National Income
Economics · 50 practice questions
Concepts of GNP, GDP, NI, NNP; national income measurement methods and their problems; uses and limitations of national income estimates; the circular flow of income (two- and three-sector models); consumption, investment and savings; the multiplier and its effects; elementary income determination.
- Identify the major concepts in national income and compare the different ways of measuring it.
- Examine their problems, uses and limitations.
- Interpret the circular flow of income.
- Calculate multipliers and evaluate their effects on equilibrium national income.
Try a few questions
- Practice question 1
If GDP is ₦580bn and net factor income from abroad (NFIA) is −₦20bn, GNP equals
- A.₦600bn
- B.₦580bn
- C.₦560bn
- D.₦540bn
Show the answer
C. ₦560bn
GNP = GDP + NFIA = 580 + (−20) = 560bn.
- Practice question 2
The investment multiplier shows how
- A.national income determines the price level
- B.exports always equal imports
- C.a change in investment leads to a greater change in national income
- D.government always balances its budget
Show the answer
C. a change in investment leads to a greater change in national income
The multiplier magnifies the effect of a change in investment on income.
- Practice question 3
If GNP is ₦560bn and depreciation is ₦40bn, Net National Product (NNP) equals
- A.₦600bn
- B.₦520bn
- C.₦560bn
- D.₦480bn
Show the answer
B. ₦520bn
NNP = GNP − depreciation = 560 − 40 = 520bn.
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