CA Foundation : Economics : Chapter 6 - Unit 1 : Quiz 1

Ch-6 Determination of National Income
Unit 1: National Income Accounting

1. Which of the following is NOT a component of Gross Domestic Product (GDP)?
A) Consumption
B) Transfer payments
C) Investment
D) Government spending
2. Net National Product (NNP) is calculated by:
A) Subtracting depreciation from GDP
B) Adding depreciation to GDP
C) Subtracting depreciation from GNP
D) Adding net exports to GNP
3. The value of output produced by a country's factors of production, regardless of location, is known as:
A) GDP
B) GNP
C) NDP
D) NNP
 4. Which of the following best represents Real GDP?
A) GDP adjusted for net exports
B) GDP adjusted for inflation
C) GDP minus depreciation
D) GDP plus government spending
5. The sum of all incomes earned by factors of production in a country, excluding indirect taxes and including subsidies, is known as:
A) GDP at market price
B) GNP at market price
C) GDP at factor cost
D) NDP at factor cost
6. Which of the following is included in the calculation of GDP?
A) Unpaid domestic work
B) Government spending on infrastructure
C) Black market activities
D) Transfer payments
7. National income is a measure of:
A) Total wealth of the country
B) Total income earned by residents of a country
C) Total stock of money
D) Total expenditure of the government
8. Which of the following is used to measure the standard of living in an economy?
A) Per capita income
B) National income
C) GDP
D) NNP
9. Gross Domestic Product (GDP) can be measured using which of the following methods?
A) Income approach
B) Expenditure approach
C) Output approach
D) All of the above
10. Which of the following represents the market value of all final goods and services produced within a country in a given period?
A) GNP
B) NNP
C) GDP
D) NDP
11. Which of the following is a flow concept?
A) National wealth
B) Capital stock
C) National income
D) Money supply
12. Which of the following is deducted from GNP to calculate NNP?
A) Indirect taxes
B) Depreciation
C) Subsidies
D) Net exports
13. Which of the following is an indicator of economic growth?
A) Increase in NNP
B) Increase in GDP
C) Increase in GNP
D) All of the above
14. Personal income can be defined as:
A) National income minus corporate taxes
B) Income received by households
C) National income minus government revenue
D) National income minus depreciation
15. Which of the following measures the income earned by residents of a country, including net income from abroad?
A) GDP
B) NDP
C) GNP
D) NNP
16. The difference between Gross Domestic Product (GDP) and Net Domestic Product (NDP) is:
A) Depreciation
B) Net exports
C) Subsidies
D) Indirect taxes
17. Which of the following is considered a leakage in the circular flow of income?
A) Consumption
B) Investment
C) Taxes
D) Exports
18. Which of the following best describes the term "double counting" in national income accounting?
A) Counting intermediate goods in GDP
B) Counting only final goods and services
C) Counting only domestic goods
D) Counting goods and services twice in national accounts
19. Which of the following is a transfer payment?
A) Salary
B) Profit
C) Unemployment benefits
D) Rent
20. Which of the following is not included in GDP?
A) Final goods and services
B) Intermediate goods
C) Investment
D) Government spending

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