introduction to macro economics section 3 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Primarily there are three methods of measuring national income. Which method is to be employed depends on the availability of data and purpose. The methods are product method, income method and expenditure method.

According to the production method, the total value of final goods and services produced in a country during a year is calculated at market prices.

According to this method, only the final goods and services are included and the intermediary goods and services are not taken into account.

In this method, National Output = National Expenditure (Aggregate Demand) = National Income.

Answer: (d)

Macroeconomics involves the sum total of economic activity, dealing with the issues such as the production of national income, growth, inflation, and unemployment.

It is all about is about maximizing national income and growth.

Answer: (b)

1. The processing of agricultural products;
2. The production of grain by threshing;
3. The production of flour by milling;
4. The curing of skins and the production of leather;
5. The production and preservation of meat and fish products; 
6. The preservation of fruit by drying, bottling, etc.;
7. The production of dairy products such as butter or cheese;
8. The production of beer, wine or spirits; the production of baskets and mats; etc,

comes under processing of primary commodities for own consumption.

Answer: (c)

Market Equilibrium is determined when the quantity demanded of a commodity becomes equal to the quantity supplied.

The price determined corresponding to market equilibrium is known as equilibrium price and the corresponding quantity is known as equilibrium quantity.

Answer: (d)

Net national product at market price is the market value of the output of final goods and services produced at the current price in one year of a country. If we subtract the depreciation charges from the gross national product, we get the net national product at market price.

So, Depreciation = Gross National ProductNet National Product,

Answer: (c)

As a general rule, saving is considered as a derivative of consumption. Developed economies have lower saving rates than developing countries because at the same income level, the level of consumption is higher in their cases.

Besides, as seen in the recent case of the United States, welfare programmes have been found to be responsible for falling saving rates.

Redistributing from young and future generations to older generations raises national consumption and lower national saving (The Concise Encyclopedia of Economics).