Question 1

The dollar value of output for an economy must always equal the dollar value of income.

Accepted Answer

A) True 
 B)False

Question 2

What are transfer payments,and how do they make their way into the GDP calculation?

Accepted Answer

Transfer payments are payments to indivi...

Question 3

When we calculate GDP,government spending on goods and services makes up approximately

Accepted Answer

A)  One-fifth of total output.
B)  One-half of total output.
C)  One-tenth of total output.
D)  One-third of total output.E) C) and D)
F) A) and B)

Question 4

The increase in the market value of a good at a particular stage of production is known as

Accepted Answer

A)  Profit.
B)  Value added.
C)  Cost based accounting.
D)  The input price.E) A) and B)
F) None of the above

Question 5

Value added is the

Accepted Answer

A)  Addition to GDP because nonmarket activities are captured.
B)  Increase in market value of a product that takes place at each stage of the production process.
C)  Difference between nominal GDP and real GDP.
D)  Impact on third parties caused by market activities.E) A) and B)
F) A) and C)

Question 6

Exports are

Accepted Answer

A)  Goods and services sold to international buyers.
B)  Not included in GDP.
C)  Goods and services produced by the public sector.
D)  Goods and services purchased from foreign sources.E) A) and B)
F) A) and C)

Question 7

Table 5.1 National Income Accounts (dollar figures are in billions) 
  Expenditures for consumer goods and services $4,565 Exports $740 Government purchases of goods and services $1,465 Social Security taxes $510 Net investment $225 Indirect business taxes $520 Imports $825 Gross investment $865 Corporate income taxes $185 Personal incometaxes $750 Corporateretained earnings $45 Net foreign factor income $20 Govermment transfer payments to households $690 Net interest payments to households $0\begin{array}{|l|r|}\hline 	ext { Expenditures for consumer goods and services } & \$ 4,565 \\hline 	ext { Exports } & \$ 740 \\hline 	ext { Government purchases of goods and services } & \$ 1,465 \\hline 	ext { Social Security taxes } & \$ 510 \\hline	ext { Net investment } & \$ 225 \\hline	ext { Indirect business taxes } & \$ 520 \\hline	ext { Imports } & \$ 825 \\hline 	ext { Gross investment } & \$ 865 \\hline 	ext { Corporate income taxes } & \$ 185 \\hline 	ext { Personal incometaxes } & \$ 750 \\hline 	ext { Corporateretained earnings } & \$ 45 \\hline	ext { Net foreign factor income } & \$ 20 \\hline 	ext { Govermment transfer payments to households } & \$ 690 \\hline 	ext { Net interest payments to households } & \$ 0 \\hline\end{array} Expenditures for consumer goods and services  Exports  Government purchases of goods and services  Social Security taxes  Net investment  Indirect business taxes  Imports  Gross investment  Corporate income taxes  Personal incometaxes  Corporateretained earnings  Net foreign factor income  Govermment transfer payments to households  Net interest payments to households ​$4,565$740$1,465$510$225$520$825$865$185$750$45$20$690$0​​

On the basis of Table 5.1,personal saving is

Accepted Answer

A)  $5,620 billion.
B)  $5,790 billion.
C)  $6,530 billion.
D)  $6,445 billion. E) C) and D)
F) B) and D)

Question 8

Gross investment is the

Accepted Answer

A)  Total investment expenditure in a given time period.
B)  Consumption of capital in the production process.
C)  Wearing out of plant and equipment.
D)  Alternative combinations of final goods and services that can be produced with all available resources and technology.E) All of the above
F) None of the above

Question 9

Real GDP is more accurate than nominal GDP in making comparisons of output over time because

Accepted Answer

A)  Nominal GDP may change simply because of price changes over time.
B)  Real GDP is not affected by output changes.
C)  Nominal GDP is the hypothetical output that would be produced at full employment.
D)  Real GDP is not affected by changes in productivity or the size of the labor force.E) A) and D)
F) None of the above

Question 10

Without foreign trade,the dollars used to buy goods and services are included in the circular flow as consumption,investment,and government spending.

Accepted Answer

A) True 
 B)False

Question 11

National income is a measure of

Accepted Answer

A)  How well the economy is doing on a gross basis.
B)  The income earned by the factors of production in producing GDP.
C)  The income received by the factors of production plus depreciation.
D)  The country's future productive capacity.E) A) and C)
F) B) and C)

Question 12

Table 5.3 National Income Accounts (dollar figures are in billions) 
  Expenditures for consumer poods and services $8,200 Exports $1,700 Government purchases of poods and services $2,500 Docial Security taxes $1,900 Net irvestment $1,400 Indirect business taxes $1,400 Irnoorts $1,900 Gross irvestment $1,800 Corporate income taxes $600 Personal income taxes $1,500 Corporateretained earnings $130 Net foreipn factor income $100 Government transfer payments to households $1600 Net interest paynnents to households $500\begin{array} {| l | r| } \hline 	ext { Expenditures for consumer poods and services } & \$ 8,200 \\hline 	ext { Exports } & \$ 1,700 \\hline 	ext { Government purchases of poods and services } & \$ 2,500 \\hline 	ext { Docial Security taxes } & \$ 1,900 \\hline 	ext { Net irvestment } & \$ 1,400 \\hline 	ext { Indirect business taxes } & \$ 1,400 \\hline 	ext { Irnoorts } & \$ 1,900 \\hline 	ext { Gross irvestment } & \$ 1,800 \\hline 	ext { Corporate income taxes } & \$ 600 \\hline 	ext { Personal income taxes } & \$ 1,500 \\hline 	ext { Corporateretained earnings } & \$ 130 \\hline 	ext { Net foreipn factor income } & \$ 100 \\hline 	ext { Government transfer payments to households } & \$ 1600 \\hline 	ext { Net interest paynnents to households } & \$ 500 \\hline\end{array} Expenditures for consumer poods and services  Exports  Government purchases of poods and services  Docial Security taxes  Net irvestment  Indirect business taxes  Irnoorts  Gross irvestment  Corporate income taxes  Personal income taxes  Corporateretained earnings  Net foreipn factor income  Government transfer payments to households  Net interest paynnents to households ​$8,200$1,700$2,500$1,900$1,400$1,400$1,900$1,800$600$1,500$130$100$1600$500​​ 
 On the basis of Table 5.3,the value of the income aggregate that is defined as "the amount of output we could consume without reducing our stock of capital" (also known as the net domestic product) is

Accepted Answer

A)  $10,700 billion.
B)  $12,400 billion.
C)  $12,300 billion.
D)  $11,900 billion. E) B) and C)
F) All of the above

Question 13

In the U.S.GDP,imports

Accepted Answer

A)  Include smuggled goods.
B)  Include black-market goods.
C)  Are the total of U.S.goods sent abroad.
D)  Are goods purchased from foreign sources.E) None of the above
F) All of the above

Question 14

The value of total output must equal the value of total income in an economy for all of the following reasons except

Accepted Answer

A)  One person's expenditures on goods and services is another person's income.
B)  Income earned is spent on goods and services,which creates additional production.
C)  For the circular nature of spending and income in the economy.
D)  Government expenditures must equal government revenues.E) All of the above
F) A) and B)

Question 15

Suppose Blu-Ray players cost consumers $300 and Blu-Ray disks cost consumers $30.What contribution does the production of 250 Blu-Ray players and 3,000 Blu-Ray disks make to the GDP?

Accepted Answer

A)  $75,000.
B)  $165,000.
C)  $90,000.
D)  $125,000.E) All of the above
F) A) and B)

Question 16

According to the hypothetical economy in Figure 5.2,real GDP differs from nominal GDP from 1980 to 2000 because

Accepted Answer

A)  Price level increases caused real GDP to increase.
B)  Population growth exceeded output growth.
C)  Inflation caused the dollar value of output to decrease.
D)  Inflation caused the dollar value of output to increase.E) B) and D)
F) All of the above

Question 17

If real GDP falls from one period to another and the price level stays the same,we can conclude that

Accepted Answer

A)  Nominal GDP increased.
B)  Inflation increased.
C)  Nominal GDP also decreased.
D)  NDP also decreased.E) B) and C)
F) None of the above

Question 18

When we calculate GDP,imports are

Accepted Answer

A)  Subtracted from total spending because they are part of another country's GDP.
B)  Added to exports because both represent purchases of final goods.
C)  Subtracted from exports to obtain gross exports.
D)  Subtracted from exports and included in gross investment.E) A) and D)
F) A) and C)

Question 19

A nation's GDP can be calculated as

Accepted Answer

A)  The sum of value added and intermediate goods.
B)  The total value added at all stages of production.
C)  NI plus depreciation.
D)  PI plus depreciation.E) B) and C)
F) C) and D)

Question 20

Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions.

Accepted Answer

A) True 
 B)False

Exam 5: National Income Accounting

Correct Answer
verified

A nation's GDP can be calculated as

Correct Answer
verified

When we calculate GDP,imports are

Correct Answer
verified

The value of total output must equal the value of total income in an economy for all of the following reasons except

Correct Answer
verified

Exports are

Correct Answer
verified

If real GDP falls from one period to another and the price level stays the same,we can conclude that

Correct Answer
verified

Gross investment is the

Correct Answer
verified

Without foreign trade,the dollars used to buy goods and services are included in the circular flow as consumption,investment,and government spending.

Correct Answer
verified

Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions.

Correct Answer
verified

Correct Answer
verified

National income is a measure of

Correct Answer
verified

When we calculate GDP,government spending on goods and services makes up approximately

Correct Answer
verified

Suppose Blu-Ray players cost consumers $300 and Blu-Ray disks cost consumers $30.What contribution does the production of 250 Blu-Ray players and 3,000 Blu-Ray disks make to the GDP?

Correct Answer
verified

According to the hypothetical economy in Figure 5.2,real GDP differs from nominal GDP from 1980 to 2000 because

Correct Answer
verified

The dollar value of output for an economy must always equal the dollar value of income.

Correct Answer
verified

Real GDP is more accurate than nominal GDP in making comparisons of output over time because

Correct Answer
verified

Value added is the

Correct Answer
verified

In the U.S.GDP,imports

Correct Answer
verified

The increase in the market value of a good at a particular stage of production is known as

Correct Answer
verified

What are transfer payments,and how do they make their way into the GDP calculation?

Correct Answer
verified
Transfer payments are payments to indivi...
View Answer

Exam 5: National Income Accounting

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A nation's GDP can be calculated as

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When we calculate GDP,imports are

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The value of total output must equal the value of total income in an economy for all of the following reasons except

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Exports are

Correct AnswerverifiedShow Answer

If real GDP falls from one period to another and the price level stays the same,we can conclude that

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Gross investment is the

Correct AnswerverifiedShow Answer

Without foreign trade,the dollars used to buy goods and services are included in the circular flow as consumption,investment,and government spending.

Correct AnswerverifiedShow Answer

Nominal GDP is not used to determine recessions because inflation can disguise the occurrence of recessions.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

National income is a measure of

Correct AnswerverifiedShow Answer

When we calculate GDP,government spending on goods and services makes up approximately

Correct AnswerverifiedShow Answer

Suppose Blu-Ray players cost consumers $300 and Blu-Ray disks cost consumers $30.What contribution does the production of 250 Blu-Ray players and 3,000 Blu-Ray disks make to the GDP?

Correct AnswerverifiedShow Answer

According to the hypothetical economy in Figure 5.2,real GDP differs from nominal GDP from 1980 to 2000 because

Correct AnswerverifiedShow Answer

The dollar value of output for an economy must always equal the dollar value of income.

Correct AnswerverifiedShow Answer

Real GDP is more accurate than nominal GDP in making comparisons of output over time because

Correct AnswerverifiedShow Answer

Value added is the

Correct AnswerverifiedShow Answer

In the U.S.GDP,imports

Correct AnswerverifiedShow Answer

The increase in the market value of a good at a particular stage of production is known as

Correct AnswerverifiedShow Answer

What are transfer payments,and how do they make their way into the GDP calculation?

Correct AnswerverifiedTransfer payments are payments to indivi...View AnswerShow Answer

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Transfer payments are payments to indivi...
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