Chapter 2: National Income — Online MCQ Test
ECONOMICS · CLASS 12th · Tamil Nadu State Board
Practice Chapter 2: National Income with a free chapter-wise online MCQ test.
This chapter covers: Explains the key measures of a country's economic output such as GDP GNP NDP and NNP along with the three standard methods of calculating national income: product income and expend....
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Chapter 2: National Income — Important Questions & Answers
National income is commonly measured as the sum of all ______ income earned by factors of production in a country during a year.
- A. money
- B. factor
- C. government
- D. trade
Answer: B. factor
National income refers to the total factor income earned by residents of a country in a year. It includes wages, rent, interest, and profit.
National income refers to the total factor income earned by residents of a country in a year. It includes wages, rent, interest, and profit.
Which of the following is the correct full form of GDP?
- A. Gross Domestic Product
- B. General Domestic Product
- C. Gross Development Product
- D. Great Domestic Production
Answer: A. Gross Domestic Product
GDP stands for Gross Domestic Product. It measures the total value of final goods and services produced within the domestic territory of a country.
GDP stands for Gross Domestic Product. It measures the total value of final goods and services produced within the domestic territory of a country.
If GDP is measured at market prices, which of the following is added to obtain national income from Net Domestic Product at factor cost?
- A. Indirect taxes
- B. Depreciation
- C. Net factor income from abroad
- D. Subsidies
Answer: C. Net factor income from abroad
National income is obtained by adding net factor income from abroad to Net Domestic Product at factor cost. This gives NNP at factor cost, which is the same as national income.
National income is obtained by adding net factor income from abroad to Net Domestic Product at factor cost. This gives NNP at factor cost, which is the same as national income.
A country’s Gross National Product (GNP) is higher than its GDP when:
- A. Net factor income from abroad is positive
- B. Net factor income from abroad is negative
- C. Depreciation is zero
- D. Indirect taxes are higher than subsidies
Answer: A. Net factor income from abroad is positive
GNP equals GDP plus net factor income from abroad. If income received from abroad exceeds income paid abroad, GNP becomes greater than GDP.
GNP equals GDP plus net factor income from abroad. If income received from abroad exceeds income paid abroad, GNP becomes greater than GDP.
Which of the following is NOT a problem in estimating national income?
- A. Non-availability of reliable data
- B. Difficulty in valuing self-consumed output
- C. Double counting
- D. Perfectly measurable underground economy
Answer: D. Perfectly measurable underground economy
An underground economy is not perfectly measurable; in fact, it is one of the difficulties. The other options are genuine problems in national income estimation.
An underground economy is not perfectly measurable; in fact, it is one of the difficulties. The other options are genuine problems in national income estimation.