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

Answer: (a)

British economist John Hicks said that National income is a collection of goods and services reduced to a common basis by being measured in terms of money. Hicks was one of the most important and influential economists of the twentieth century.

The most familiar of his many contributions in the field of economics were his statement of consumer demand theory in microeconomics, and the IS/LM model (1937), which summarized a Keynesian view of macroeconomics.

His book Value and Capital (1939) significantly extended general-equilibrium and value theory.

Answer: (c)

Net National Product at factor cost is also called national income.

Net National Product at factor cost is equal to sum total of value added at factor cost or net domestic product at factor cost and net factor income from abroad.

NNP at factor cost = NNP at Market Price -Net Indirect Tax.

National income measures the monetary value of the flow of output of goods and services produced within an economy over a period of time.

Answer: (d)

Average Revenue refers to revenue received per unit of output sold. It is the same as the Price of the commodity. Average revenue can be obtained by dividing the total revenue by the number of units sold.

Thus, Average Revenue (AR) = $\text"Total Revenue (TR)"/\text"Quantity sold (Q)"$

When we take the case of a single commodity,

TR = P × Q

So, AR= ${P × Q}/Q$ = P,

where P = Price of the commodity

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: (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: (c)

“Supply creates its own demand” is the formulation of Say’s law by John Maynard Keynes.

The rejection of this doctrine is a central component of The General Theory of Employment, Interest and Money (1936) and a central tenet of Keynesian economics.

Say’s law, or the law of the market is an economic principle of classical economics named after the French businessman and economist Jean-Baptiste Say (1767– 1832), who stated that “products are paid for with products” and “a glut can take place only when there are too many means of production applied to one kind of product and not enough to another