MCQs on National Income

National Income is defined as the total monetary value of all goods and services produced within a country during a given period of time. It is an important indicator of the economic activities that are taking place within a nation. It is measured using different methods and governments use this figure to make important financial policy decisions.

Below is a list of multiple-choice questions and answers on National Income to help students get a grasp of the main concepts related to this topic.

  1. Which of the following is a method to measure the National Income?
    1. Expenditure method
    2. Income method
    3. Product method
    4. All of the above

    Answer: d

  2. Which of the following is the correct term for calculating National Income at the market prices?
    1. Money income
    2. Non-monetary income
    3. Real income
    4. None of the above

    3. Answer: a

  3. Which of the following is the correct term for calculating National Income at constant prices?
    1. Current income
    2. Domestic income
    3. Real income
    4. None of the above

    4. Answer: c

  4. Which of the following items are not included while measuring the Gross National Product?
    1. Illegal and leisure activities
    2. Purely financial transactions
    3. Transferring of used goods and non-market goods and services
    4. All of the above

    5. Answer: d

  5. Which of the following is the employment theory related to?
    1. Macroeconomics
    2. Static economics
    3. Microeconomics
    4. None of the above

    6. Answer: a

  6. Which of the following is the actual definition of transfer payments?
    1. Transfer payments refer to the payments made as compensation to the employees within an organisation
    2. Transfer payments refer to the payments made to workers on transferring from one job to another
    3. Transfer payments refer to the payments made without any exchange of goods and services
    4. None of the above

    7. Answer: c

  7. The difference between the National Income and the Net National Product at market price is known as _______.
    1. National debt transfer
    2. Current transfers from the rest of the world
    3. Net indirect taxes
    4. All of the above

    8. Answer: c

  8. Which of the following is not a part of the National Income?
    1. Undistributed profits
    2. Income from government expenditure
    3. The interest amount on the unproductive national debt
    4. The payments made by a household to a firm for purchasing goods and services

    9. Answer: c

  9. Which of the following is another term for the Net National Product at factor cost?
    1. Personal Income
    2. National Income
    3. Gross National Product
    4. Net Domestic Product

    10. Answer: b

  10. Which of the following is true for Disposable Income?
    1. Disposable Income is the difference between Private Income and Indirect Taxes
    2. Disposable Income is the difference between Personal Income and Indirect Taxes
    3. Disposable Income is the difference between Private Income and Direct Taxes
    4. Disposable Income is the difference between Personal Income and Direct Taxes

    11. Answer: d

  11. Which of the following organisations calculate the Gross Domestic Product in India?
    1. Reserve Bank of India
    2. Indian Statistical Institute
    3. National Statistical Office
    4. None of the above

    12. Answer: c

  12. Which of the following is the correct definition for the Gross Domestic Product (GDP) of a country?
    1. The Gross Domestic Product is the total monetary value of the economic transactions within a country in a given year
    2. The Gross Domestic Product is the total value of both monetary and non-monetary goods and services in a country within a given year
    3. The Gross Domestic Product is the total value of tradable goods produced in a country within a given year
    4. None of the above

    13. Answer: d

  13. Which of the following is true for Inflation?
    1. The value of money increases during Inflation
    2. The value of money decreases during Inflation
    3. The value of money stays the same during Inflation
    4. None of the above

    14. Answer: b

  14. Which of the following is true for Net National Income?
    1. The Net National Income is the total of Gross National Product and Depreciation
    2. The Net National Income is the difference between Gross National Product and Depreciation
    3. The Net National Income is the difference between Gross Domestic Product and Depreciation
    4. The Net National Income is the difference between Net Domestic Product and Depreciation

    15. Answer: b

  15. Which of the following is true for the National Income of a country?
    1. If the savings exceed the investment within a country, the National Income will rise
    2. If the savings exceed the investment within a country, the National Income will fall
    3. If the savings exceed the investment within a country, the National Income will fluctuate
    4. If the savings exceed the investment within a country, the National Income will remain constant

    16. Answer: d

  16. Which of the following is the definition of a closed economy?
    1. A closed economy is a type of economy where the money supply is totally controlled by the government
    2. A closed economy is a type of economy where neither exports nor imports take place
    3. A closed economy is a type of economy where deficit financing takes place
    4. A closed economy is a type of economy where there are no exports to other countries

    17. Answer: b

  17. Which of the following is not needed while considering the Gross National Product?
    1. The net investment made by foreigners within a given period
    2. The total of private investments made within a given period
    3. The total purchase of goods made by the government within a given period
    4. The total per capita income of the citizens of a country within a given period

    18. Answer: d

  18. The primary sector within a country for the calculation of National Income includes __________.
    1. Small scale industries
    2. Retail trading
    3. Agriculture
    4. All of the above

    19. Answer: d

  19. Which of the following is included in the National Income of a country?
    1. Rent
    2. Interest
    3. Wages
    4. Rent, Interest, Wages, Salary, Profits

    20. Answer: d

  20. What is the consumption of Fixed Capital known as?
    1. Depreciation
    2. Capital Formation
    3. Investment
    4. All of the above

    21. Answer: a

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