National Income Accounting and Macro Basics MCQs 2026

Government final consumption expenditure is part of

1. A GDP (expenditure side) ✓
2. B only transfer payments ✓
3. C only NFIA ✓
4. D only capital consumption ✓

Final goods are those

1. A used only as raw materials ✓
2. B purchased for final use, not for further production in the same period ✓
3. C always imported ✓
4. D never consumed ✓

GDP does not directly measure

1. A market production of finals ✓
2. B government output (as measured) ✓
3. C welfare, leisure, inequality or environmental quality fully ✓
4. D exports of goods ✓

Constant-price series allow comparison of

1. A only money wages without deflation ✓
2. B output volumes over time ✓
3. C only exchange rates ✓
4. D only tax rates ✓

In circular flow with financial markets, household saving

1. A finances firms' investment (in a simple closed model) ✓
2. B is always equal to imports ✓
3. C destroys GDP by definition ✓
4. D equals depreciation only ✓

Mixed income of self-employed appears in

1. A only as a transfer ✓
2. B income-side national accounts ✓
3. C only as intermediate good ✓
4. D only as NFIA ✓

Which statement is correct

1. A GDP always exceeds GNP ✓
2. B GNP can exceed GDP if net factor income from abroad is positive ✓
3. C NNP ignores depreciation ✓
4. D DI equals GDP always ✓

Imputed rent of owner-occupied housing is

1. A included in GDP ✓
2. B always excluded ✓
3. C counted only in GNP abroad ✓
4. D a transfer payment ✓

GDP at market prices measures

1. A the market value of final goods and services produced within a country in a period ✓
2. B only intermediate goods ✓
3. C only government transfers ✓
4. D only overseas production by nationals ✓

GNP equals GDP

1. A minus depreciation only ✓
2. B plus intermediate consumption ✓
3. C minus exports ✓
4. D plus net factor income from abroad ✓

NNP at market prices equals

1. A GDP plus depreciation ✓
2. B GNP minus depreciation (capital consumption) ✓
3. C GNP plus taxes ✓
4. D GDP minus imports only ✓

National Income (NI) at factor cost is approximately

1. A NNP at market prices minus net indirect taxes ✓
2. B GDP plus transfers ✓
3. C GNP plus depreciation ✓
4. D PI plus corporate taxes only ✓

Personal income (PI) differs from national income mainly because of

1. A undistributed profits, corporate taxes, social security contributions and transfer payments ✓
2. B only depreciation ✓
3. C only exports ✓
4. D only intermediate goods ✓

Disposable income (DI) equals

1. A personal income minus personal direct taxes ✓
2. B GDP minus depreciation ✓
3. C GNP plus transfers ✓
4. D NI plus indirect taxes ✓

The three methods of measuring national income are

1. A only barter and credit ✓
2. B only tax and non-tax ✓
3. C only real and nominal without accounts ✓
4. D production (value added), income and expenditure ✓

Value added equals

1. A value of output minus value of intermediate consumption ✓
2. B total revenue plus transfers ✓
3. C wages minus rent ✓
4. D exports minus imports only ✓

Intermediate goods are excluded from GDP to avoid

1. A double counting ✓
2. B including all finals ✓
3. C measuring depreciation ✓
4. D recording exports ✓

Transfer payments are excluded from GDP because they

1. A are always illegal ✓
2. B do not correspond to current production of goods/services ✓
3. C equal exports ✓
4. D are intermediate goods ✓

Nominal GDP is measured at

1. A current year prices ✓
2. B base year prices only ✓
3. C factor cost only always ✓
4. D constant wages only ✓

Real GDP is measured at

1. A current prices only ✓
2. B foreign exchange rates only ✓
3. C constant (base year) prices ✓
4. D stock market prices ✓

The GDP deflator equals

1. A CPI only ✓
2. B PPI only ✓
3. C (Nominal GDP / Real GDP) × 100 ✓
4. D Real GDP / Nominal GDP without scaling ✓

Circular flow in a simple two-sector model shows

1. A only government taxation ✓
2. B households supply factors and buy goods; firms hire factors and sell goods ✓
3. C only foreign trade ✓
4. D only banks creating money ✓

In a four-sector open economy circular flow, injections include

1. A only saving ✓
2. B only taxes ✓
3. C investment, government spending and exports ✓
4. D only imports ✓

Leakages in the circular flow include

1. A investment only ✓
2. B saving, taxes and imports ✓
3. C exports only ✓
4. D government spending only ✓

NFIA (net factor income from abroad) is

1. A exports minus imports of goods only ✓
2. B remittances that are always transfers only ✓
3. C factor income received from abroad minus factor income paid abroad ✓
4. D depreciation abroad ✓

GDP at factor cost equals

1. A GNP plus depreciation ✓
2. B NNP plus indirect taxes always ✓
3. C PI minus DI ✓
4. D GDP at market prices minus net indirect taxes ✓

Which is NOT included in GDP

1. A newly produced car ✓
2. B sale of a used car (pure second-hand sale) ✓
3. C government purchase of new equipment ✓
4. D exports of new textiles ✓

Net exports equal

1. A exports minus imports ✓
2. B imports minus exports ✓
3. C GNP minus GDP ✓
4. D DI minus C ✓

Base year in real GDP calculations is the year whose

1. A population is ignored ✓
2. B currency is demonetized ✓
3. C exports are zero ✓
4. D prices are used to value output in other years ✓

Per capita GDP equals

1. A GNP minus NFIA ✓
2. B NI plus depreciation ✓
3. C DI times MPC ✓
4. D GDP divided by population ✓

Green GDP attempts to adjust conventional GDP for

1. A only military spending ✓
2. B only stock prices ✓
3. C environmental degradation and resource depletion ✓
4. D only remittances ✓

The expenditure approach to GDP sums

1. A only wages and rent ✓
2. B only value added in agriculture ✓
3. C only tax revenue ✓
4. D C + I + G + (X − M) ✓

The income approach sums

1. A only consumer spending ✓
2. B only exports ✓
3. C wages, rent, interest, profits (and adjustments) ✓
4. D only intermediate inputs ✓

Gross investment minus depreciation equals

1. A net investment ✓
2. B GDP ✓
3. C NFIA ✓
4. D personal saving only ✓

Inventory investment is

1. A purchase of shares only ✓
2. B government transfers ✓
3. C interest on bonds only ✓
4. D change in stocks of unsold goods ✓

Underground (black) economy activities are

1. A fully captured always ✓
2. B often under-reported in official GDP ✓
3. C identical to NFIA ✓
4. D equal to DI ✓

Purchasing power parity (PPP) comparisons adjust for

1. A only nominal exchange rates without prices ✓
2. B only population age ✓
3. C differences in price levels across countries ✓
4. D only interest rates ✓

NDP equals

1. A GDP plus NFIA ✓
2. B GNP minus exports ✓
3. C PI minus taxes ✓
4. D GDP minus depreciation ✓

Market price includes

1. A only factor costs ✓
2. B indirect taxes (net of subsidies) in the valuation of output ✓
3. C only transfer incomes ✓
4. D only illegal rents ✓

Double counting is avoided in the production method by

1. A adding all intermediate sales fully ✓
2. B ignoring final goods ✓
3. C using value added at each stage ✓
4. D counting only imports ✓

In an open economy, GDP differs from domestic absorption partly due to

1. A net exports ✓
2. B only wages ✓
3. C only rent ✓
4. D only depreciation definitions ✓

Real per capita income growth requires

1. A only nominal GDP rising with inflation ✓
2. B real GDP rising faster than population (ceteris paribus) ✓
3. C population rising faster always ✓
4. D zero investment ✓

Capital gains on existing assets are

1. A always added to GDP fully ✓
2. B equal to depreciation ✓
3. C identical to NFIA ✓
4. D generally not counted as part of current GDP ✓

Social security contributions by employers are part of

1. A pure transfer with no NI link ever ✓
2. B only intermediate consumption ✓
3. C only exports ✓
4. D national income accounting of labour costs / affect PI adjustments ✓

The identity S = I in a closed economy without government holds in

1. A only planned terms always ✓
2. B open economy with NX ✓
3. C ex post national accounts (including unintended inventory changes) ✓
4. D barter without money only ✓

Nominal GDP can rise even if real output is unchanged when

1. A population falls only ✓
2. B imports rise only ✓
3. C the price level rises ✓
4. D base year changes without prices ✓

Chain-weighted real GDP methods are used to

1. A eliminate all price indices ✓
2. B ignore substitution ✓
3. C reduce bias from fixed base-year relative prices ✓
4. D count only agriculture ✓

Factor cost valuation is preferred for some welfare comparisons because it

1. A includes all transfers ✓
2. B removes distortions from indirect taxes and subsidies ✓
3. C equals stock market cap ✓
4. D ignores wages ✓

Remittances from Pakistanis abroad that are current transfers

1. A always equal GDP ✓
2. B are intermediate goods ✓
3. C are depreciation ✓
4. D raise GNI/GNP-related measures via NFIA/transfers but are not GDP from domestic production ✓

Statistical discrepancy in national accounts arises because

1. A GDP definitions are meaningless ✓
2. B only one method exists ✓
3. C prices are constant forever ✓
4. D independent methods do not match perfectly in practice ✓