Test Ch 5 National Income

School of Business and Management SBM Islamabad
PRC 3 Principles of Economics

Test national income
Name: ___________________ Date: ______________________ Marks: ____/36
1. Which of the following items are not included while measuring the Gross National Product?
a. Illegal and leisure activities
b. Purely financial transactions
c. Transferring of used goods and non-market goods and services
d. All of the above
2. Which of the following is the actual definition of transfer payments?

a. Transfer payments refer to the payments made as compensation to the employees within an
organisation
b. Transfer payments refer to the payments made to workers on transferring from one job to another
c. Transfer payments refer to the payments made without any exchange of goods and services
d. None of the above
3. Which of the following is not a part of the National Income?

a. Undistributed profits b. Income from government expenditure
c. The interest amount on the unproductive national debt
d. The payments made by a household to a firm for purchasing goods and services
4. Which of the following is true for Net National Income?

a. The Net National Income is the total of Gross National Product and Depreciation
b. The Net National Income is the difference between Gross National Product and Depreciation
c. The Net National Income is the difference between Gross Domestic Product and Depreciation
d. The Net National Income is the difference between Net Domestic Product and Depreciation
5. Which of the following is not needed while considering the Gross National Product?
a. The net investment made by foreigners within a given period
b. The total of private investments made within a given period
c. The total purchase of goods made by the government within a given period
d. The total per capita income of the citizens of a country within a given period
6. GDPfc =
a. GDPmp – Net indirect taxes b. GDPmp + Net indirect taxes
c. GDPmp + Subsidies d. GDPmp – Indirect taxes
7. Calculation of National Income at Market Prices is known as _________

a. Money income b. Real income
c. Non-monetary income d. None of these
8. Which one is included inflow ?
a. Consumption b. Investment
c. Income d. All of these
9. Total national income divided by total population is known as:

a. Private income b. Personal income
1
c. Personal spendable income d. Per capita income
10. Which one of the following is included in circular flow?

a. Real Flow b. Money Flow
c. Both (a) and (b) d. None of these
11. Which statement is true for National Income?

a. Only final goods will be considered b. Only final goods will be considered
c. It is usually taken for one year d. All of the above
e. None of the above
12. While calculating Personal Income, which item would be added in national income?
a. Corporate Profit Tax b. Undistributed profit
c. Social security allowance d. Transfer payments
13. Which one is NOT the most relevant problem regarding calculating national income?
a. Unreliable record keeping b. Lack of trained staff
c. Illegal activities d. Poor collection procedure
14. GDP deflator is use to estimate

a. Gross National Product b. Personal Income
c. Net National Product d. Inflating
15. Which of the following represent withdrawals from the circular flow of national income?
(i) Distributed profits
(ii) Interest paid on bank loans
(iii) Income tax payments
(iv) Imports
(a) (i) and (ii) only
(b) (ii) and (iii) only
(c) (i) and (iii) only
(d) (iii) and (iv) only
16. The monetary value of the flow of goods and services produced by the economy during one year
after the adjustment of indirect taxes and subsidies is known as:
a. Personal Income b. Disposable Income
c. National Income d. G.D.P.
17. Total income received by all the legal residents of an economy in one financial year.
a. National Income at Factor Price b. National Income at Market Price
c. Personal Income d. Disposable Income
18. A country’s measured national income per capital falls but its inhabitants experience a rise in
consumption. What could explain this?
a. A decrease in net foreign remittances b. A fall in population
c. An increase in trade deficit d. A rise in negative externalities
sno ans sno ans sno ans
2
1 D 11 D
2 C 12 D
3 C 13 C
4 B 14 D
5 D 15 B,D
6 A 16 C
7 A 17 C
8 B 18 B,C
9 D
10 C

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School of Business and Management SBM Islamabad

PRC 3 Principles of Economics

Name: _ Date: Marks: /36

2. Which of the following is the actual definition of transfer payments?

3. Which of the following is not a part of the National Income?

4. Which of the following is true for Net National Income?

7. Calculation of National Income at Market Prices is known as _________

9. Total national income divided by total population is known as:

10. Which one of the following is included in circular flow?

11. Which statement is true for National Income?

14. GDP deflator is use to estimate

sno ans sno ans sno ans

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