National Income | MCQs

Explanation

The total output produced in a country, including that from both domestic and foreign resources, is called Gross Domestic Product (GDP).

GDP represents the total market value of all final goods and services produced within a country's borders in a specific time period.

Explanation

Gross Domestic Product (GDP) is the most commonly used measure of economic activity in a country.

It reflecting the total value of goods and services produced within its borders.

It helps assess the economic health and growth of a nation.

Explanation

• The difference between Gross Value Added (GVA) and Net Value Added (NVA) is depreciation.
• Gross Value Added (GVA) represents the total value generated by a firm, industry, or sector, minus the value of intermediate goods used in production. It is essentially the value of output minus the value of intermediate goods.
• Net Value Added (NVA) is Gross Value Added minus depreciation. Depreciation accounts for the wear and tear of capital goods used in production, which reduces their value over time. So, NVA provides a measure of the net contribution to the economy after accounting for depreciation.

Explanation

To find consumption spending, we can use the GDP formula:

• GDP = Consumption (C) + Investment (I) + Government Spending (G) + Net Exports (NX)

Given:

• GDP = $100 billion
• Government Spending (G) = $20 billion
• Investment (I) = $10 billion
• Net Exports (NX) = -$5 billion (negative because it's an import)

We rearrange the formula to solve for consumption:

• Consumption (C) = GDP - (Investment + Government Spending + Net Exports)
• Substituting the given values:
• Consumption (C) = $100 billion - ($10 billion + $20 billion - $5 billion)
• = $100 billion - $25 billion = $75 billion.