Q1. What is the primary purpose of measuring national income?
Solution:
The primary purpose of measuring national income is to assess economic growth over time.
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Q2. Which of the following components is part of the expenditure approach to calculating GDP?
Solution:
All of the above components—investment, net exports, and consumption—are part of the expenditure approach to calculating GDP.
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Q3. What does the term 'per capita income' refer to?
Solution:
Per capita income is calculated by dividing the total national income by the population, providing an average income per person.
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Q4. What does 'net national income' (NNI) account for?
Solution:
Net National Income (NNI) is calculated by subtracting depreciation from Gross National Income (GNI), reflecting the income available for consumption and investment.
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Q5. What does the term 'per capita' mean in economics?
Solution:
'Per capita' means income per person, providing a measure of average economic output or income.
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Q6. What does the term 'nominal GDP' refer to?
Solution:
Nominal GDP refers to GDP measured at current prices, without adjusting for inflation.
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Q7. Which of the following is a method to calculate national income?
Solution:
All of the above methods—income approach, expenditure approach, and production approach—can be used to calculate national income.
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Q8. Which of the following is a component of the income approach to GDP?
Solution:
All of the above—wages, rent, and profits—are components of the income approach to calculating GDP.
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Q9. Which of the following is a limitation of national income statistics?
Solution:
National income statistics often do not account for income inequality, which can mask disparities in wealth distribution within a country.
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Q10. What is the difference between real GDP and nominal GDP?
Solution:
Real GDP is adjusted for inflation, while nominal GDP is measured at current prices without such adjustments.
