introduction to macro economics section 5 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (a)

Dadabhai Naoroji prepared the first estimates of National income in 1876. He estimated the national income by first estimating the value of agricultural production and then adding a certain percentage as nonagricultural production.

However, such a method can only be called a non-scientific method. The first person to adopt a scientific procedure in estimating the national income was Dr VKRV Rao in 1931.

Answer: (b)

The price of a commodity is always determined by the forces of demand and supply in the market.

The price at which the amount demanded and the amount supplied are equal is known as ‘equilibrium price.’

The equilibrium price definitely increases when there is an increase in demand combined with a decrease in supply.

Answer: (a)

The income approach equates the total output of a nation to the total factor income received by residents or citizens of the nation. Transfer incomes are excluded from national income.

Therefore, wages of labourers will be included, pensions of retired workers will be excluded from national income.

Labour income includes compensations in kind. Non-labour income includes dividends, undistributed profits of corporations before taxes, interest, rent, royalties, profits of non-incorporated enterprises and of government enterprises.

Answer: (c)

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

Answer: (d)

The primary sector of the economy is the sector of an economy making direct use of natural resources. This includes agriculture, forestry, fishing, mining, and extraction of oil and gas.