introduction to macro economics section 4 MCQ Questions & Answers Detailed Explanation

Answer: (b)

Disposable income is total personal income minus personal current taxes. In national accounts, definitions, personal income, minus personal current taxes equals disposable personal income.

Subtracting personal outlays (which includes the major category of personal (or, private) consumption expenditure) yields personal (or, private) savings.

Answer: (b)

A transfer payment is a one-way payment of money for which no money, good, or service is received in exchange.

Governments use such payments as means of income redistribution by giving out money under social welfare programs such as social security, old age or disability pensions, student grants, unemployment compensation, etc.

Examples of certain transfer payments include welfare (financial aid), social security, and government making subsidies for certain businesses

Answer: (a)

Per capita income, more simply known as income per person, is the mean income within an economic aggregate such as a country or city.

It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross national income) and dividing it by the total population.

Answer: (a)

Economic activity, is quite simply, the activity of the economy. It includes the growth and shrinkage of the economy and all factors that affect this (for example Aggregate Expenditure).

It is commonly measured by the GDP (Gross Domestic Product) which is probably one of the most reliable economic indicators.

A teacher teaching his daughter at home is an example of a non-economic activity.

Answer: (a)

According to Keynesian Theory of consumption, the current real disposable income is the most important determinant of consumption in the short run. It bases consumption on current income.

Answer: (c)

Gross national product (GNP) is the market value of all products and services produced in one year by labour and property supplied by the residents of a country.

It is the total value of all final goods and services produced within a nation in a particular year, plus income earned by its citizens (including income of those located abroad), minus income of non-residents located in that country.