Question

. The difference between expenditure and income approach to measure GDP resides in:

A) Expenditure approach address the question “Who gets income”, while income approach “Who purchases GDP”

B) Expenditure approach counts compensation of employees, rents, interest, proprietor’s income and corporate profit, while income approach counts consumption, investment, government spending and net export

C) From the spending side 70% of national income is paid in wages and benefits, while from income side 72% consists of consumer expenditures

D) The expenditure approach values goods at market prices and measures gross product, while income approach values goods at factor cost and measure net product, the difference being amount of indirect taxes (sales taxes) and subsidies.

Many economists consider that the critical factor for economic fluctuations during the business cycle is:

1. Innovations and resulted changes in labor productivity
2. Changes in the level of consumer spending
3. Monetary policy
4. Financial imbalances  

What is the difference between unemployment rate and labor force participation rate:

1. Unemployment rate is the percentage of unemployed in the total population, while labor force participation is the percentage of unemployed in working age population
2. Unemployment rate is the number of people employed in labor force, while labor force participation is the number of employed and unemployed in total population
3. The unemployment rate is the number of people employed and unemployed in labor force, while labor force participation is number of people under 16 years, in jail, hospital, college divide by working age population
4. Unemployment rate is the percentage of people in labor force who are unemployed, while labor force participation rate is the percentage of working age population who are members of labor force

Which of the following formulas is used to calculate the inflation rate?

A) inflation rate = 100 ×

B) inflation rate = 100 ×

C) Inflation rate = 100 ×

D) Inflation rate = 100 ×

Answer 1

1)D....... because, the income method of calculating national income takes into account the income generated from the basic factors of production such as land, labor, capital, and entrepreneurship. While expenditure method focuses on the expenditure involved in the production of goods and services.

2)A..

3)D......... unemployment rate(UR) is the proportion of labour force who are currently unemployed and formula is UR= Unemployed/ labour force. Labour force participation rate is nothing but proportion of people who are employed are seeking employment or looking for employment as a percentage of non institutionalised working age population.

4) inflation rate is equal to 100* ( current year inflation- previous year inflation)/ previous year inflation