Income Method

Q.

How do you calculate on accrual basis?

Q.

Which of the following items is not included while estimating national income by income method?

1. Fixed investment

2. Undistributed profits

3. Rent

4. Mixed income

Q.

How will you treat the following while estimating National Income? Give reasons for your answer.

(i) Capital gain on sale of a house

(ii) Prize won in a lottery

(iii) Interest on public debt

Q.

(a) What is real flow?

(b) What is the relevance of the financial sector in the circular flow of income? Explain .

Q. = Wages + + Interest + Profit

1. Rent
2. Income
3. Expenditure
4. Production

Q.

Do you think that a surplus in capital account BoP reflects the prosperity of the nation?

Q. Rent belongs to the category of .

1. income
2. production
3. expenditure
4. revenue

Q. Explain the relationship between MPC and multiplier with the help of an example.

Q. State the relationship between multiplier and MPC.

Q. If MPC = MPS, then value of multiplier is __________.

1. Infinity
2. One
3. Equal to MPC
4. Two

Q. Explain, in brief, the concept of ex-ante and ex-post saving and investment. Why are ex-ante saving and ex-ante investment not always equal to each other?

Q. If MPC is 0.6, the investment multiplier will be ________.

1. 1.67
2. 2.5
3. 4
4. 6

Q. The maximum value of multiplier is when the value of MPC is _________.

1. Infinity, one
2. One, infinity
3. None of these
4. Infinity, zero

Q. When the elasticity of demand is unity, the Marginal revenue is _____.

1. Zero
2. negative
3. either negative or zero
4. positive

Q. What is income and savings approach in macroeconomics?

Q. What are the different phases in the Law of Variable Proportions in terms of marginal product? Give reason behind each phase. Use diagram.

Q.

State true or false with reasons--

1. Nominal GDP can never be less than real GDP.

2. Gross domestic capital formation is always greater than gross fixed capital formation.

Q.

Classify rent into one of the following categories.

1. Income

2. Expenditure

3. Production

4. None of the above

Q. _______ refers to actual saving in an economy during a year.

1. Ex-ante saving
2. MPS
3. APS
4. Ex-post saving

Q. The law of returns refers to

1. The amount of extra output secured by adding to a fixed input, more and more variable inputs
2. The amount of extra output secured by adding to variable inputs and marginal inputs
3. The amount of extra profit secured by adding to a fixed input, more and more variable inputs
4. None of these

Q. In an economy, investment increases from 300 to 500. As a result of this, equilibrium level of income increases by 2, 000. Calculate the marginal propensity to consume.
(Marginal Propensity to Consume = 0.9)

Q. Match the following:

Group A	Group B
1. Production	a. Profit
2. Land	b. Captain of industry
3. Labour	c. Creating utility
4. Reward of capital	d. Rent
5. Reward of entrepreneur	e. Interest
	f. Wages

Q.

how to calculate national income from income method ?

Q. In the short-run, the firm will be in equilibrium when (Monopolistic competition) _____________________.

1. Marginal Revenue=Marginal cost
2. Average Revenue = Average cost
3. Total Revenue = Total cost
4. AR = MR = Price

Q. Explain the determination of equilibrium level of national income using 'saving and investment approach. Use diagram. Also explain the effects if saving is greater than investment.

Q. Giving reasons, explain how are the following treated in estimating national
Income by the income method.
(a) Interest on a car loan paid by an individual
(b) Interest on a car loan paid by a Govt. owned company.

Q. When the quantity of variable factors is changed under the law of Increasing Return, in what proportion production changes in __________.

1. constant proportion
2. decreasing production
3. increasing proportion
4. variable proportions

Q. If MPC = 0, the value of multiplier is __________.

1. 0
2. 1
3. Between 0 and 1
4. Infinity

Q. The slope of MRTS _________________.

1. $\frac{deltaL}{deltaC}$
2. $\frac{C}{L}$
3. $\frac{deltaC}{deltaL}$
4. $\frac{deltab}{deltaa}$

Q.

As a source of finance retained profit is better than other sources.Do you agree with this view?Give reason for your answer.Can a company grow indefinitely by reinvesting surplus profits?