Question 1

National income measures

Accepted Answer

A)  nominal GDP after it has been inflated or deflated for changes in the value of the dollar.
B)  the after-tax income of resource suppliers.
C)  the total of all sources of private income plus government revenue from taxes on production and imports.
D)  the amount of wage, rent, interest, and profits income actually received by households.E) B) and D)
F) All of the above

Question 2

Computation of GDP by the expenditures method would include the purchase of

Accepted Answer

A)  fertilizer by a farmer.
B)  cement by a construction company.
C)  land by the U.S.Department of Interior.
D)  government bonds by a commercial bank.E) C) and D)
F) A) and C)

Question 3

GDP tends to overstate economic well-being because it takes into account

Accepted Answer

A)  improvements in product quality over time.
B)  expenditures undertaken to correct pollution.
C)  illegal activities of individuals and businesses.
D)  nonmarket activities, such as the productive work of homemakers.E) B) and C)
F) A) and B)

Question 4

Which of the following represents an income flow in the circular flow of domestic output and national income?

Accepted Answer

A)  net exports
B)  investment expenditures
C)  government purchases
D)  corporate profitsE) A) and B)
F) All of the above

Question 5

What is the difference between national income and personal income?

Accepted Answer

A)  personal taxes
B)  National income includes income earned both in the United States and abroad, while personal income only includes that income earned within the borders of the United States.
C)  National income represents before-tax income, while personal income measures how much is available for spending after all taxes have been subtracted.
D)  National income represents income earned by American-owned resources, while personal income measures received income, whether earned or unearned.E) C) and D)
F) B) and D)

Question 6

The value of a sale of a share of stock is considered to be an investment in national income accounting.

Accepted Answer

A) True 
 B)False

Question 7

The largest expenditure component of GDP is

Accepted Answer

A)  government purchases.
B)  personal consumption expenditures.
C)  gross private domestic investment.
D)  net exports.E) A) and B)
F) B) and D)

Question 8

Value added by a firm is the market value of the firm's output minus the

Accepted Answer

A)  total wages paid to its employees.
B)  value of inputs bought from other firms.
C)  profits that the firm's owners earn.
D)  total costs of all inputs used.E) B) and D)
F) A) and D)

Question 9

In national income accounting, the consumption category of expenditures includes purchases of

Accepted Answer

A)  both new and used consumer goods.
B)  automobiles for personal use but not houses.
C)  consumer durable and nondurable goods but not services.
D)  consumer nondurable goods and services but not consumer durable goods.E) A) and B)
F) None of the above

Question 10

Which of the following is a private transfer payment?

Accepted Answer

A)  unemployment benefits received by newly laid-off workers
B)  the sale of used clothing at a thrift store
C)  the Social Security benefits paid to a retired worker
D)  a check for $250 sent by a parent to a daughter at collegeE) A) and D)
F) B) and D)

Question 11

GDP estimates account for which of the following items?

Accepted Answer

A)  do-it-yourself activities
B)  "psychic income" people derive from their work
C)  household spending for health and home insurance
D)  improvements in product qualityE) B) and D)
F) A) and D)

Question 12

The value added in an industry includes the wages earned by workers in the industry.

Accepted Answer

A) True 
 B)False

Question 13

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity.

Accepted Answer

A) True 
 B)False

Question 14

U.S.GDP in 2015 was about

Accepted Answer

A)  $8 trillion.
B)  $18 trillion.
C)  $890 billion.
D)  $30 trillion.E) A) and D)
F) None of the above

Question 15

The value of transactions in the underground economy is estimated to be about what percentage of GDP in the United States?

Accepted Answer

A)  2 percent
B)  8 percent
C)  19 percent
D)  25 percentE) A) and B)
F) None of the above

Question 16

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050) , personal consumption expenditures ($4,800) , imports ($370) , exports ($240) , and gross private domestic investment ($1,130) .Personal consumption expenditures are approximately what percentage of this economy?

Accepted Answer

A)  60 percent
B)  65 percent
C)  70 percent
D)  75 percentE) All of the above
F) A) and D)

Question 17

Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion.GDP in year 2 is

Accepted Answer

A)  $180 billion.
B)  $190 billion.
C)  $200 billion.
D)  $210 billion.E) A) and C)
F) A) and B)

Question 18

Real GDP is

Accepted Answer

A)  the nominal value of all goods and services produced in the economy.
B)  the nominal value of all goods and services produced in the domestic economy, corrected for inflation or deflation.
C)  that aggregate output that is produced when the economy is operating at full employment.
D)  always greater than nominal GDP.E) None of the above
F) A) and C)

Question 19

The expenditures or output approach to GDP measures it by summing up

Accepted Answer

A)  compensation of employees, rents, interest, dividends, undistributed corporate profits, proprietors' income, indirect business taxes paid, consumption of fixed capital, and net foreign factor income earned in the United States.
B)  compensation of employees, rents, interest, dividends, corporate profits, proprietors' income, and indirect business taxes, and subtracting the consumption of fixed capital.
C)  the total spending for consumption, investment, net exports, and government purchases.
D)  the total spending for consumption and government purchases, but subtracting public and private transfer payments.E) A) and D)
F) A) and C)

Question 20

One year nominal GDP was $286 billion and the price index was 88.Real GDP that year was

Accepted Answer

A)  $252 billion.
B)  $325 billion.
C)  $308 billion.
D)  $262 billion.E) All of the above
F) None of the above

Exam 27: Measuring Domestic Output and National Income

Which of the following represents an income flow in the circular flow of domestic output and national income?

Correct Answer
verified

The value of transactions in the underground economy is estimated to be about what percentage of GDP in the United States?

Correct Answer
verified

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity.

Correct Answer
verified

Computation of GDP by the expenditures method would include the purchase of

Correct Answer
verified

One year nominal GDP was $286 billion and the price index was 88.Real GDP that year was

Correct Answer
verified

The largest expenditure component of GDP is

Correct Answer
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In national income accounting, the consumption category of expenditures includes purchases of

Correct Answer
verified

The expenditures or output approach to GDP measures it by summing up

Correct Answer
verified

What is the difference between national income and personal income?

Correct Answer
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Correct Answer
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Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion.GDP in year 2 is

Correct Answer
verified

The value of a sale of a share of stock is considered to be an investment in national income accounting.

Correct Answer
verified

Value added by a firm is the market value of the firm's output minus the

Correct Answer
verified

Real GDP is

Correct Answer
verified

GDP estimates account for which of the following items?

Correct Answer
verified

GDP tends to overstate economic well-being because it takes into account

Correct Answer
verified

U.S.GDP in 2015 was about

Correct Answer
verified

Which of the following is a private transfer payment?

Correct Answer
verified

National income measures

Correct Answer
verified

The value added in an industry includes the wages earned by workers in the industry.

Correct Answer
verified

Exam 27: Measuring Domestic Output and National Income

Which of the following represents an income flow in the circular flow of domestic output and national income?

Correct AnswerverifiedShow Answer

The value of transactions in the underground economy is estimated to be about what percentage of GDP in the United States?

Correct AnswerverifiedShow Answer

Gross private domestic investment exceeds depreciation in an economy that experiences expanding production capacity.

Correct AnswerverifiedShow Answer

Computation of GDP by the expenditures method would include the purchase of

Correct AnswerverifiedShow Answer

One year nominal GDP was $286 billion and the price index was 88.Real GDP that year was

Correct AnswerverifiedShow Answer

The largest expenditure component of GDP is

Correct AnswerverifiedShow Answer

In national income accounting, the consumption category of expenditures includes purchases of

Correct AnswerverifiedShow Answer

The expenditures or output approach to GDP measures it by summing up

Correct AnswerverifiedShow Answer

What is the difference between national income and personal income?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion.GDP in year 2 is

Correct AnswerverifiedShow Answer

The value of a sale of a share of stock is considered to be an investment in national income accounting.

Correct AnswerverifiedShow Answer

Value added by a firm is the market value of the firm's output minus the

Correct AnswerverifiedShow Answer

Real GDP is

Correct AnswerverifiedShow Answer

GDP estimates account for which of the following items?

Correct AnswerverifiedShow Answer

GDP tends to overstate economic well-being because it takes into account

Correct AnswerverifiedShow Answer

U.S.GDP in 2015 was about

Correct AnswerverifiedShow Answer

Which of the following is a private transfer payment?

Correct AnswerverifiedShow Answer

National income measures

Correct AnswerverifiedShow Answer

The value added in an industry includes the wages earned by workers in the industry.

Correct AnswerverifiedShow Answer

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