Q1. 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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Q2. Which of the following is NOT included in the calculation of national income?
Solution:
Government transfer payments, such as social security or unemployment benefits, are not included in national income as they do not reflect the production of goods and services.
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Q3. Which of the following is NOT included in the calculation of GDP?
Solution:
Used car sales are not included in GDP calculations as they do not represent new production.
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Q4. 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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Q5. 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.
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Q6. Which of the following is a component of national income?
Solution:
Consumer spending is a component of national income as it reflects the total expenditure on goods and services in the economy.
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Q7. 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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Q8. What is national income?
Solution:
National income refers to the total income earned by a country's residents, including wages, profits, rents, and taxes, minus subsidies.
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Q9. Which method is commonly used to calculate national income?
Solution:
National income can be calculated using various methods, including the production method, income method, and expenditure method.
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Q10. 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.
