The product method of measuring national income is also known as
A Value-added method
B Income method
C Expenditure method
D Factor cost method
The product method measures national income by summing value added at each stage of production.
The product method estimates national income by calculating
A Total sales value
B Sum of factor incomes
C Value of final goods and services
D Total expenditure
Only final goods and services are counted to avoid double counting.
Value added by a firm equals
A Output − Depreciation
B Output − Intermediate consumption
C Output − Factor income
D Output − Indirect taxes
Value added is the contribution of a firm to GDP, excluding intermediate inputs.
Double counting refers to
A Counting goods twice deliberately
B Counting intermediate goods along with final goods
C Counting only services
D Counting only exports
Including intermediate goods inflates GDP figures by duplication.
Which of the following avoids double counting?
A Gross output method
B Value-added method
C Transfer payment method
D Income redistribution method
Value added ensures each production stage is counted only once.
Which sector’s output is difficult to estimate using product method?
A Manufacturing
B Agriculture
C Service sector
D Mining
Services lack physical output, making valuation difficult.
The income method measures national income as the sum of
A Value added
B Final expenditure
C Factor incomes
D Gross sales
It aggregates wages, rent, interest, and profits earned in production.
Which of the following is included in income method?
A Transfer payments
B Capital gains
C Wages and salaries
D Old-age pension
Wages are earned through productive activity and included.
Which of the following is excluded from income method?
A Rent
B Wages
C Interest
D Unemployment allowance
Unemployment allowance is a transfer payment, not earned income.
Mixed income refers to
A Income of joint stock companies
B Income of self-employed persons
C Income of government
D Income from capital only
Self-employed earn income combining wages, rent, interest, and profit.
Which of the following is part of profit in national income accounting?
A Corporate tax
B Undistributed profit
C Dividends
D All of the above
Profit includes corporate tax, dividends, and retained earnings.
The expenditure method calculates national income by summing
A Total production
B Factor incomes
C Final expenditures
D Gross sales
It totals spending on final goods and services.
Which expenditure is included in GDP calculation?
A Purchase of shares
B Old house purchase
C Government spending on defence
D Transfer payments
Government expenditure on services contributes to GDP.
Expenditure method includes
A C + I + G + (X − M)
B C + S + T
C W + R + I + P
D C + T + S
GDP = Consumption + Investment + Government spending + Net exports.
Which item is included in investment expenditure?
A Purchase of shares
B Purchase of old machinery
C Change in inventories
D Transfer payments
Inventory changes represent current production.
Which is NOT included in consumption expenditure?
A Household spending on food
B Purchase of consumer durables
C Purchase of shares
D Spending on services
Shares are financial assets, not goods or services.
Government transfer payments are excluded because
A They are illegal
B They do not involve production
C They increase inflation
D They are savings
Transfers do not correspond to current output.
Which method is most suitable for estimating national income of developing countries?
A Expenditure method
B Income method
C Product method
D Mixed method
Due to data limitations, a combination of methods is used.
Which method is most reliable in an economy with accurate income records?
A Product method
B Income method
C Expenditure method
D Circular flow method
Reliable income data improves accuracy of income method.
In expenditure method, imports are
A Added
B Ignored
C Subtracted
D Multiplied
Imports represent foreign production, so they are subtracted.
Exports are included in GDP because
A They are produced domestically
B They are consumed domestically
C They increase money supply
D They reduce imports
Exports reflect domestic production sold abroad.
Which method directly shows sector-wise contribution to GDP?
A Income method
B Expenditure method
C Product method
D Circular flow method
Product method highlights sectoral value addition.
In income method, factor incomes are recorded
A At market price
B At constant price
C At factor cost
D At base-year price
Income method values incomes at factor cost.
Which of the following causes difficulty in income method?
A Non-monetized sector
B Depreciation
C Net exports
D Capital formation
Non-monetized incomes are hard to record.
Which activity causes underestimation of national income?
A Paid services
B Unreported income
C Export earnings
D Government services
Black income is not recorded in official statistics.
Which method is prone to double counting if not careful?
A Income method
B Expenditure method
C Product method
D Circular flow method
Counting intermediate goods can cause duplication.
Which of the following is included in GDP through imputation?
A Rent of owner-occupied houses
B Free services of NGOs
C Unpaid housework
D Black market income
Imputed rent estimates housing services.
Imputed value is included in national income to
A Inflate GDP
B Ensure completeness of production
C Reduce inequality
D Increase tax base
It accounts for non-market but productive services.
Which method includes imputed rent of owner-occupied houses?
A Income method
B Expenditure method
C Product method
D All of the above
Imputed values appear in all approaches to maintain consistency.
Which method is affected most by price changes?
A Product method
B Income method
C Expenditure method
D All methods equally
All methods are influenced by price variations unless adjusted.
The three methods of measuring national income give
A Different results always
B Same results theoretically
C No results
D Arbitrary results
In theory, all methods yield the same national income.
Statistical discrepancy arises due to
A Inflation
B Use of different data sources
C Government policy
D Population growth
Data inconsistencies across sources cause discrepancy.
Which item is included in income method but excluded in product method?
A Wages
B Interest
C Indirect taxes
D Imputed rent
Indirect taxes are added separately in income accounts.
Which item is excluded from all three methods?
A Old-age pension
B Wages
C Rent
D Interest
Pension is a transfer payment with no production.
Expenditure on education by government is treated as
A Transfer payment
B Investment
C Consumption expenditure
D Subsidy
Education services are final consumption by government.
Which component is the largest in GDP of most economies?
A Consumption expenditure
B Investment expenditure
C Government expenditure
D Net exports
Household consumption forms the biggest share.
In GDP calculation, depreciation is
A Added
B Ignored
C Subtracted to get net measures
D Multiplied
Net aggregates exclude depreciation.
Which of the following is counted as capital formation?
A Buying shares
B Building a factory
C Buying land
D Paying pension
Factory construction adds to productive capacity.
Gross capital formation includes
A Only fixed investment
B Only inventory change
C Fixed investment and inventory change
D Only financial assets
Both fixed assets and inventory changes are included.
Which of the following is included in government final expenditure?
A Interest payments
B Subsidies
C Salaries of government employees
D Pensions
Salaries pay for current services.
National income calculated by income method equals
A GDP at market price
B NDP at market price
C NNP at factor cost
D GNP at market price
Income method directly estimates national income.
Which is deducted from GNP to get national income?
A Indirect taxes
B Depreciation and net indirect taxes
C Subsidies
D Direct taxes
NNP at factor cost = GNP − Depreciation − Net indirect taxes.
Which method is best suited to estimate GDP of service-based economy?
A Product method
B Income method
C Expenditure method
D Mixed method
Income data captures service output better.
GDP measured at current prices may increase due to
A Increase in output only
B Increase in prices only
C Increase in both prices and output
D All of the above
Nominal GDP reflects both price and quantity changes.
Which of the following reduces GDP?
A Increase in exports
B Increase in consumption
C Increase in imports
D Increase in investment
Imports are subtracted in GDP calculation.
If intermediate goods are mistakenly included in GDP, it will
A Underestimate GDP
B Give correct GDP
C Overestimate GDP
D Not affect GDP
It leads to double counting.
Which method records income at the point of generation?
A Product method
B Income method
C Expenditure method
D Circular flow method
Income method records incomes when generated.
Which method records income at the point of spending?
A Product method
B Income method
C Expenditure method
D Value-added method
Expenditure method records final spending.
National income accounting primarily helps in
A Fixing prices
B Measuring economic performance
C Collecting taxes
D Reducing inflation
It provides a quantitative measure of economic activity.
Which of the following is a flow variable?
A National income
B Wealth
C Capital stock
D Population
National income is measured over a period of time.