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Exam 7: Measuring Domestic Output and National Income

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Question 21

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National income is the sum of employee compensation, profits, and the following items, except

A) rent.
B) interest.
C) depreciation or consumption of fixed capital.
D) taxes on production and imports.

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Question 22

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

A) net investment is positive.
B) net investment is negative.
C) depreciation equals gross investment.
D) depreciation is greater than gross investment.

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Question 23

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The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050) , personal consumption expenditures ($4,800) , imports ($370) , Exports ($240) , and gross private domestic investment ($1,130) . What is GDP for this economy?

$\begin{array} { | c | c | c | } \hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \\\hline 1 & 20 & \$ 4 \\\hline 2 & 25 & 4 \\\hline 3 & 30 & 6 \\\hline\end{array}$ Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen as the base year, in years 1 and 3 the price index Values are

Which of the following is included in the expenditures approach to GDP?

$\begin{array} { | l | r | } \hline \text { Consumption of Fixed Capital } & \$ 25 \\\hline \text { Government Purchases } & 315 \\\hline \text { US imports } & 260 \\\hline \text { Personal Taxes } & 45 \\\hline \text { Transfer Payments } & 247 \\\hline \text { US Exports } & 249 \\\hline \text { Personal Consumption Expenditures } & 475 \\\hline \text { Net Foreign Factor Income } & 5 \\\hline \text { Gross Private Domestic Investment } & 300 \\\hline \text { Taxes on Production and Imports } & 245 \\\hline \text { Undistributed Corporate Profits } & 60 \\\hline \text { Social Security Contributions } & 240 \\\hline \text { Corporate Income Taxes } & 65 \\\hline \text { Statistical Discrepancy } & 40 \\\hline\end{array}$ Refer to the accompanying national income data (in billions of dollars) . National income is

In year 1, Trailblazer Bicycle Company produced a mountain bike that was delivered to a retail outlet in November of that same year. The bicycle was sold to E.Z. Ryder in March of the next year, year 2. This bicycle is counted as

If real GDP rises and the GDP price index has increased,

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

Setup Corporation buys $100,000 of sand, rock, and cement to produce ready-mix concrete. It sells 10,000 cubic yards of concrete at $30 a cubic yard. The value added by Setup Corporation is

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

The simplest way to calculate GDP is to sum the total sales of all business firms.

Which of the following transactions would be included in GDP?

Real GDP accounts for changes in product quality; nominal GDP does not.

The following are examples of final goods in national income accounting, except

All expenditures on new construction are included as investment in calculating GDP.

$\begin{array} { | l | r | } \hline \text { Consumption of Fixed Capital } & \$ 25 \\\hline \text { Government Purchases } & 315 \\\hline \text { US imports } & 260 \\\hline \text { Personal Taxes } & 45 \\\hline \text { Transfer Payments } & 247 \\\hline \text { US Exports } & 249 \\\hline \text { Personal Consumption Expenditures } & 475 \\\hline \text { Net Foreign Factor Income } & 5 \\\hline \text { Gross Private Domestic Investment } & 300 \\\hline \text { Taxes on Production and Imports } & 245 \\\hline \text { Undistributed Corporate Profits } & 60 \\\hline \text { Social Security Contributions } & 240 \\\hline \text { Corporate Income Taxes } & 65 \\\hline \text { Statistical Discrepancy } & 40 \\\hline\end{array}$ Refer to the accompanying national income data (in billions of dollars) . Net domestic product equals

Nominal GDP is adjusted for price changes using

The growth of GDP may understate changes in the economy's economic well-being over time if the

The agency responsible for compiling the National Income and Product Accounts for the U.S. economy is the