Book 1

.
NI = NE is an:
A.
Equation
B.
C.
Function
D.
Answer: Option B
2.
Per capita income is:
A.
Income per worker
B.
C.
Income per household
D.
Answer: Option B
3.
If indirect taxes are deducted from NNP and subsidies are added, we achieve:
A.
Personal savings
B.
C.
NI
D.
Answer: Option C
4.
Transfer payments are not included in national income because:
A.
Such payments are made to

persons living abroad
B.
C.
They are illegal
D.
Answer: Option B
5.
To determine the correct level of GNP, it is necessary to:
A.
Add up the values of goods

and services during one year
B.
C.
Count all imports
D.
Answer: Option A
6.
Real national income increases when:
A.
Prices of goods are rising
B.
C.
Quantity of goods and

services increases
D.
Answer: Option C
7.
It is considered as investment:
A.
Construction of a house
B.
C.
Salaries of college professors
D.
Answer: Option A
8.
It is considered as transfer payments:
8.
A.
Salaries of employees
B.
C.
Free medical care to officers
D.
A.
Less than NNP
B.
C.
Equal to NNP
D.
Answer: Option D
9.
GNP is always:
Answer: Option B
10.
The four factor payments are:
A.
Money, capital, salaries, and

income
B.
C.
Money, power, prices, and

wealth
D.
Answer: Option B
1.
It is transfer payment:
A.
Payment of college tuition
B.
C.
Interest paid for a bank loan
D.
Answer: Option B
12.
It is counted in GDP:
A.
Sale price of an old car
B.
C.
A TV set produced this year

but not sold
D.
Answer: Option C
13.
If government increases taxes, private savings:
A.
C.
Increase
Do not change
B.
D.
Answer: Option B
14.
If C=200 and I = 40 then Y will equal to:
A.
C.
160 B.
200 D.
Answer: Option B
15.
Corporate tax is levied on:
A.
C.
Landlords
Big companies
B.
D.
Answer: Option C
16.
If we deduct direct tax from personal income, we get:
16.
A.
C.
Net national income

Disposable income
B.
D.
Answer: Option C
17.
The largest part of national income is:
A.
C.
Consumption
Saving
B.
D.
Answer: Option A
18.
We measure national income by this method:
A.
C.
Expenditure method
Product method
B.
D.
Answer: Option D
19.
Which statement is true?
A.
C.
NNP = GNP - Depreciation

NNP = DPI
B.
D.
Answer: Option A
20.
Transfer payments means:
A.
Bank loans
C.
21.
B.
Tax payments
Direct taxes are not included in:
D.
A.
C.
B.
D.
NNP
DPI
Answer: Option C
22.
When National income is estimated by expenditure method, we include:
A.
All govt. expenditure
B.
C.
All expenditure of the business

D.
sector
Answer: Option D
23.
A.
National Expenditure =
National income
B.
C.
National Expenditure =
National income + National
Taxes
D.
Answer: Option A
24.
A.
National Income = National

Expenditure - indirect taxes
B.
C.
NI = NNP - indirect taxes
D.
Answer: Option C
25.
There are methods of measuring national income:
A.
C.
5 B.
1 D.
Answer: Option D
26.
If we compare GDP and GNP, then:
A.
GNP = GDP - net income from

abroad
B.
C.
GNP = NNP - net income from

abroad
D.
Answer: Option B
27.
It is deducted from GNP to get NNP:
A.
C.
Indirect taxes
Direct taxes
B.
D.
Answer: Option B
28.
Select the correct statements:
A.
Transfer payments are

included in national income
B.
C.
Taxes are not included in NNP
D.
Answer: Option B
29.
Which is the largest figure:
A.
C.
NNP
DPI
B.
D.
Answer: Option B
30.
Which is a flow concept:
A.
C.
Number of my shirts
My total wealth
B.
D.
Answer: Option B
31.
To avoid double counting when GDP is estimated, economist:
A.
C.
Use GDP deflator

Use retail prices
B.
D.
Answer: Option B
32.
A TV set purchased from a retail store is an example of:
A.
C.
Intermediate good
Surplus goods
B.
D.
Answer: Option D
33.
It is deducted from GNP to find NNP:
A.
Savings
B.
C.
Depreciation allowance
D.
33.
Answer: Option C
34.
Undistributed profits are considered:
A.
Income earned but not

received
B.
C.
Income earned and received
D.
A.
Total sales in the economy
B.
C.
The market value of all goods

and series produced in an
economy
D.
Answer: Option A
35.
GNP is:
Answer: Option C
36.
GNP includes:
A.
C.
A loan from a bank

Gifts and donations
B.
D.
Answer: Option D
37.
In terms of national income accounts, multiple counting refers to:
A.
The addition to GNP of

multiple units of a good
B.
C.
The inclusion in GNP of gross

spending and taxes
D.
A.
Gross Investment minus

household Investment
B.
C.
Gross Investment minus

capital consumption allowance
D.
A.
DPI minus personal taxes
B.
C.
DPI minus income earned but

not received
D.
Answer: Option B
38.
Net Investment is:
Answer: Option C
Explanation:
39.
PI is equivalent to:
Answer: Option D
40.
Market value of all final goods and services produced in a country during a year is definition of:
A.
C.
NI
GNP
B.
D.
40.
Answer: Option C
41.
Investment spending includes the purchase of:
A.
Stocks
B.
C.
Residential construction
D.
Answer: Option C
42.
Which of the following would not be included in GNP:
A.
Govt. transfer payments
B.
C.
Govt. purchase of an airplane
D.
Answer: Option A
43.
Consumption spending does not include:
A.
Household's purchase of food
B.
C.
Household's payment of rent

for an apartment
D.
A.
Total exports plus total

imports
B.
C.
Total imports minus total

exports
D.
Answer: Option D
44.
Net exports are:
Answer: Option B
45.
National Income is:
A.
Total income spent in the

economy
NNP minus the capital
C.
consumption allowance
Answer & Explanation
B.
D.
Answer: Option D
46.
Which of the following is not included in personal Income:
A.
Social security benefits
B.
C.
Undistributd corporate profits
D.
A.
Part of personal consumption

spending
B.
C.
Included in NI but not in PI
D.
Answer: Option C
47.
Traffic fines are:
Answer: Option D
48.
Govt. transfer payment include:
48.
A.
C.
49.
Social security benefits

Student scholarships
B.
D.
Answer: Option D
Which of the following would increse level of national income?
A.
An increase in taxation.
B.
C.
A reduction in consumer
spending
D.
Answer: Option D
50.
National income is a measure of:
A.
The size of government

revenue
B.
C.
Total increase in wages in a

year
D.
Answer: Option B
51.
In calculating national income which one will not be included:
A.
C.
Exports
Wages of a lecturer
B.
D.
Answer: Option D
52.
In circular flow model
A.
Households own the resources
B.
C.
Household income is limited to

wages and salaries
D.
Answer: Option A
53.
A country is poor if it has:
A.
Less production of goods per

capita
B.
C.
Less amount of foreign

currency
D.
Answer: Option A
54.
A country is poor if it has:
A.
Less amount of gold
B.
C.
Less amount of foreign

currency
D.
Answer: Option D
55.
It is transfer payment:
A.
C.
Bus fare
Pension
B.
D.
Answer: Option C
56.
They have a functional relation
A.
Consumption and national

income
B.
56.
C.
Consumption and investment
D.
Answer: Option A
57.
This is NOT a method of measure national income:
A.
By adding all incomes
B.
C.
By adding money value of all

production
D.
Answer: Option D
58.
Gross national product includes:
A.
A loan from one's parents
B.
C.
A loan from, other countries
D.
Answer: Option D
59.
It is considered as investment in national accounting:
A.
Construction of a house
B.
C.
Purchase of a new shirt
D.
Answer: Option A
60.
It is considered as transfer payment:
A.
Salary of an employee
B.
C.
Payment of house rent
D.
A.
Less than NNP
B.
C.
Equal to NNP
D.
Answer: Option D
61.
GNP is always:
Answer: Option B
62.
The four factor payments are:
A.
Money, capital, salaries, and

income
B.
C.
Money, power, prices and

wealth
D.
Answer: Option B
63.
Macroeconomics is concerned with:
A.
Aggregate economic activity
B.
C.
How to produce goods
D.
Answer: Option A
64.
Which of the following is not macroeconomics:
64.
A.
Inflation
B.
C.
The level of output in the

economy
D.
Answer: Option D
65.
A closed economy is best described as one in which:
A.
C.
B.
D.
There are no monopolies

No externalities
Answer: Option D
66.
In economics, one or more persons living in a joint family are called a:
A.
C.
B.
D.
Business firm
Super family
Answer: Option D
67.
The largest type of income in the Pakistan is:
A.
C.
Rental income
B.
D.
A.
Must be a democracy
B.
C.
Is that interacts with other

economies
D.
Compensation f employees
Answer: Option A
68.
An open economy:
Answer: Option C
69.
Which of the following is transfer payment:
A.
C.
Paument of college tuition fee

Payment of interest
B.
D.
Answer: Option B
70.
Which of the following is counted in GDP:
A.
Sale of used car
B.
C.
A TV set produced this year

but not sold
D.
Answer: Option C
71.
If government increases taxes, private savings:
A.
C.
Increase
Become negative
B.
D.
Answer: Option B
72.
If C = 200 and I = 40 then Y will equal to:
A.
C.
160 B.
200 D.
Answer: Option B
73.
Corporate tax is levied on:
A.
Landlords
B.
73.
C.
Joint stock companies
D.
Answer: Option C
74.
If we deduct direct taxes from personal income, we get
A.
C.
Net national income

Disposable income
B.
D.
Answer: Option C
75.
The largest part of national income goes to:
A.
C.
Consumption
Saving
B.
D.
Answer: Option A
76.
We measure national income by this method:
A.
C.
Expenditure method
Product method
B.
D.
Answer: Option D
77.
A.
C.
NNP = GNP - Depreciation
B.
NNP - DPI
Answer: Option A
78.
Transfer payments mean:
A.
Bank loans
B.
C.
Tax payments
D.
Answer: Option B
79.
Direct taxes are not included in:
A.
C.
NNP
DPI
B.
D.
Answer: Option C
80.
When national income is estimated by expenditure method, we include:
A.
All govt. expenditure
B.
C.
All expenditure of the business

D.
sector
Answer: Option D
81.
A.
Nationl Expenditure = National

B.
income
C.
Nationl Expenditure = National

D.
income + Taxes
Answer: Option A
82.
A.
National Income = National

expenditure - indirect taxes
B.
C.
NI = NNP - indirect taxes
D.
Answer: Option C
83.
There are methods of measuring national income:
A.
C.
Answer & Explanation
5 B.
1 D.
Answer: Option D
84.
If we compare GDP and GNP, then:
A.
GNP = GDP - net income from

abroad
B.
C.
GNP = NNP - net income from

abroad
D.
Answer: Option B
85.
It is deducted from GNP to get NNP:
A.
C.
Indirect taxes
Direct taxes
B.
D.
Answer: Option B
86.
It is added to GDP to get GNP
A.
C.
Depreciation allowance
Subsidies
B.
D.
Answer: Option D
87.
Select the correct statement:
A.
Transfer payment are included

in national income
B.
C.
Taxes are not included in NNP
D.
Answer: Option B
88.
Which is the largest figure:
A.
C.
NNP
DPI
B.
D.
Answer: Option B
89.
Which is a flow concept:
A.
C.
Number of my shirts
My monthly income
B.
D.
Answer: Option C
90.
To avoid double counting when GDP is estimated, economists:
90.
A.
C.
Answer: Option B
Use GDP deflator

Use retail prices
B.
D.
Identity
None of these
Income per head

Income per industrial unit
es are added, we achieve:

DPI
Per capita income
me because:
Double counting would result

There is no method to account for these
y to:
Add up all savings

Add up the value of semi finished goods
National savings increase
None of the above
Purchase of an old house
Both (a) & (b)
et:
Bonus of bank employees

Unemployment allowance paid by govt.
Greater than NNP
Any of (a), (b), (c)
Wages, rent, interest and profits

Wages, interest, salaries and income
A social security payment

Payment for a leased car
Purchase of 100 shares of PSO
The leisure people consume
Decrease
Will become zero
240
None of the above
Municipal corporations
Importers
Personal saving
Per capita income
Investment
Transfer payments
Income method
All of the above
NNP = NI
None of these
The payment without work

Payment made to all factors of production
PI
(a) and (c) of above
method, we include:
All households expenditure
All of the above
National Expenditure = National income + National

production
National Expenditure = National income - Taxes
NI = GNP - NNP
NI = PI
2
3
GNP = GDP + net income from abroad

GNP = NNP + net income from abroad
Depreciation
Transfer payments
Depreciation allowance is a part of GNP

GDP means Gross Direct Production
GNP
PI
My monthly income
Money supply
conomist:
Calculate value added at each stage of production
Use price only intermediate goods
e of:
Capital goods
Final goods
Direct taxes
Subsidies
Income received but not earned

None of the above
Total monetary transactions in an economy
Total spending in an economy
Al loan from one's parents

A broker's commission
ting refers to:
Counting currently produced goods more than once
Counting both goods and services
Gross Investment minus govt. Investment
None of the above
DPI plus unearned receipts

NI plus unearned receipts minus earnings not received
(taxes)
d in a country during a year is definition of:

NNP
Consumpt
Govt. bonds
All of the above
:
Payment for construction of state high way
Salary paid for the presidents secretary
Household's purchase of car
Household's purchase of stock in any XYZ corporation
Total exports minus total imports

Total exports divided by total imports
Sum of disposable personal income and saving
Total income earned in producing the national product
come:
Dividend payments
Interest received from saving certificates
Excluded from national income accounts

Included in PI but not in Disposable PI
Welfare benefits
All of the above
al income?
A reduction in government spending
An increase in exports
Payments made to factors of production

Total production of goods in a period
included:
Undistributed by firms
Old age pensions
There are never international transactions

Financial markets ensure that the federal govt.'s
budget is balanced annually
Less amount of gold

Less exports
Less amount of local currency

Less GNP per capita
College fee
Salary
Consumption and saving
All of the above
By adding all expenditure
By adding all money supply in the country
A loan from a domestic bank

None of the above
g:
Purchase of a running hotel

Increase in salaries of professors
Bouus paid to bank employees

Unemployment allowance paid by govt.
Greater than NNP

Greater in many years but less in others
Wages, rent, interest and profits

Wages, interest, salaries and income
Spending decisions of households

How to but stocks and bonds
Unemployment
Level of wages in garment industry
:
No corporations
No international trade
family are called a:

Social gathering
Household
Proprietors income
Corporate profits
Is one without taxes

Means world economy
Payment for social security

Payment for a leased car
Purchase of shares of PSO (company)
The leisure enjoyed by people
Decrease
Do not change
240
None of these
Municipal corporations
Importers
get
Personal saving
Percapita income
Investment
Transfer payment
Income method
Any of the above
NNP = NI
The payment without work

Payments made to all factors of production
PI
(a) and (c) of above
method, we include:
All household expenditure
All of the above
Nationl Expenditure = National income + National

savings
Nationl Expenditure = National income - Taxes
conomists:
NI = GNP - NNP
NI = PI
2
3
GNP = GDP + net income from abroad

GNP = NNP + net income from abroad
Depreciation
Transfer payment
Direct taxes
Net income from abroad
Depreciation allowance is a part of GNP

GDP means Gross Direct Production
GNP
PI
My total wealth
Money supply
Calculte value added at each stage of production

Use price of only intermediate goods

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.

Per capita income is:

Income per worker

Income per household

Transfer payments are not included in national income because:

Such payments are made to

They are illegal

To determine the correct level of GNP, it is necessary to:

Add up the values of goods

Count all imports

Real national income increases when:

Prices of goods are rising

Quantity of goods and

Salaries of college professors

It is considered as transfer payments:

Free medical care to officers

Less than NNP

The four factor payments are:

Money, capital, salaries, and

Money, power, prices, and

Payment of college tuition

Interest paid for a bank loan

Sale price of an old car

A TV set produced this year

If government increases taxes, private savings:

If C=200 and I = 40 then Y will equal to:

Corporate tax is levied on:

If we deduct direct tax from personal income, we get:

Net national income

The largest part of national income is:

We measure national income by this method:

Which statement is true?

NNP = GNP - Depreciation

Transfer payments means:

When National income is estimated by expenditure method, we include:

All govt. expenditure

All expenditure of the business

Which statement is true?

Which statement is true?

National Income = National

NI = NNP - indirect taxes

There are methods of measuring national income:

If we compare GDP and GNP, then:

GNP = GDP - net income from

GNP = NNP - net income from

It is deducted from GNP to get NNP:

Select the correct statements:

Transfer payments are

Taxes are not included in NNP

Which is the largest figure:

Which is a flow concept:

To avoid double counting when GDP is estimated, economist:

Use GDP deflator

A TV set purchased from a retail store is an example of:

It is deducted from GNP to find NNP:

Undistributed profits are considered:

Income earned but not

Income earned and received

Total sales in the economy

The market value of all goods

A loan from a bank

In terms of national income accounts, multiple counting refers to:

The addition to GNP of