National income Revision Questions and Answers

1. Outline four reasons why an increase in per capita income may not necessarily lead to a rise
in the standard of living of the citizens
2. State four factors that affect the circular flow of income in an economy
3. Identify four factors that may be contributing to income disparity between the rich and poor
citizens in Kenya
4. Account for the difference between the gross National Income figures between Kenya
and Uganda
5. Name three approaches for measuring national income
6. Highlight four problems associated with income approach
7. Highlight four problems associated with the output approach in computation of National income
8. Highlight four uses of National Income statistics in any given country
9. Outline four circumstances under which per capita income would be a good indicator

20. NATIONAL INCOME
1. Explain five uses of national income statistics to an economy
2. The gap between the rich and the poor is so wide In Kenya. Highlight five factors that
contribute to this disparity in income distribution.
3. Explain five limitations of using per capita income as a measure of the standard of living
in a country
4. Outline five problems that are encountered in measuring National income in your country
5. (a) Explain five limitations of using per capita income to compare living standards of people
in different Countries
(b) High national income may not necessarily mean better welfare for the citizens of
that country. Explain five reasons to support this argument

7. a) A newly industrialized country with a population of 40 million people, had its national
income estimates during the year 2009 as follows:
Value in Kshs (million)
Exports 250000
Consumption expenditure 624000
Investment 300000
Government spending 416000
Imports 210000
Depreciation 10000
Net indirect taxes 50000
Required:
a) (i) Calculate the GNP per capital of the country
ii) Outline limitations of using GNP pr capita in measuring the standard of living of accounts
b) Discuss five problems that are encountered in measuring National income in your country.

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