National Income and Related Aggregates MCQ — Class 12

Test your understanding of National Income and Related Aggregates with 20 free questions across Easy and Moderate. Hard and Extreme require Premium. Choose a level in the interactive quiz to answer questions and review explanations.

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Key concepts to revise

Final goods

Final goods: goods and services purchased for final use and not for resale or further production in the accounting period

Intermediate goods

Intermediate goods: goods and services used as inputs for producing other goods or for resale during the accounting period

Stock and flow distinction

Stock and flow distinction: a stock is measured at a point of time while a flow is measured over a period of time

Depreciation

Depreciation: the fall in value of fixed capital due to normal wear and tear, expected obsolescence or accidental damage within the accounting treatment

Circular flow of income

Circular flow of income: the continuous movement of production, income and expenditure between producing units and households in the simplified economy

Value added method

Value added method: a national-income method that adds value added by producing units and avoids double counting of intermediate goods

Income method

Income method: a national-income method that adds factor incomes generated in production such as compensation, rent, interest and profit as applicable

Expenditure method

Expenditure method: a national-income method that totals final expenditure on domestically produced final goods and services using the prescribed components

Domestic–national conversion

Domestic–national conversion: national aggregates are obtained from corresponding domestic aggregates by adding net factor income from abroad

Gross, net, market-price and real-value checks

Gross, net, market-price and real-value checks: gross-to-net conversion subtracts depreciation, market-price-to-factor-cost conversion adjusts net indirect taxes where prescribed, and real GDP removes price-change effects from nominal GDP

Try these sample MCQs

1. Which concept best matches this situation? A household buys a refrigerator for use at home.

  1. Intermediate goods
  2. Final goods
  3. Depreciation
  4. Income method
Check answer and explanation

Final goods. Final goods: goods and services purchased for final use and not for resale or further production in the accounting period

2. Which concept best matches this situation? A bakery purchases flour to make bread for sale.

  1. Stock and flow distinction
  2. Circular flow of income
  3. Intermediate goods
  4. Expenditure method
Check answer and explanation

Intermediate goods. Intermediate goods: goods and services used as inputs for producing other goods or for resale during the accounting period

3. Which concept best matches this situation? Wealth on 31 March is a stock, while income earned during the year is a flow.

  1. Depreciation
  2. Value added method
  3. Domestic–national conversion
  4. Stock and flow distinction
Check answer and explanation

Stock and flow distinction. Stock and flow distinction: a stock is measured at a point of time while a flow is measured over a period of time

After the quiz

Write down the concepts you missed. Explain each one in your own words, give an example, and attempt the level again without notes. A high score on a short quiz does not replace revision of the whole chapter.

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