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

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.

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.

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

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

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.

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.

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.

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.

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.

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.