add to GDP the

(a) depreciation of piant and equiprnent

(b) taxes minus subsidies

(c) net income from abroad

(d) subsidies minus taxes

Ans. c

40. Social accounting is based on

(a) single entry system

(c) multiple entry system

(b) double entry system

(d) None of these

Ans. b

41. Of the four components of GDP, which is the largest?

(a) Consumption

(c) Govermment spending

(b) Investment

(d) Net exports

Ans. a

42. Citizenship’ and ‘residential status’ are

(a) different concepts

(b) means one and the same thing

(c) reiated concepts

(d) None of the above

Ans. a

43. Net Factor Income from Abroad (NFIA) comprise of

(a) net compensation of employees

(b) net income from property and entrepreneurship

(c) net retained earnings of resident companies abroad

(d) All of the above

Ans. d

44. Input-output analysis assumes coefficient yielded by the input-output table are that technological

(a) not constant

(b) constant

(c) zero

(d) one

Ans. b

45. Spending on capital equipment, inventories, and structures is referred to as

(a) consumption expenditure (C)

(b) investment expenditure (I)

(c) government expenditure (G)

(d) expenditure on net exports (X- M)

Ans. b

46. GDP is a

(a) gond measure of relative welfare in various countries

(b) good measure of relalive prices in various countres

(c)gondmeasure of relative living standards in various countries

(d) good measure of markot activities atmarket prices

Ans. d

47. Double counting in the national income accounts will not occur if GDP is computed by summing all

(a) sales of final output

(b) sales of final output and intermediate goods

(c) sales

(d) production costs

Ans. a

48. The United States produces and sells millions of types products. To add them up to a single aggregate, each good is weighted by

(a) its cost of production.

(b) its market price

(c) its utility to consumers

(d) its contribution to corporate profits

Ans. b

49. The value of national output produced by residents country, whether located at home overseas, after depreciation and excluding the influence of taxes subsidies, is known as

(a) GDP at factor cost

(c) GNP at factor cost

(b) GNP at market price

(d) NNP at factor cost

Ans. d

50. National accounting income fails to reveal the

(a) gans of different sectors in an economy

(b) financial transactions of an economy

(c) losses of different sectors

(d) None of the above

Ans. b

51. The flow of funds shows.. among different sectors of the economy

(a) aggregate demand and supply

(b) savings

(c) financial transactions

(d) production

Ans. c

52. According to flow of funds accounts financial uses and financial sources of the economy must be

(a) one

(c) equal

(b) non-equal

(d) zero

Ans. c

53. For estinmating national income accruing to construction sector, which method is used?

(a) Value addecd method

(e) Expenditure mothod

(b) Income method

(d) None of these

Ans. C

54. Input-output analytics was developed by

(a) Wassily Leontitt

(c) Hawkins-Simon

(b) Samuelson

(d) None of these

Ans. a

55. Gross Domestic Product (GDP) is

(a) personal consumption expenditures and gross private domestic investment

(b) the sum of wage and salary compensation of employees. corporate profits and interest income

(c) the market value of final goods and services produced within a country in one year

(d) the market value of all final and intermediate goods and services produced by the economy in one year

Ans. c

56. Which of the following statement is true?

(a) in an open economy, the total value of consumption and domestic capital formation can exceed total production The amount of money a household has is called flow

(c) A student using stationery forms part of production process

(d) The political frontiers of the country are wider than its domestic territory

Ans. a

57. To compute GDP, the quantity of each final good or service produced must first be weighted by

(a) its market price

(b) its cost of production

(c) its share of total output

(d) its contribution to corporate profits

Ans. a

58. For purposes of calculating GDP, which, of the following payments is not included in the government spending component

(a) Social security payments

(b) Wages paid by a Local Govermment to its road crew

(c) Wages paid by a State Government to the workers in its weitare department

(d) The tederal government’s purchase of a submarine from a shipbuilder

Ans. a

59. To calculate nominal GDP

(a) sum the quantiry of all final goods and services produced in an economy in a year

(b) sum the quantity of all goods and services sold in an economy in a year

(c) weight the output of each final good and service produced in an economy in a year by its price that year and then sum the result

(d) weight the output of each good and service produced in an economy in a year by its price in that year, and then sum the result

Ans. c

60. For estimating national income accruing to banking and insurance sectors, . method will be used.

(a) value added

(c) expenditure

(b) income

(d) None of these

Ans. b

MCQ on National Income pdf | National Income Multiple Choice Questions and Answers pdf

61. Which of the following is included in the computation of national income according to the income method?

(a) Expense on staying at a luxury hotel on a holiday

(b) Purchase of securities of a listed company

(c) Income earned from smuggling of goods

(d) Wages and salaries paid to employees

Ans. d

62. Import into a country add the income of

(a) government

(c) foreign producers

(b) domestic manufacturers

(d) traders

Ans. c

63. Operating surplus includes

(a) rent

(C) profit

(b) interest

(d) All of these

Ans. d

64. Flow of funds accounts were developed by

(a) Prof Samuelson

(c) Prof Simon

(b) Prof JR Hich

(d) Morris Copeland

Ans. d

65. Input-output accounting has been criticized because

(a) final demand is taken as dependent variable

(b) it fails to study the impact of production bottlenecks, external econornies and diseconomies

(c) it considers the possibility of factor substitution

(d) industries are governed by the constant return scale

Ans. b

66. Gross national product

(a) will be higher in a private sector economy than in an economy where there is also a public sector that taxes the private sector

(b) is identical to gross domestic product

(c) will exceed gross domestic product if net factor payments from abroad are positive

(d) will always exceed gross domestic product in a closed economy

Ans. c

67. Real gross domestic product is best defined as

(a) the market value of goods and services produced in an economy

(b) all goods and services produced in an economy stated in the prices of a given year

(c) the market value of all final goods and services produced in an economy stated in the prices of a given year

(d) the market value of goods and services produced in an economy stated in current year prices

Ans. c

69. Use the table above to calculate GDP (in billions of dollars).

(a) 6,200

(c) 7,500

(b) 7,400

(d) 8,450

Ans. c

70. Use the table above to calculate net exports (in billions of dollars).

(a) 100

(c) 950

(b) 100

(d) 1050

Ans. b

72. Calculate net exports using the table above (in billions of dollars).

(a) 170

(b) 200

(c) 450

(d) 650

Ans. b

73. NNP is equal to 

(a) GNP + Net exports

(c) GNP + Depreciation

(b) GNP – Net exports

(d) GNP – Depreciation

Ans. d

74. Which of the following is not to be included in national product?

(a) Wheat produced by the farmer and consumed by him

(b) House built by the owner himself

(c) Income from the sale of old car

(d) Machine made by firm A and sold to B

Ans. c

75. If we know the GNP, then we calculate GDP by

(a) adding net indirect taxes

(b) subtracting net indirect taxes

(c) adding net factor income from abroad

(d) subtracting net factor income from abroad

Ans. d

76. National income is less than NNP at market price by the amount of

(a) transfer payments

(b) direct taxes

(c) net indirect taxes

(d) depreciation

Ans. c

77. NNP according to income method includes

2. royalty

4. depreciation

(b) 2, 3 and 4

(d) 2 and 3 1. wages and salaries 3. net indirect taxes

(a) 1, 2 and 3

(c) 1 and 2

Ans. a

78. National income expressed in terms of a general level of prices of a particular year taken as base is known as

(a) NNP at market price

(c) NNP at current prices

(b) NNP at factor cost

(d) Real income

Ans. d

79. Y =C+1+G+(X-M) is

(a) equation

(c) a formula

(b) an identity

(d) a function

Ans. b

80. GNP includes

1. consumer goods and services.

2. gross private domestic investment.

3. goods and services produced by government.

4. net exports.

(a) 1, 2 and 3

(c) 1, 3 and 4

(b) 2, 3 and 4

(d) 1, 2, 3 and 4

Ans. d

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81. The difference between GNP and GDP is equal to

(a) gross foreign investment

(b) net foreign investment

(c) net exports

(d) net factor income from abroad

Ans. d

82. Which one of the following items is excluded in calculating national income?

(a) Unemployment allowance

(b) Paid household job

(c) Profit of public sector undertakings

(d) Royalty

Ans. a

83. If we know the GNP at market prices, we calculate GNP at factor cost by

(a) adding net indirect taxes

(b) subtracting net indirect taxes

(c) adding net factor income from abroad

(d) subtracting net factor income from abroad

Ans. b

84. Depreciation means

(a) destruction of a plant in a fire accident

(b) loss of equpment and machines over time due to normal wear and tear

(c) closure of the firm due to lockout

(d) unanticipated loss

Ans. b

85. GNP at market prices – depreciation indirect taxes + subsidies is equal to

(a) NNP at market price

(c) National income

(b) GNP at factor cost

(d) NDP at factor cost

Ans. c

86. Which among the following is the best indicator of economic welfare?

(b) Real GDP

(a) Nominal GDP

(c) GDP deflator

(d) None of these

Ans. b

87. The net value of final goods and services evaluated at current prices is known as

(a) GNP at market price

(b) GNP at factor price

(d) NNP at tactor cost

Ans. c

88. While computing national income by income method, which item(s) should not be included?

(a) Transfer earnings

(c) NNP at market price

(b) Income from lotteries

(c) Income from capital gains

(d) All of the above

Ans. d

89. National product at factor cost used for studying the

(a) final products by the origin of industry

(b) expenditure by commodity groups

(c) payments to factor owners

(d) consumer goods and services

Ans. c

90. Which of the following is not correct?

(a) In measuring GNP, all kinds of goods and services produced in a country during a year are measured in terms of money

(b) in estimating GNP, only the final products are taken into account

(c) The sale and purchase of shares of existing companies are included in GNP

(d) The income earned through illegal activities is not included in the GNP

Ans. c

91. The difference between GNP and NNP is

(a) net indirect taxes

(b) net factor income from abroad

(c) depreciation

(d) personal income taxes

Ans. c

92. Which of the following is not included in disposable income!

(a) Intenational transfer payments

(b) Unemployment allowances

(c) Direct taxes

(d) Corporate dividends

Ans. c

93. The sum of money value of the income produced by and accruing to the various factors of production in one year in a country is known as

(a) GNP at market price

(b) GNP at factor cost

(c) NNP at market price

(d) NNP at factor cost

Ans. b

94. National product at current prices is higher than national product at constant prices during a period of

(a) rising prices

(b) falling prices

(c) stable prices

(d) changing costs

Ans. a

95. Which method will be used to estimate national income accuring to forestry and logging?

(a) Value added method

(b) Income method

(c) Expenditure method

(d) None of the above

Ans. a

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