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

Answer: (c)

Consumption and income are directly or positively related.

An increase in income is associated with an increase in income; a decrease in consumption accompanies a decrease in income.

Answer: (a)

Investment multiplier is simply the multiplier effect of an injection of investment into an economy.

The multiplier effect refers to the idea that an initial spending rise can lead to an even greater increase in national income.

Answer: (d)

Gross National Product (GNP) can be defined as an economic statistic that includes Gross Domestic Product, plus any income earned by the residents from investments made overseas.

Net factor income from abroad = income earned in foreign countries by the residents of a country – income earned by nonresidents in that country.

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: (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: (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.