Free Measures of National Income 03 Practice Test - 12th Grade - Commerce
Question 1
A higher GDP per capita may not mean that the quality of life has really improved because
It does not measure the quality of the items produced
SOLUTION
Solution : C
It measures the income generated but not the quality of the products; items may be better quality but cheaper to produce so GDP would fall.
Question 2
Nominal GDPGDP deflatorPopulationYear 3$5,00012511Year 4$6,60015012
Refer to the table mentioned above. What is the real GDP in year 3?
4000
2000
1000
5000
SOLUTION
Solution : A
Real GDP = Nominal GDPGDP deflator
=5,000125×100=4,000
Question 3
If GDP deflator for the period 1995-2000 is 140%, this means that we can only buy with 40 Rupees in 2000 what we can buy with 100 Rupees in 1995.
True
False
SOLUTION
Solution : B
False, because GDP deflator for the period 1995-2000 is 140% means that we can buy with 140 Rupees in 2000 what we can buy with 100 Rupees in 1995.
Question 4
National income refers to:
The sum total of domestic income and net factor income from abroad
Factor incomes only
Income of only normal residents of the country
All of these
SOLUTION
Solution : A
National income refers to all the given options.
Question 5
Which of the following statements is correct?
Personal disposable income can be used at will by households
Personal disposable income cannot be used at will by households
Personal disposable income includes fees and fines yet to be paid
Personal disposable income includes direct taxes
SOLUTION
Solution : A
Personal disposable income can be used at will by households.
Question 6
Real national income means:
national income at current prices
national income at factor prices
national income at constant prices
national income at average prices of the past 10 years
SOLUTION
Solution : C
Real national income is measured at constant prices, adjusted for inflation.
Question 7
National income at current prices can increase even when the quantum of goods and services produced during the year remains constant.
True
False
SOLUTION
Solution : A
Increase in the price level can cause an increase in national income at current prices without an increase in the quantum of goods and services.
Question 8
Market price includes the impact of indirect taxes, but not of subsidies.
True
False
SOLUTION
Solution : B
Market price includes the impact of both indirect taxes and subsidies. Indirect taxes raise the market price while subsidies lower it.
Question 9
Increase in national income implies increase in the flow of goods and services in the economy.
True
False
SOLUTION
Solution : A
True. Provided that, national income as the market value of final goods and services produced during the year is estimated at constant prices, not at current prices.
Question 10
The difference between gross domestic product and net domestic product is due to
Net factor income from abroad
Depreciation
Net indirect taxes
Change in stock
SOLUTION
Solution : B
The difference between gross domestic product and net domestic product is due to depreciation.