Ways of Measuring National Income And Their Limitations - SS2 Economics Past Questions and Answers - page 1
Which of the following methods of measuring national income calculates the total value of goods and services produced within a country's borders?
Output method
Income method
Expenditure method
None of the above
Which of the following methods of measuring national income adds up all the incomes earned by individuals and businesses within a country's borders?
Output method
Income method
Expenditure method
None of the above
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?
Output method
Income method
Expenditure method
None of the above
What is the limitation of the output method of measuring national income?
It can underestimate the value of goods and services that are not sold in the market.
It can underestimate national income if there is a large informal sector.
It can be affected by changes in the price level.
None of the above
What is the limitation of the income method of measuring national income?
It can underestimate national income if there is a large informal sector.
It can be affected by changes in the price level.
It does not account for the negative effects of production on the environment.
None of the above
Why is it important to use a combination of methods to measure national income?
It is important to use a combination of methods to get a more complete picture of a country's economic health and to overcome the limitations of each individual method.
What is the limitation of the expenditure method of measuring national income?
The expenditure method can be affected by changes in the price level, making it difficult to compare national income across different time periods.