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

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)

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: (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.