Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics > L1: National Income > Flashcards

L1: National Income Flashcards

1
Q

What is national income?

A

National income is the total value of all goods and services produced by a country over a specific time period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Which method is NOT used to calculate national income?

A

The ‘social welfare’ method is NOT used to calculate national income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

True or False: National income includes only the income earned by residents.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What are the three primary methods to calculate national income?

A

The three primary methods are the production method, income method, and expenditure method.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Fill in the blank: National income can be measured by the ______ method, which focuses on the total output of goods and services.

A

production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What is GDP?

A

GDP, or Gross Domestic Product, is the total monetary value of all finished goods and services produced within a country’s borders in a specific time period.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does GNP stand for?

A

GNP stands for Gross National Product.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

True or False: GNP includes income earned by residents from investments abroad.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What is the formula for calculating national income using the income method?

A

National Income = Wages + Rent + Interest + Profit

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Which component is NOT part of the expenditure method?

A

Government subsidies are NOT part of the expenditure method.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Fill in the blank: The ______ method calculates national income based on total spending on final goods and services.

A

expenditure

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What is the difference between nominal and real national income?

A

Nominal national income is measured in current prices, while real national income is adjusted for inflation.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

True or False: Depreciation is considered when calculating net national income.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What does NNP stand for?

A

NNP stands for Net National Product.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

What is the relationship between GDP and GNP?

A

GNP equals GDP plus net income from abroad.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Fill in the blank: The ______ is the total income that residents earn from all sources.

A

national income

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a limitation of using GDP as a measure of national income?

A

GDP does not account for income inequality or non-market transactions.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

True or False: National income accounting helps in economic planning and policy formulation.

A

True

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What is the primary goal of national income accounting?

A

The primary goal is to provide a comprehensive overview of a country’s economic performance.

20
Q

What is the significance of the base year in calculating real national income?

A

The base year allows for comparisons over time by adjusting for inflation.

21
Q

Fill in the blank: National income can also be referred to as ______ income.

A

aggregate

22
Q

Which of the following is NOT included in national income? A) Government spending B) Transfer payments C) Consumer spending

A

B) Transfer payments

23
Q

What is the purpose of the circular flow of income model?

A

The model illustrates how money moves through the economy between households and firms.

24
Q

True or False: The income method of calculating national income is based on the total output of goods and services.

A

False

25
Q

What is the impact of inflation on national income measurements?

A

Inflation can distort the true value of national income if not adjusted for.

26
Q

What is an example of a non-market transaction?

A

Household chores performed without payment are an example of non-market transactions.

27
Q

Fill in the blank: The ______ is the value added at each stage of production.

A

value added

28
Q

What is the significance of calculating per capita national income?

A

Per capita national income provides an average income per person, indicating the standard of living.

29
Q

True or False: National income accounting is only relevant for developed countries.

A

False

30
Q

What does the term ‘aggregate demand’ refer to?

A

Aggregate demand refers to the total demand for all goods and services in an economy.

31
Q

Fill in the blank: The ______ approach to national income focuses on the distribution of income among factors of production.

A

income

32
Q

What is the primary limitation of GNP?

A

GNP does not accurately reflect the economic activities occurring within the country’s borders.

33
Q

What role do government policies play in influencing national income?

A

Government policies can affect taxation, spending, and investment, thereby influencing national income.

34
Q

True or False: National income can be used to compare economic performance across different countries.

A

True

35
Q

What is ‘disposable income’?

A

Disposable income is the amount of money that households have available for spending and saving after taxes.

36
Q

Fill in the blank: The ______ method is based on the total income earned by factors of production.

A

income

37
Q

What is the significance of calculating net national income?

A

Net national income accounts for depreciation, providing a clearer picture of economic health.

38
Q

What does the term ‘economic growth’ refer to?

A

Economic growth refers to an increase in the production of goods and services in an economy over time.

39
Q

True or False: An increase in national income always indicates an improvement in living standards.

A

False

40
Q

What is the difference between gross and net income?

A

Gross income is the total income before deductions, while net income is what remains after deductions.

41
Q

Fill in the blank: The ______ effect refers to the impact of changes in national income on consumption and investment.

A

multiplier

42
Q

What is the purpose of the national income identity?

A

The national income identity shows that total output equals total income equals total expenditure.

43
Q

True or False: National income statistics are always accurate and reliable.

A

False

44
Q

What are transfer payments?

A

Transfer payments are payments made by the government to individuals without any goods or services being exchanged.

45
Q

Fill in the blank: ______ is the sum of all final goods and services produced in a country during a specific period.

A

National product

46
Q

What role do exports and imports play in national income?

A

Exports contribute positively, while imports are subtracted from national income.

47
Q

What is the significance of the income distribution in relation to national income?

A

Income distribution affects economic inequality and overall economic health.

Economics (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions