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Exam 26: Measuring Domestic Output and National Income

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Question 61

True/False

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Disposable income measures the before-tax income received by resource suppliers.

A) True
B) False

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Question 62

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Answer the question on the basis of the following information: $\begin{array}{c}\begin{array}{c}\\\underline{\text { Year }} \\1 \\2 \\3 \\4 \\5\end{array}\begin{array}{c}\text { Nominal}\\\underline{\text { GDP } }\\ \$ 550 \\560 \\576 \\586 \\604\end{array}\begin{array}{c}\text { Price}\\\underline{\text { Index}}\\140 \\135 \\120 \\117 \\108\end{array}\end{array}$ The economy above has experienced a:

A) declining nominal GDP.
B) rising price level.
C) declining real GDP.
D) rising real GDP.

E) None of the above
F) A) and B)

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Question 63

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An economy is enlarging its stock of capital goods:

The GDP tends to:

Government purchases include government spending on:

In calculating the GDP,national income accountants:

Answer the question on the basis of the following national income data for the economy.All figures are in billions of dollars. $\begin{array} { l r } \text { Personal Consumption Expenditures } & \$ 400 \\\text { Government Purchases } & 128 \\\text { Gross Private Domestic Investment } & 88 \\\text { Net Exports } & 7 \\\text { Net Foreign Factor Income } & 0 \\\text { Consumption of Fixed Capital } & 43 \\\text { Taxes on Production and Imports } & 50 \\\text { Compensation of Employees } & 369 \\\text { Rents } & 12 \\\text { Interest } & 15 \\\text { Proprietors' Income } & 52 \\\text { Corporate Income Taxes } & 36 \\\text { Dividends } & 24 \\\text { Undistributed Corporate Profits } & 22 \\\text { Statistical Discrepancy } & 0\end{array}$ Refer to the data.Disposable income:

Answer the question on the basis of the following data.All figures are in billions of dollars. $\begin{array} { l r } \text { Gross Investment } & \$ 18 \\\text { National Income } & 100 \\\text { Net Exports } & 2 \\\text { Personal Income } & 85 \\\text { Personal Consumption Expenditures } & 70 \\\text { Saving } & 5 \\\text { Government Purchases } & 20 \\\text { Net Domestic Product } & 105 \\\text { Statistical Discrepancy } & 0\end{array}$ Refer to the data.Disposable income is:

If in some year gross investment was $120 billion and net investment was $65 billion,then in that year the country's capital stock:

Nominal GDP is adjusted for price changes through the use of:

Assume an economy that makes only one product and that year 3 is the base year.Output and price data for a five-year period are as follows.Answer the question on the basis of these data. $\begin{array}{c}\begin{array}{c}\\\underline{\text { Year }} \\1 \\2 \\3 \\4 \\5\end{array}\begin{array}{c}\text { Units of}\\\underline{\text { Output}}\\3 \\4 \\6 \\7 \\8\end{array}\begin{array}{c}\text { Price Per } \\\underline{\text { Unit } }\\ \$ 3 \\4 \\5 \\7 \\8\end{array}\end{array}$ Refer to the data.Real GDP for year 5 is:

In 1933,net private domestic investment was a minus $6.0 billion.This means that:

Suppose a nation's 2010 nominal GDP was $972 billion and the general price index was 90.To make the 2010 GDP comparable with the base year GDP,the 2010 GDP must be:

Net exports are negative when:

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

In the treatment of U.S.exports and imports,national income accountants:

Answer the question on the basis of the following data.All figures are in billions of dollars. $\begin{array}{llcc} \text { Gross Private Domestic Investment} & \$46 \\ \text { Exports of the U.S. } &9\\ \text {Disposable Income } &190\\ \text { Personal Saving } &10\\ \text {Government Purchases } &84\\ \text { Net Foreign Factor Income } &10\\ \text { Consumption of Fixed Capital } &52 \\ \text {Dividends } &13\\ \text { Imports of the U.S.} &12\\ \text {Taxes on Production and Imports } &22\\ \text { Personal Taxes} &38\\ \text {Social Security Contributions } &23\\ \text { Statistical Discrepancy} &0\end{array}$ Refer to the data.The gross domestic product is:

The ZZZ Corporation issued $25 million in new common stock in 2013.It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result,investment:

In national income accounting,government purchases include:

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: