Ways of Measuring National Income And Their Limitations - SS2 Economics Past Questions and Answers - page 1
1
Which of the following methods of measuring national income calculates the total value of goods and services produced within a country's borders?
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A
Output method
B
Income method
C
Expenditure method
D
None of the above
2
Which of the following methods of measuring national income adds up all the incomes earned by individuals and businesses within a country's borders?
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A
Output method
B
Income method
C
Expenditure method
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D
None of the above
3
Which of the following methods of measuring national income adds up all the expenditures made by individuals, businesses, and the government within a country's borders?
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A
Output method
B
Income method
C
Expenditure method
D
None of the above
4
What is the limitation of the output method of measuring national income?
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A
It can underestimate the value of goods and services that are not sold in the market.
B
It can underestimate national income if there is a large informal sector.
C
It can be affected by changes in the price level.
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D
None of the above
5
What is the limitation of the income method of measuring national income?
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A
It can underestimate national income if there is a large informal sector.
B
It can be affected by changes in the price level.
C
It does not account for the negative effects of production on the environment.
D
None of the above
6
Why is it important to use a combination of methods to measure national income?
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7
What is the limitation of the expenditure method of measuring national income?
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