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Exam 7: Measuring Domestic Output and National Income

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Question 91

Multiple Choice

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Which of the following is the smallest dollar amount in the United States?

A) disposable income
B) personal income
C) gross domestic product
D) national income

E) C) and D)
F) B) and D)

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Question 92

Multiple Choice

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Assume that in year 1, an economy's nominal GDP was $350 billion and in year 2, it was $375 billion. Based on this information, we

A) cannot make a meaningful comparison of the economy's performance in year 1 relative to year 2.
B) can conclude that the economy was achieving real economic growth.
C) can conclude that real GDP was higher in year 1 than in year 2.
D) can conclude that real GDP was lower in year 1 than in year 2.

E) A) and B)
F) A) and C)

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Question 93

Multiple Choice

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An economy is enlarging its stock of capital goods

$\begin{array} { | c | c | c | } \hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \\\hline 1 & 3 & \$ 3 \\\hline 2 & 4 & 4 \\\hline 3 & 6 & 5 \\\hline 4 & 7 & 7 \\\hline 5 & 8 & 8 \\\hline\end{array}$ Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a ?ve-year period are shown in the table. The price index for year 1 is

Economy A: gross investment equals depreciation Economy B: depreciation exceeds gross investment Economy C: gross investment exceeds depreciation Other things equal, the information suggests that the production capacity in economy

Net exports is a positive number when

$\begin{array} { | l | c | } \hline \text { Personal Taxes } & \$ 40 \\\hline \text { Social Security Contributions } & 15 \\\hline \text { Taxes on Production and Imports } & 20 \\\hline \text { Corporate Income Taxes } & 40 \\\hline \text { Transfer Payments } & 22 \\\hline \text { U.S. Exports } & 24 \\\hline \text { Undistributed Corporate Profits } & 35 \\\hline \text { Government Purchases } & 90 \\\hline \text { Gross Private Domestic Investment } & 75 \\\hline \text { U.S. Imports } & 22 \\\hline \text { Personal Consumption Expenditures } & 250 \\\hline \text { Consumption of Fixed Capital (depreciation) } & 25 \\\hline \text { Net Foreign Factor Income } & 10 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data (all ?gures in billions of dollars) . PI is

$\begin{array} { | l | r | } \hline \text { Gross Investment } & \$ 18 \\\hline \text { National Income } & 100 \\\hline \text { Net Exports } & 2 \\\hline \text { Personal Income } & 85 \\\hline \text { Personal Consumption Expenditures } & 70 \\\hline \text { Saving } & 5 \\\hline \text { Government Purchases } & 20 \\\hline \text { Net Domestic Product } & 105 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data (all ?gures in billions of dollars) . Consumption of ?xed capital (depreciation) is

Suppose that inventories were $80 billion in year 1 and $70 billion in year 2. For year 2, national income accountants would

$\begin{array} { | l | r | } \hline \text { Disposable Income } & \$ 200 \\\hline \text { Net Private Domestic Investment } & 40 \\\hline \text { US Imports } & 15 \\\hline \text { National Income } & 300 \\\hline \text { Personal Taxes } & 31 \\\hline \text { Net Exports } & 9 \\\hline \text { Gross Private Domestic Investment } & 55 \\\hline \text { Net Foreign Factor Income } & 10 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying national income data (in billions of dollars) . In these data, U.S. GDP is

$\begin{array} { | l | c | } \hline \text { Gross Private Domestic Investment } & \$ 46 \\\hline \text { Exports of the U.S. } & 9 \\\hline \text { Disposable Income } & 190 \\\hline \text { Personal Saving } & 10 \\\hline \text { Government Purchases } & 84 \\\hline \text { Net Foreign Factor Income } & 10 \\\hline \text { Consumption of Fixed Capital } & 52 \\\hline \text { Dividends } & 13 \\\hline \text { Imports of the U.S. } & 12 \\\hline \text { Taxes on Production and Imports } & 22 \\\hline \text { Personal Taxes } & 38 \\\hline \text { Social Security Contributions } & 23 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data. All ?gures are in billions of dollars. Personal income is

$\begin{array} { | c | c | c | } \hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \\\hline 1 & 20 & \$ 4 \\\hline 2 & 25 & 4 \\\hline 3 & 30 & 6 \\\hline\end{array}$ Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen as the base year, the price index for year 1 is

Gross domestic private investment, as defined in national income accounts, would include the following, except

In 2017, the three largest economies in the world were (listed in order, from largest)

Which of the following is a private transfer payment?

Exports are subtracted from imports in calculating U.S. GDP because exports are not available for domestic consumption.

Real GDP is

Personal income usually exceeds disposable income.

If depreciation exceeds gross investment,

Net exports are negative when