Question 1

The amount of new output produced per year for both consumption and additions to capital stock is measured by:

Accepted Answer

A)   GDP
B)   Net investment
C)   NDP
D)   Net exportsE) C) and D)
F) A) and B)

Question 2

That portion of corporate profits which is included in personal income is:

Accepted Answer

A)   Dividends
B)   Corporate income taxes
C)   Consumption of fixed capital
D)   Undistributed corporate profitsE) A) and B)
F) All of the above

Question 3

Gordon is a person who sells narcotics "on the street." This type of illegal activity:

Accepted Answer

A)   Would be considered double counting in calculating GDP
B)   Is estimated and included in GDP figures
C)   Is excluded from GDP figures
D)   Causes GDP to be overstatedE) A) 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

Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year.  Refer to the above data. If year 2 is the base year, then the percentage increase in real GDP from year 2 to year 4 is:

Accepted Answer

A)   40 percent
B)   60 percent
C)   80 percent
D)   100 percentE) C) and D)
F) A) and C)

Question 6

(The following national income data for an economy are in billions of dollars.)   Refer to the above data. Corporate profits are equal to:

Accepted Answer

A)   $442 billion
B)   $532 billion
C)   $621 billion
D)   $788 billionE) A) and C)
F) B) and D)

Question 7

Refer to the graph above. Which of the following statements is correct on the basis of the information shown?

Accepted Answer

A)   Real GDP must be deflated in each year after 2000 to determine nominal GDP
B)   Nominal GDP must be inflated in each year since 2000 to determine real GDP
C)   Nominal GDP must be deflated in each year before 2000 to determine real GDP
D)   Nominal GDP must be inflated in each year before 2000 to determine real GDPE) A) and B)
F) A) and C)

Question 8

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 GDPE) B) and C)
F) B) and D)

Question 9

The National Income and Product Accounts (NIPA)  for the U.S. are compiled by the:

Accepted Answer

A)   National Bureau of Economic Research
B)   Bureau of Economic Analysis
C)   National Census Bureau
D)   Council of Economic AdvisersE) B) and C)
F) A) and D)

Question 10

National income (NI) is estimated as the sum of four categories of income (wages, rent, interest, profits) plus taxes on production and imports.

Accepted Answer

A) True 
 B)False

Question 11

Refer to the above table. Nominal GDP rises faster than real GDP between years:

Accepted Answer

A)   1 and 2
B)   2 and 4
C)   4 and 5
D)   5 and 6E) A) and B)
F) A) and D)

Question 12

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 bankE) B) and D)
F) B) and C)

Question 13

"Corporate profits" in the national income accounts consists of the following, except:

Accepted Answer

A)   Retained earnings
B)   Interest
C)   Dividends
D)   Corporate income taxesE) All of the above
F) A) and B)

Question 14

Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year.  Refer to the above data. If year 2 is the base year, then Real GDP in year 5 is:

Accepted Answer

A)   $120
B)   $90
C)   $60
D)   $30E) A) and C)
F) A) and B)

Question 15

The value of a price index in the base year is always 100.

Accepted Answer

A) True 
 B)False

Question 16

Most activities in the so-called underground economy are illegal activities involving drugs or gambling, for example.

Accepted Answer

A) True 
 B)False

Question 17

The GDP deflator or price index equals:

Accepted Answer

A)   Gross private domestic investment less the consumption of fixed capital
B)   Gross national product less net foreign factor income earned in the United States
C)   Nominal GDP divided by real GDP
D)   Real GDP divided by nominal GDPE) A) and B)
F) All of the above

Question 18

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 investmentE) B) and C)
F) A) and D)

Question 19

Which of the following government agencies estimates and compiles the U.S. GDP accounts?

Accepted Answer

A)   The American Economic Association
B)   The Federal Reserve System
C)   The Bureau of Economic Analysis
D)   The Internal Revenue ServiceE) A) and D)
F) B) and C)

Question 20

In an economy, the value of inventories was $75 billion in 2009 and $63 billion in 2010. In calculating total investment for 2010, national income accountants would:

Accepted Answer

A)   Decrease it by $75 billion
B)   Increase it by $63 billion
C)   Decrease it by $12 billion
D)   Increase it by $138 billionE) A) and B)
F) A) and C)

Exam 7: Measuring Domestic Output and National Income

Most activities in the so-called underground economy are illegal activities involving drugs or gambling, for example.

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

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The GDP deflator or price index equals:

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Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Refer to the above data. If year 2 is the base year, then Real GDP in year 5 is:

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National income (NI) is estimated as the sum of four categories of income (wages, rent, interest, profits) plus taxes on production and imports.

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Refer to the above table. Nominal GDP rises faster than real GDP between years:

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

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

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Which of the following government agencies estimates and compiles the U.S. GDP accounts?

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Gordon is a person who sells narcotics "on the street." This type of illegal activity:

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That portion of corporate profits which is included in personal income is:

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"Corporate profits" in the national income accounts consists of the following, except:

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In an economy, the value of inventories was $75 billion in 2009 and $63 billion in 2010. In calculating total investment for 2010, national income accountants would:

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

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The National Income and Product Accounts (NIPA) for the U.S. are compiled by the:

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Refer to the graph above. Which of the following statements is correct on the basis of the information shown?

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The value of a price index in the base year is always 100.

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Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Refer to the above data. If year 2 is the base year, then the percentage increase in real GDP from year 2 to year 4 is:

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The amount of new output produced per year for both consumption and additions to capital stock is measured by:

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(The following national income data for an economy are in billions of dollars.) Refer to the above data. Corporate profits are equal to:

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