Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Adding the market value of all final and intermediate goods and services in an economy in a given year would result in:

Accepted Answer

A)   The calculation of GDP for that year
B)   The calculation of NDP for that year
C)   An amount less than GDP for that year
D)   An amount greater than GDP for that yearE) B) and C)
F) C) and D)

Question 3

Personal income will equal disposable income when:

Accepted Answer

A)   Corporate profits are zero
B)   Personal taxes are zero
C)   Transfer payments are zero
D)   Social Security contributions are zeroE) A) and B)
F) A) and C)

Question 4

"Net foreign factor income" in the national income accounts refers to the difference between:

Accepted Answer

A)   The income Americans gain from supplying resources abroad and the income that foreigners earn by supplying resources in the U.S.
B)   The value of products sold by Americans to other nations and the value of products bought by Americans from other nations
C)   The value of investments that Americans made abroad and the value of investments made by foreigners in the U.S.
D)   The income earned by Americans in the U.S. minus the income earned by foreigners in the U.S.E) None of the above
F) B) and C)

Question 5

The gross domestic product (GDP)  concept accounts for society's valuation of the relative worth of goods and services by using:

Accepted Answer

A)   A measure of physical weight
B)   A measure of volume
C)   A utility measure
D)   A monetary measureE) B) and D)
F) C) and D)

Question 6

Consider the following data for a firm over a period of time. The contribution of the firm to domestic output by the value-added method is:

Accepted Answer

A)   $5,000
B)   $40,000
C)   $45,000
D)   $50,000E) None of the above
F) A) and C)

Question 7

(The following national income statistics are in billions of dollars.)   Refer to the above data. Net domestic product is:

Accepted Answer

A)   $400 billion
B)   $442 billion
C)   $483 billion
D)   $517 billionE) A) and B)
F) A) and C)

Question 8

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

Accepted Answer

A)   -$155 billion
B)   $288 billion
C)   -$424 billion
D)   $1483 billionE) A) and C)
F) C) and D)

Question 9

In the expenditures approach of national income accounting, C, Ig, and G include expenditures for:

Accepted Answer

A)   Domestically produced goods and services only
B)   Domestically produced as well as imported goods and services
C)   Exported goods and services
D)   The private sector of the economy onlyE) C) and D)
F) B) and D)

Question 10

Value added by a firm is the market value of the firm's output minus the:

Accepted Answer

A)   Total wages paid to its employees
B)   Value of inputs bought from other firms
C)   Profits that the firm's owners earn
D)   Total costs of all inputs usedE) C) and D)
F) A) and B)

Question 11

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

Accepted Answer

A)   Changes to business inventories
B)   All domestic construction done by the private sector
C)   Government construction of new highways and dams
D)   The value of all capital goods bought by business firmsE) B) and D)
F) B) and C)

Question 12

If real GDP in a year was $3,668 billion and the price index was 112, then nominal GDP in that year was approximately:

Accepted Answer

A)   $3,846 billion
B)   $3,925 billion
C)   $4,108 billion
D)   $4,379 billionE) A) and B)
F) A) and C)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

Refer to the above table. If output increases by 8% from Year 5 to Year 6, then in that period:

Accepted Answer

A)   Real GDP will rise faster than nominal GDP
B)   Real GDP will rise slower than nominal GDP
C)   Nominal GDP will decrease
D)   Real GDP will decreaseE) B) and C)
F) All of the above

Question 15

(The following national income statistics are in billions of dollars.)   Refer to the above data. Personal income is:

Accepted Answer

A)   $483 billion
B)   $376 billion
C)   $372 billion
D)   $317 billionE) A) and C)
F) A) and B)

Question 16

(The following national income data for an economy are in billions of dollars.)   Refer to the above data. The expenditures approach to GDP calculation can be done by adding:

Accepted Answer

A)   1 through 7
B)   2 through 7
C)   8 through 11
D)   8 through 13E) A) and D)
F) None of the above

Question 17

The consumption of fixed capital in each year's production is called:

Accepted Answer

A)   Indirect business taxes
B)   Inventory reduction
C)   Depreciation
D)   Net investmentE) A) and B)
F) C) and D)

Question 18

The following are incomes earned but not received by the nation's households, except:

Accepted Answer

A)   Corporate income taxes
B)   Social security contribution
C)   Transfer payments
D)   Undistributed corporate profitsE) None of the above
F) All of the above

Question 19

GDP measured using current prices is called:

Accepted Answer

A)   Nominal GDP
B)   Real GDP
C)   Constant GDP
D)   Deflated GDPE) A) and D)
F) All of the above

Question 20

Nominal GDP differs from real GDP because:

Accepted Answer

A)   Nominal GDP is based on constant prices
B)   Real GDP is based on current prices
C)   Real GDP results from adjusting for changes in the price level
D)   Nominal GDP results from adjusting for changes in the price levelE) A) and B)
F) None of the above

Exam 7: Measuring Domestic Output and National Income

Value added by a firm is the market value of the firm's output minus the:

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(The following national income statistics are in billions of dollars.) Refer to the above data. Net domestic product is:

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The gross domestic product (GDP) concept accounts for society's valuation of the relative worth of goods and services by using:

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"Net foreign factor income" in the national income accounts refers to the difference between:

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

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(The following national income statistics are in billions of dollars.) Refer to the above data. Personal income is:

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Adding the market value of all final and intermediate goods and services in an economy in a given year would result in:

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Refer to the above table. If output increases by 8% from Year 5 to Year 6, then in that period:

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

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(The following national income data for an economy are in billions of dollars.) Refer to the above data. The expenditures approach to GDP calculation can be done by adding:

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Personal income will equal disposable income when:

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If real GDP in a year was $3,668 billion and the price index was 112, then nominal GDP in that year was approximately:

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

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The following are incomes earned but not received by the nation's households, except:

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In the expenditures approach of national income accounting, C, Ig, and G include expenditures for:

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

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GDP measured using current prices is called:

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The consumption of fixed capital in each year's production is called:

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Nominal GDP differs from real GDP because:

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Consider the following data for a firm over a period of time. The contribution of the firm to domestic output by the value-added method is:

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In the expenditures approach of national income accounting, C, I_g, and G include expenditures for:

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