National Income Overview
52 Questions
0 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What does national income measure?

  • The total population of a country
  • The national debt of a country
  • The overall wealth distribution among citizens
  • The total value of final goods and services produced in a year (correct)

    • Which of the following best describes saving?

  • Income set aside for future needs (correct)
  • Government expenditure
  • Investment in capital assets
  • Money spent on immediate consumption

    • What is the primary focus of economic growth?

  • Distribution of wealth
  • Increase in real national income (correct)
  • Reduction in unemployment rates
  • Improvement in quality of life

    • What does cyclical unemployment refer to?

    <p>Unemployment linked to economic cycles of inflation and depression</p> Signup and view all the answers

    Which option is part of macroeconomics?

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

    How is economic development primarily measured?

    <p>Through agricultural productivity and quality of life</p> Signup and view all the answers

    Which of the following statements is true about economic growth?

    <p>Economic growth can occur without economic development</p> Signup and view all the answers

    What characterizes inflation?

    <p>A continuous rise in the general price level</p> Signup and view all the answers

    What does Kenneth Boulding define microeconomics as?

    <p>The study of individual firms, households, and markets</p> Signup and view all the answers

    Which of the following best describes the concept of 'want' in economics?

    <p>A feeling of lack of satisfaction prompting an individual to seek fulfillment</p> Signup and view all the answers

    Which characteristic of wants implies they continue to increase once satisfied?

    <p>Wants are infinite</p> Signup and view all the answers

    How do wants differ according to age?

    <p>Wants change based on life stages and experiences</p> Signup and view all the answers

    What influences consumer wants according to cultural differences?

    <p>Cultural norms and values</p> Signup and view all the answers

    What distinguishes natural sciences from social sciences?

    <p>Natural sciences are universally acceptable and tested in controlled conditions.</p> Signup and view all the answers

    What does 'Arthashastra' refer to in Kautilya's teachings?

    <p>A treatise on political economy</p> Signup and view all the answers

    Which thinker is known for the wealth-oriented definition of economics?

    <p>Adam Smith</p> Signup and view all the answers

    Why is economics referred to as the 'Queen of Social Sciences'?

    <p>It encompasses various aspects of human behavior related to wealth.</p> Signup and view all the answers

    What does Robbins' scarcity-oriented definition emphasize?

    <p>Limited resources and unlimited wants</p> Signup and view all the answers

    Which statement best relates to social sciences?

    <p>Social sciences focus on abstract aspects of human behavior.</p> Signup and view all the answers

    What is one key focus of Kautilya's economic views?

    <p>Creation of wealth for state welfare</p> Signup and view all the answers

    Which of the following best describes the nature of social science as compared to natural science?

    <p>Social sciences study human behavior, which is often unpredictable.</p> Signup and view all the answers

    What are economic wants?

    <p>Wants that require a monetary transaction</p> Signup and view all the answers

    Which of the following is classified as a luxury?

    <p>Well-furnished house</p> Signup and view all the answers

    Which of these represents a 'free good'?

    <p>Water in a river</p> Signup and view all the answers

    What does utility refer to in economics?

    <p>The capacity to satisfy human wants</p> Signup and view all the answers

    What is Adam Smith's definition of economics primarily focused on?

    <p>Science of wealth and capital accumulation</p> Signup and view all the answers

    Which statement best describes the water-diamond paradox?

    <p>Some commodities can have a high value-in-use but low exchange value.</p> Signup and view all the answers

    What does personal disposable income (PDI) refer to?

    <p>Income after taxes have been deducted</p> Signup and view all the answers

    According to Lionel Robbins, what is a characteristic of human wants?

    <p>They are unlimited and gradable by priority.</p> Signup and view all the answers

    What aspect does Alfred Marshall's definition of economics emphasize?

    <p>The study of ordinary man and behavioral science</p> Signup and view all the answers

    Which of the following best describes a good in economics?

    <p>Something that satisfies human wants and has material existence</p> Signup and view all the answers

    What characterizes wealth in economic terms?

    <p>Anything with market value that can be exchanged for money</p> Signup and view all the answers

    What do the terms Micro and Macro Economics originate from?

    <p>Greek words meaning 'small' and 'large'</p> Signup and view all the answers

    Who coined the terms Micro Economics and Macro Economics?

    <p>Sir Ragnar Frisch</p> Signup and view all the answers

    What characteristic of a commodity refers to its ability to satisfy human wants?

    <p>Utility</p> Signup and view all the answers

    Which type of income is characterized by stability over time?

    <p>Fixed Income</p> Signup and view all the answers

    What is Personal Disposable Income (PDI)?

    <p>Income after paying direct taxes</p> Signup and view all the answers

    Which of the following best describes residual income?

    <p>Income left after paying all production costs</p> Signup and view all the answers

    What distinguishes earned income from unearned income?

    <p>Earned income requires participation in production</p> Signup and view all the answers

    Which economic activity involves the actual selling of goods?

    <p>Exchange</p> Signup and view all the answers

    What is the essence of scarcity in the context of wealth?

    <p>Limited availability increases value</p> Signup and view all the answers

    In terms of income classification, which type refers to gains from lottery winnings?

    <p>Unearned Income</p> Signup and view all the answers

    What are the four factors of production?

    <p>Land, Labour, Capital, Entrepreneur</p> Signup and view all the answers

    What type of reward does land earn in productive activity?

    <p>Rent</p> Signup and view all the answers

    Which factor of production is defined as the human effort put into the production process?

    <p>Labour</p> Signup and view all the answers

    What is the main reward for capital in the production process?

    <p>Interest</p> Signup and view all the answers

    Which of the following is NOT a part of macro-economics?

    <p>Individual Prices</p> Signup and view all the answers

    What is defined as the division of factor rewards among different segments of society?

    <p>Distribution</p> Signup and view all the answers

    What does macro-economics primarily study?

    <p>National Income and Output</p> Signup and view all the answers

    Which term refers to making use of goods and services to satisfy human wants?

    <p>Consumption</p> Signup and view all the answers

    According to Kenneth Boulding, what does macro-economics deal with?

    <p>Aggregates of Quantities</p> Signup and view all the answers

    What is the total income of a country known as?

    <p>National Income</p> Signup and view all the answers

    Study Notes

    National Income

    • National income represents the total monetary value of all final goods and services produced within a nation's economy over a year.
    • Savings are defined as income set aside for future needs, which involves foregoing current consumption.
    • Investment involves the creation of capital assets through mobilization of savings, such as machinery and equipment.
    • Trade cycles denote fluctuations in business activity, characterized by inflation (ups) and depression (downs).
    • Economic growth signifies a quantitative increase in real national income over time.
    • Economic development includes qualitative progress reflecting improvements in education, health, and overall well-being.

    Economic Growth vs. Economic Development

    • Economic growth focuses on the increase in national income; economic development incorporates broader dimensions affecting people's quality of life.
    • Economic growth is a narrow, unidimensional, and reversible concept, while economic development is broader, multi-dimensional, and irreversible.
    • Economic growth can occur without development; however, development cannot occur in the absence of growth.

    Introduction to Economics

    • Economics is classified as a social science, derived from the Greek term "Oikonomia," which means household management.
    • It examines how humans satisfy unlimited wants with limited resources.

    Types of Economic Systems

    • Major systems include capitalism, socialism, and mixed economies.

    Kautilya's Economic Perspective

    • Kautilya emphasized the significance of the state in wealth acquisition and governance.
    • He authored the "Arthashastra," a foundational text on political economy.

    Definitions of Economics

    • Adam Smith: Economics is a "science of wealth," advocating for non-interventionism and emphasizing capital accumulation.
    • Lionel Robbins: Economics examines the relationship between unlimited wants and limited resources with alternate uses.
    • Alfred Marshall: Economics studies individual and social actions relevant to material well-being.

    Classification of Wants

    • Economic wants require monetary expenditure (food, medicine), while non-economic wants can be satisfied without money (air, sunshine).
    • Wants can be individual (personal needs) or collective (social needs) and vary with age, gender, season, and culture.

    Goods and Services

    • Goods have material existence and fulfill wants (e.g., chalk); services fulfill wants immaterially (e.g., teaching).
    • Utility refers to a commodity's ability to satisfy human wants.

    Value

    • Value in use refers to the usefulness of a commodity, while value in exchange pertains to its worth in monetary terms.

    Water-Diamond Paradox

    • Highlights the disparity between high value-in-use commodities like water and high exchange value items like diamonds.

    Wealth Characteristics

    • For a commodity to be classified as wealth, it must possess utility, be scarce, transferable, and external.

    Income Types

    • Fixed income remains stable (rent, wages); fluctuating income varies (profits); monetary income is in cash; real income reflects purchasing power.

    Economic Activities

    • Production involves creating utility through factors of production: land, labor, capital, and entrepreneurship.
    • Distribution involves dividing income among society's segments based on production factors.
    • Exchange denotes monetary transactions, while consumption refers to the use of goods and services.

    Macro-Economics

    • Focuses on aggregates, including total employment, national income, and general price levels, studying overall economic performance.
    • Kenneth Boulding described macroeconomics as analyzing national scales rather than individual components.

    Summary

    • This compilation of economic principles, definitions, and characteristics emphasizes the systematic understanding of wealth, income, and the various facets of economics as a behavioral science.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    This quiz covers the fundamental concepts of national income, including its definition, measurement, and key components. It explains the significance of savings and how it impacts the overall economy. Test your understanding of these essential economic principles.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser