Chapter 6: National Income Basics
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Questions and Answers

Which of the following best describes economic activities?

  • Activities producing goods and services exchanged in market transactions (correct)
  • Activities producing goods and services with no monetary value
  • Activities producing goods with no market value
  • Activities producing services exchanged through barter

    • What is the key characteristic of non-economic activities?

  • They produce goods and services with monetary value
  • They are exchanged in market transactions
  • They involve barter transactions
  • They do not command any market value (correct)

    • Why is it important to express national income in monetary terms?

  • To compare goods and services produced in different countries
  • To avoid double counting and measure the total value of production accurately (correct)
  • To exclude all non-economic activities from the calculation
  • To show the value of intermediate goods used in production

    • What type of goods are included in the calculation of national income?

    <p>Only final goods and services, excluding intermediate products</p> Signup and view all the answers

    How do intermediate goods differ from final goods?

    <p>Final goods are used as input into further stages of production</p> Signup and view all the answers

    Why is it important to exclude intermediate goods from national income calculation?

    <p>To avoid overestimating the total production value</p> Signup and view all the answers

    Which statement accurately defines national income?

    <p>$1000 + $1500 + $100000</p> Signup and view all the answers

    What happens if intermediate products are included in the calculation of national income?

    <p>National income will be understated</p> Signup and view all the answers

    "Which of the following is NOT a reason why National Income is expressed in monetary terms?"

    <p>To count all goods and services produced during a year only once</p> Signup and view all the answers

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