Podcast
Questions and Answers
Which of the following is a challenge in estimating national income?
Which of the following is a challenge in estimating national income?
What part of the Rs. 60,000 sale proceeds from a used car will be included in national income?
What part of the Rs. 60,000 sale proceeds from a used car will be included in national income?
How are fees paid to real estate agents treated in national income calculation?
How are fees paid to real estate agents treated in national income calculation?
How should electricity sold to a consumer household be treated in national income calculation?
How should electricity sold to a consumer household be treated in national income calculation?
Signup and view all the answers
What is the classification of electricity sold to a steel plant in national income calculation?
What is the classification of electricity sold to a steel plant in national income calculation?
Signup and view all the answers
Which statement accurately describes transfer payments in national income estimation?
Which statement accurately describes transfer payments in national income estimation?
Signup and view all the answers
How are economic activities from used goods generally treated in national income?
How are economic activities from used goods generally treated in national income?
Signup and view all the answers
Which of the following scenarios affects national income calculations?
Which of the following scenarios affects national income calculations?
Signup and view all the answers
Study Notes
Problems in Estimating National Income
- Lack of an agreed definition of national income complicates calculations.
- Difficulty in distinguishing between final goods and intermediate goods affects accuracy.
- Transfer payments pose challenges as they do not contribute to production.
Sale of Used Goods
- Sale proceeds from a used car (e.g., Rs. 60,000) are not included in national income.
- Used goods represent a transfer of existing assets, previously accounted for in national income when produced.
Transactions in National Income Calculation
- Fees for real estate agents and lawyers are included in national income as they represent current production.
- Excluded transactions are those that do not represent current production.
Electricity Sales to Consumers
- Electricity sold to consumers is treated as a final good and does not require further processing.
- Once sold, electricity becomes part of the active economic flow and is included in national income.
Electricity Sales to Industry
- Electricity sold to steel plants is categorized as an intermediate good.
- Intermediate goods are not included in national income calculations as they are part of the production process.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
Test your understanding with multiple-choice questions from Chapter 1 of the Economics syllabus. Focus on key concepts such as national income estimation and transactions affecting national accounts. Assess your knowledge on important topics in this foundational chapter.
