introduction to macro economics section 4 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (d)

The tertiary industry is the segment of the economy that provides services to its consumers.

It includes a wide range of activities that are service-based and give non-tangible value to customers such as the provision of trading, insurance, banking, etc.

The other sectors are the secondary sector (manufacturing), and the primary sector (agriculture and allied activities).

Answer: (a)

Capitalism is an economic system in which each individual in his capacity as a consumer, producer, and the resource owner is engaged in economic activity with a large measure of economic freedom.

The inspiring force in this system is self-interest and maximization of profit. The decisions of businessmen, farmers, producers, including that of wage-earners are based on the profit motive.

Answer: (b)

Per capita income or average income or 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. Measurement of personal income is the best measure of the economic well-being of individuals and nations.

Besides, it helps to show the level of inequality in a society or country.

Answer: (b)

National income is the total value of a country’s final output of all new goods and services produced in one year.

So the construction of a new house is certainly output of goods. Transfer payments are not a part of the national income.

So private sector transfers including charitable donations and prizes to lottery winners are excluded from it.

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.