Question 1

A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end. Consumption of private fixed capital in the year was $25 billion. Assuming stable prices, gross investment was:

Accepted Answer

A)   $25 billion
B)   $50 billion
C)   $75 billion
D)   $90 billionE) A) and D)
F) All of the above

Question 2

A business buys $5,000 worth of inputs from other firms in order to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is:

Accepted Answer

A)   $5,000
B)   $6,500
C)   $1,500
D)   $1,000E) B) and C)
F) A) and D)

Question 3

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

Accepted Answer

A)   $1,049 billion
B)   $1,079 billion
C)   $1,090 billion
D)   $1,101 billionE) A) and B)
F) B) and C)

Question 4

The "underground economy" is mostly made up of:

Accepted Answer

A)   Unpaid work
B)   Illegal activities
C)   Do-it-yourself activities
D)   Tax-evasion activitiesE) A) and B)
F) C) and D)

Question 5

Personal consumption expenditures include expenditures for new houses.

Accepted Answer

A) True 
 B)False

Question 6

GDP estimates account for which of the following items?

Accepted Answer

A)   Do-it-yourself activities
B)   "Psychic income" people derive from their work
C)   Household spending for health and home insurance
D)   Improvements in product qualityE) B) and C)
F) A) and D)

Question 7

GDP is the market value of:

Accepted Answer

A)   Resources (land, labor, capital, and entrepreneurship)  in an economy in a given year
B)   All final goods and services produced in an economy in a given year
C)   Consumption and investment spending in an economy in a given year
D)   All output produced and accumulated over the yearsE) C) and D)
F) A) and D)

Question 8

The value of a sale of a share of stock is considered to be an investment in national income accounting.

Accepted Answer

A) True 
 B)False

Question 9

One year nominal GDP was $286 billion and the price index was 88. Real GDP that year was:

Accepted Answer

A)   $252 billion
B)   $325 billion
C)   $308 billion
D)   $262 billionE) A) and C)
F) A) and D)

Question 10

The value of corporate stocks and bonds traded in a given year is:

Accepted Answer

A)   Included in the calculation of GDP because they make a contribution to the current production of goods and services
B)   Excluded from the calculation of GDP because they make no contribution to current production of goods and services
C)   Included in the calculation of net private domestic investment
D)   Included in the calculation of gross private domestic investmentE) A) and B)
F) A) and C)

Question 11

The value added in an industry includes the wages earned by workers in the industry.

Accepted Answer

A) True 
 B)False

Question 12

An example of final goods in national income accounts would be:

Accepted Answer

A)   New lawn mowers purchased by Cut-Rite Lawn Equipment & Supplies
B)   Flowers and pots purchased by homeowner Joe Smith
C)   Chemicals purchased by Green Grass Lawn Care Services
D)   Seedlings and saplings purchased for resale by Wendy's Garden CenterE) A) and C)
F) None of the above

Question 13

A nation's capital stock was valued at $500 billion at the start of the year and $575 billion at the end. Consumption of private fixed capital in the year was $35 billion. Assuming stable prices, net investment was:

Accepted Answer

A)   $35 billion
B)   $40 billion
C)   $45 billion
D)   $75 billionE) A) and B)
F) None of the above

Question 14

Disposable income (DI) includes transfer payments like Social Security benefits and unemployment benefits.

Accepted Answer

A) True 
 B)False

Question 15

The "statistical discrepancy" that the NIPA includes in the data is to account for the following, except:

Accepted Answer

A)   To equalize GDP totals produced by the expenditures approach and the income approach
B)   Errors due to people misrepresenting their incomes on their tax returns
C)   Difficulty in accurately estimating depreciation
D)   Household production, or "do-it-yourself" activities of householdsE) C) and D)
F) None of the above

Question 16

When gross private domestic investment exceeds depreciation, it can be concluded that:

Accepted Answer

A)   Net investment is positive
B)   Net investment is negative
C)   The economy is exporting more than it imports
D)   The economy is importing more than it exportsE) A) and D)
F) All of the above

Question 17

Government purchases in national income accounts would include payments for:

Accepted Answer

A)   Social Security checks to retirees
B)   Salaries for current U.S. military officers
C)   Public assistance for welfare recipients
D)   Unemployment benefitsE) None of the above
F) A) and B)

Question 18

Disinvestment occurs when:

Accepted Answer

A)   Businesses sell machinery and equipment to one another
B)   The prices of investment goods rise faster than the prices of consumer goods
C)   Businesses have larger inventories at the end of the year than they had at the start
D)   The consumption of private fixed capital exceeds gross private domestic investmentE) A) and B)
F) C) and D)

Question 19

If the University of Missouri, a public school, builds a new laboratory, then it will be counted as part of Ig in GDP.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is a private transfer payment?

Accepted Answer

A)   Unemployment benefits received by newly laid-off workers
B)   The sale of used clothing at a thrift store
C)   The Social Security benefits paid to a retired worker
D)   A check for $250 sent by a parent to a daughter at collegeE) A) and D)
F) A) and C)

Exam 7: Measuring Domestic Output and National Income

Disinvestment occurs when:

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GDP estimates account for which of the following items?

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The value added in an industry includes the wages earned by workers in the industry.

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The value of a sale of a share of stock is considered to be an investment in national income accounting.

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When gross private domestic investment exceeds depreciation, it can be concluded that:

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Government purchases in national income accounts would include payments for:

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Personal consumption expenditures include expenditures for new houses.

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GDP is the market value of:

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If the University of Missouri, a public school, builds a new laboratory, then it will be counted as part of Ig in GDP.

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An example of final goods in national income accounts would be:

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

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One year nominal GDP was $286 billion and the price index was 88. Real GDP that year was:

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A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end. Consumption of private fixed capital in the year was $25 billion. Assuming stable prices, gross investment was:

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The "underground economy" is mostly made up of:

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The value of corporate stocks and bonds traded in a given year is:

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Which of the following is a private transfer payment?

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The "statistical discrepancy" that the NIPA includes in the data is to account for the following, except:

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Disposable income (DI) includes transfer payments like Social Security benefits and unemployment benefits.

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A nation's capital stock was valued at $500 billion at the start of the year and $575 billion at the end. Consumption of private fixed capital in the year was $35 billion. Assuming stable prices, net investment was:

Correct AnswerverifiedShow Answer

A business buys $5,000 worth of inputs from other firms in order to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the business to these products is:

Correct AnswerverifiedShow Answer

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If the University of Missouri, a public school, builds a new laboratory, then it will be counted as part of I_g in GDP.

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