Free Measures of National Income 01 Practice Test - 12th Grade - Commerce 

Question 1

If a country’s nominal GDP increases, it means the country is producing more goods and services. State true or false.

A.

True

B.

False

SOLUTION

Solution : B

Nominal GDP refers to market value of the final goods and services produced within the domestic territory of a country during a financial year using the current year prices. Real GDP is what reflects real production.

Question 2

Which one leads to Factor Cost?

A.

Market price - Indirect taxes

B.

Market price - Net Indirect tax

C.

Market price + Indirect taxes

D.

Market price + Net Indirect tax

SOLUTION

Solution : B

Market price - Net Indirect tax = Factor Cost.

Question 3

Which one includes depreciation?

A.

GNP at market price

B.

NNP at market price

C.

NNP at factor cost

D.

None of these

SOLUTION

Solution : A

GNP at market price - Depreciation = NNP at market price

Question 4

 National income NNPFC  is equal to: 

A.

GNPFC + Depreciation

B.

GNPFC - Depreciation

C.

 NNPMP - Net Indirect taxes

D.

Both B and C

SOLUTION

Solution : D

 National income NNPFC = GNPFC - Depreciation and NNPMP - Net Indirect taxes

Question 5

The value of national output produced by residents located within the country, before depreciation and including the influence of taxes and subsidies, is known as:

A.

NNP at factor cost

B.

GDP at factor cost

C.

GDP at market price

D.

GNP at market price

SOLUTION

Solution : C

The value of national output produced by residents located within the country, before depreciation and including the influence of taxes and subsidies, is known as GDP at market price.

Question 6

Human Development Index(HDI) focuses on

A.

Longevity

B.

Knowledge

C.

Standing of living

D.

All of the above

SOLUTION

Solution : D

HDI focuses on three dimensions of human welfare as given in the above options.

Question 7

Government transfer payments include:

A.

Social security benefits

B.

Welfare benefits

C.

Student scholarships

D.

All of the above

SOLUTION

Solution : D

Government transfer payment includes all the given options.

Question 8

Transfer payments means:

A.

Bank loans

B.

The payment without work

C.

Tax payments

D.

Payment made to all factors of production

SOLUTION

Solution : B

Transfer payments means the payment without work.

Question 9

To avoid double counting when GDP is estimated, economists:

A.

use GDP deflator

B.

calculate value added at each stage of production

C.

use retail prices

D.

use prices of intermediate goods only

SOLUTION

Solution : B

To avoid double counting when GDP is estimated, economists calculate value added at each stage of production.

Question 10

The Gini coefficient is a measure of

A.

Market efficiency

B.

Product differentiation

C.

Income inequality

D.

Market power

SOLUTION

Solution : C

The Gini coefficient is a statistical measure of income distribution in an economy.

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