4 Questions
Which method is used to calculate national income by summing the total value added at each stage of production?
Product method
Which economist named his most influential work 'An Enquiry into the Nature and Cause of the Wealth of Nations'?
Adam Smith
Which price index is used to measure the average level of prices of all new domestically produced final goods and services in an economy?
GDP deflator
In the circular flow of income, which sector represents the households and firms purchasing goods and services?
Household sector
Study Notes
Calculating National Income
- The value-added method is used to calculate national income by summing the total value added at each stage of production.
Influential Economist and Work
- Adam Smith is the economist who named his most influential work 'An Enquiry into the Nature and Cause of the Wealth of Nations'.
Price Index
- The GDP Deflator is the price index used to measure the average level of prices of all new domestically produced final goods and services in an economy.
Circular Flow of Income
- The household sector represents households and firms purchasing goods and services in the circular flow of income.
Test your understanding of national income accounting with this quiz. Explore the fundamental concepts of aggregate income, sectors of the economy, and different ways to calculate national income.
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