Question 1

If inflows to the capital stock are greater than outflows, then

Accepted Answer

A)  net investment is positive.
B)  net investment is negative.
C)  depreciation equals gross investment.
D)  depreciation is greater than gross investment.E) A) and B)
F) A) and C)

Question 2

If gross investment is positive, it means that firm (or the economy) must be expanding.

Accepted Answer

A) True 
 B)False

Question 3

Disinvestment occurs when

Accepted Answer

A)  businesses sell machinery and equipment to one another.
B)  the prices of investment goods rise faster than the prices of consumer goods.
C)  businesses have larger inventories at the end of the year than they had at the start.
D)  the consumption of private fixed capital exceeds gross private domestic investment.E) A) and D)
F) B) and C)

Question 4

The total amount of income earned by U.S.resource suppliers in a year, plus taxes on production and imports, is measured by

Accepted Answer

A)  gross domestic product.
B)  national income.
C)  personal income.
D)  disposable income.E) B) and C)
F) A) and D)

Question 5

If net foreign factor income is zero and there are no statistical discrepancies, the sum of national income and the consumption of fixed capital equals

Accepted Answer

A)  disposable income.
B)  personal income.
C)  net domestic product.
D)  gross domestic product.E) A) and B)
F) A) and C)

Question 6

(Consider This)  When making a capital stock and reservoir analogy, the

Accepted Answer

A)  outflow below the dam is the stock of capital.
B)  inflow from the river is gross investment.
C)  level of water in the reservoir is depreciation.
D)  level of water in the reservoir is net investment.E) All of the above
F) A) and B)

Question 7

GDP does not include which of the following activities?

Accepted Answer

A)  businesses installing anti-pollution equipment
B)  households spending to enhance security of their neighborhoods
C)  couples remodeling their own homes
D)  families eating out in restaurantsE) A) and D)
F) C) and D)

Question 8

The fact that nominal GDP has risen faster than real GDP

Accepted Answer

A)  suggests that the base year of the GDP price index has been shifted.
B)  tells us nothing about what has happened to the price level.
C)  suggests that the general price level has fallen.
D)  suggests that the general price level has risen.E) A) and C)
F) C) and D)

Question 9

In an economy that is experiencing a shrinking production capacity,

Accepted Answer

A)  gross domestic investment is negative.
B)  net private domestic investment is zero.
C)  depreciation is negative.
D)  depreciation exceeds gross investment.E) C) and D)
F) A) and C)

Question 10

Real GDP measures

Accepted Answer

A)  current output at current prices.
B)  current output at base year prices.
C)  base year output at current prices.
D)  base year output at current exchange rates.E) All of the above
F) C) and D)

Question 11

Which of the following best defines national income?

Accepted Answer

A)  income received by households less personal taxes
B)  the before-tax income received by households
C)  incomes earned by U.S.resource suppliers plus taxes on production and imports
D)  the market value of the annual output net of consumption of fixed capitalE) B) and D)
F) B) and C)

Question 12

The "underground economy" is mostly made up of

Accepted Answer

A)  unpaid work.
B)  illegal activities.
C)  do-it-yourself activities.
D)  tax-evasion activities.E) C) and D)
F) A) and C)

Question 13

GDP is the market value of

Accepted Answer

A)  resources (land, labor, capital, and entrepreneurship)  in an economy in a given year.
B)  all final goods and services produced in an economy in a given year.
C)  consumption and investment spending in an economy in a given year.
D)  all output produced and accumulated over the years.E) A) and C)
F) A) and B)

Question 14

All expenditures on new construction are included as investment in calculating GDP.

Accepted Answer

A) True 
 B)False

Question 15

If the price index is rising over a period of time, then the real GDP in years

Accepted Answer

A)  prior to the base year will be larger than the nominal GDP.
B)  prior to the base year will be less than the nominal GDP.
C)  after the base year will be higher than the nominal GDP.
D)  after the base year will be rising faster than the nominal GDP.E) C) and D)
F) A) and B)

Question 16

The statistic called Gross Output (GO) is bigger than GDP, because GO sums up the values in all stages of a productive economy, whereas GDP accounts only for the final stage.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following do national income accountants consider to be investment?

Accepted Answer

A)  the purchase of an automobile for private, nonbusiness use
B)  the purchase of a new house
C)  the purchase of corporate bonds
D)  the purchase of gold coinsE) A) and C)
F) A) and B)

Question 18

Interest on the public debt is included as a part of government purchases in determining GDP by the expenditures method.

Accepted Answer

A) True 
 B)False

Question 19

Nominal GDP has generally risen more rapidly than real GDP since World War II in the United States, suggesting that

Accepted Answer

A)  the general price level has declined.
B)  the general price level has increased.
C)  productivity has increased substantially.
D)  world trade has increased.E) A) and B)
F) A) and C)

Question 20

Gross private domestic investment can be divided into replacement investment and net investment.

Accepted Answer

A) True 
 B)False

Exam 27: Measuring Domestic Output and National Income

If net foreign factor income is zero and there are no statistical discrepancies, the sum of national income and the consumption of fixed capital equals

Correct AnswerverifiedShow Answer

Nominal GDP has generally risen more rapidly than real GDP since World War II in the United States, suggesting that

Correct AnswerverifiedShow Answer

(Consider This) When making a capital stock and reservoir analogy, the

Correct AnswerverifiedShow Answer

The "underground economy" is mostly made up of

Correct AnswerverifiedShow Answer

Disinvestment occurs when

Correct AnswerverifiedShow Answer

Gross private domestic investment can be divided into replacement investment and net investment.

Correct AnswerverifiedShow Answer

If inflows to the capital stock are greater than outflows, then

Correct AnswerverifiedShow Answer

All expenditures on new construction are included as investment in calculating GDP.

Correct AnswerverifiedShow Answer

Which of the following best defines national income?

Correct AnswerverifiedShow Answer

The total amount of income earned by U.S.resource suppliers in a year, plus taxes on production and imports, is measured by

Correct AnswerverifiedShow Answer

Real GDP measures

Correct AnswerverifiedShow Answer

GDP is the market value of

Correct AnswerverifiedShow Answer

The statistic called Gross Output (GO) is bigger than GDP, because GO sums up the values in all stages of a productive economy, whereas GDP accounts only for the final stage.

Correct AnswerverifiedShow Answer

Interest on the public debt is included as a part of government purchases in determining GDP by the expenditures method.

Correct AnswerverifiedShow Answer

The fact that nominal GDP has risen faster than real GDP

Correct AnswerverifiedShow Answer

In an economy that is experiencing a shrinking production capacity,

Correct AnswerverifiedShow Answer

Which of the following do national income accountants consider to be investment?

Correct AnswerverifiedShow Answer

GDP does not include which of the following activities?

Correct AnswerverifiedShow Answer

If the price index is rising over a period of time, then the real GDP in years

Correct AnswerverifiedShow Answer

If gross investment is positive, it means that firm (or the economy) must be expanding.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified