Question 1

Which of the following statements is true?

Accepted Answer

A)   National income is total income earned by households whereas personal income is total income received by households (including transfer payments) .
B)   Disposable personal income equals personal income minus personal taxes.
C)   The expenditures approach and the income approach yield the same GDP figure.
D)   All of the above.E) A) and B)
F) A) and C)

Question 2

When depreciation is subtracted from:

Accepted Answer

A)   Personal income, we get national income.
B)   Gross Domestic Product, we get national income.
C)   Gross Domestic Product, we get personal income.
D)   Disposable Personal Income, we get Gross Domestic Product.E) All of the above
F) A) and D)

Question 3

Which of the following is a shortcoming of GDP?

Accepted Answer

A)   GDP excludes changes in inventories.
B)   GDP includes an estimate of illegal transactions.
C)   GDP excludes nonmarket transactions.
D)   GDP excludes business investment spending.E) A) and B)
F) A) and C)

Question 4

Which of the following would be included in the government expenditures component of GDP?

Accepted Answer

A)   The export of 100 fighter jets to Japan
B)   Construction costs of a new public school building
C)   Food stamps used by the Smith family
D)   A $1,000 check issued by the federal government as part of the Pell Grant program to help college students pay for schoolE) B) and C)
F) A) and D)

Question 5

Which of the following is included in personal income but not in national income?

Accepted Answer

A)   Compensation for workers.
B)   Proprietors' income.
C)   Corporate profits.
D)   Social Security payments.
E)   Rent.F) A) and B)
G) B) and D)

Question 6

National income is derived from gross domestic product by subtracting:

Accepted Answer

A)   transfer payments.
B)   profits.
C)   an allowance for depreciation of capital equipment.
D)   net exports.E) A) and C)
F) B) and D)

Question 7

The circular flow of economic activity is a model of the:

Accepted Answer

A)   flow of goods, resources, payments, and expenditures between the sectors of the economy.
B)   influence of government on business behavior.
C)   influence of business on consumers.
D)   role of unions and government in the economy.E) None of the above
F) A) and B)

Question 8

The most broadly based price index is the:

Accepted Answer

A)   real GDP price index.
B)   consumer price index.
C)   producer price index.
D)   GDP chain price index.E) B) and C)
F) A) and B)

Question 9

Explain why GDP was never intended to be a measure of social well being.

Accepted Answer

GDP is simply a measure of total product...

Question 10

The GDP chain price index is designed to adjust nominal GDP for changes in:

Accepted Answer

A)   the level of transfer payments.
B)   the quality of goods over time.
C)   the costs of economic bads such as pollution and crime.
D)   the general level of prices over time.E) A) and C)
F) All of the above

Question 11

Using the expenditure approach,total spending by households for durable goods,nondurable goods,and services is a category called:

Accepted Answer

A)   gross private domestic investment.
B)   capital consumption allowance.
C)   personal consumption expenditures.
D)   household investment.E) A) and B)
F) B) and C)

Question 12

In order to compute national income from GDP,

Accepted Answer

A)   national income is first calculated, and then depreciation of capital and indirect business taxes are subtracted from it to get GDP.
B)   GDP is first calculated, and then gross private domestic investment is subtracted from it to get national income.
C)   GDP is first calculated, and then capital depreciation and proprietors' income are subtracted from it to get national income.
D)   GDP is first calculated, and then depreciation of capital is subtracted from it to get national income.E) All of the above
F) C) and D)

Question 13

Based on the circular flow model,goods and services flow from:

Accepted Answer

A)   households to businesses in product markets.
B)   businesses to households in product markets.
C)   households to businesses in factor markets.
D)   businesses to households in factor markets.E) All of the above
F) A) and B)

Question 14

Exhibit 11-2 Gross domestic product data
 
-As shown in Exhibit 11-2,total expenditures by businesses for fixed investment and inventories is:

Accepted Answer

A)   $500 billion.
B)   $50 billion.
C)   $200 billion.
D)   $15 billion.
E)   $65 billion.F) A) and C)
G) A) and E)

Question 15

Which of the following is true?

Accepted Answer

A)   GDP is a "flow" concept.
B)   The purchase prices of both intermediate goods and final goods are included in GDP.
C)   GDP measures economic welfare.
D)   GDP is a measure of changes in the general level of prices.E) B) and C)
F) A) and C)

Question 16

Payments to households not in exchange for goods and services currently produced are:

Accepted Answer

A)   transfer payments.
B)   government purchases.
C)   consumption expenditures.
D)   investment expenditures.E) A) and B)
F) A) and C)

Question 17

Exhibit 11-7 GDP data (billions of dollars) 
   Depreciation $438 Compensation af employees 2,000 Rental income 100 Net interest 300 Corparate profits 700 Sacial Security taxes 519 Transfer payments 650 Personal consumption exgenditures 2,582 Grass Private Domestic Investment 669 Government 5pending 815 Net exparts −7a Personal taxes 590 Indirect business taxes 450\begin{array} { | l | r | } \hline 	ext { Depreciation } & \$ 438 \\hline 	ext { Compensation af employees } & 2,000 \\hline 	ext { Rental income } & 100 \\hline 	ext { Net interest } & 300 \\hline 	ext { Corparate profits } & 700 \\hline 	ext { Sacial Security taxes } & 519 \\hline 	ext { Transfer payments } & 650 \\hline 	ext { Personal consumption exgenditures } & 2,582 \\hline 	ext { Grass Private Domestic Investment } & 669 \\hline 	ext { Government 5pending } & 815 \\hline 	ext { Net exparts } & - 7 a \\hline 	ext { Personal taxes } & 590 \\hline 	ext { Indirect business taxes } & 450 \\hline\end{array} Depreciation  Compensation af employees  Rental income  Net interest  Corparate profits  Sacial Security taxes  Transfer payments  Personal consumption exgenditures  Grass Private Domestic Investment  Government 5pending  Net exparts  Personal taxes  Indirect business taxes ​$4382,0001003007005196502,582669815−7a590450​​ 
-In Exhibit 11-7,national income (NI) equals:

Accepted Answer

A)   $3,628 billion.
B)   $3,706 billion.
C)   $4,446 billion.
D)   $3,550 billion.
E)   $5,344 billion. F) A) and B)
G) A) and C)

Question 18

Net exports:

Accepted Answer

A)   will increase if exports of goods decline.
B)   will increase if imports of goods rise.
C)   in our GDP accounts permit estimation of foreign ownership of American businesses.
D)   include budgetary outlays of the federal government.
E)   is the net effect of the foreign trade sector on GDP.F) C) and D)
G) D) and E)

Question 19

Economic values that are measured in units per period of time are referred to as:

Accepted Answer

A)   stocks.
B)   flows.
C)   unit values.
D)   dollars.E) B) and C)
F) All of the above

Question 20

In the circular flow model,

Accepted Answer

A)   money flows from the firms to the households through the product market.
B)   money flows from the households to the firms through the product market.
C)   money flows from the households to the firms through the resource market.
D)   money flows from the households to the firms through both the product market and the resource market.
E)   resources flow to the households from the firms through the product market.F) B) and E)
G) D) and E)

Exam 11: Gross Domestic Product

The GDP chain price index is designed to adjust nominal GDP for changes in:

Correct Answer
verified

Explain why GDP was never intended to be a measure of social well being.

Correct Answer
verified
GDP is simply a measure of total product...
View Answer

Net exports:

Correct Answer
verified

National income is derived from gross domestic product by subtracting:

Correct Answer
verified

Using the expenditure approach,total spending by households for durable goods,nondurable goods,and services is a category called:

Correct Answer
verified

Exhibit 11-2 Gross domestic product data -As shown in Exhibit 11-2,total expenditures by businesses for fixed investment and inventories is:

Correct Answer
verified

Which of the following is true?

Correct Answer
verified

The most broadly based price index is the:

Correct Answer
verified

Which of the following is included in personal income but not in national income?

Correct Answer
verified

Correct Answer
verified

In order to compute national income from GDP,

Correct Answer
verified

Economic values that are measured in units per period of time are referred to as:

Correct Answer
verified

Which of the following statements is true?

Correct Answer
verified

Which of the following would be included in the government expenditures component of GDP?

Correct Answer
verified

When depreciation is subtracted from:

Correct Answer
verified

Based on the circular flow model,goods and services flow from:

Correct Answer
verified

The circular flow of economic activity is a model of the:

Correct Answer
verified

Payments to households not in exchange for goods and services currently produced are:

Correct Answer
verified

Which of the following is a shortcoming of GDP?

Correct Answer
verified

In the circular flow model,

Correct Answer
verified

Exam 11: Gross Domestic Product

The GDP chain price index is designed to adjust nominal GDP for changes in:

Correct AnswerverifiedShow Answer

Explain why GDP was never intended to be a measure of social well being.

Correct AnswerverifiedGDP is simply a measure of total product...View AnswerShow Answer

Net exports:

Correct AnswerverifiedShow Answer

National income is derived from gross domestic product by subtracting:

Correct AnswerverifiedShow Answer

Using the expenditure approach,total spending by households for durable goods,nondurable goods,and services is a category called:

Correct AnswerverifiedShow Answer

Exhibit 11-2 Gross domestic product data -As shown in Exhibit 11-2,total expenditures by businesses for fixed investment and inventories is:

Correct AnswerverifiedShow Answer

Which of the following is true?

Correct AnswerverifiedShow Answer

The most broadly based price index is the:

Correct AnswerverifiedShow Answer

Which of the following is included in personal income but not in national income?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

In order to compute national income from GDP,

Correct AnswerverifiedShow Answer

Economic values that are measured in units per period of time are referred to as:

Correct AnswerverifiedShow Answer

Which of the following statements is true?

Correct AnswerverifiedShow Answer

Which of the following would be included in the government expenditures component of GDP?

Correct AnswerverifiedShow Answer

When depreciation is subtracted from:

Correct AnswerverifiedShow Answer

Based on the circular flow model,goods and services flow from:

Correct AnswerverifiedShow Answer

The circular flow of economic activity is a model of the:

Correct AnswerverifiedShow Answer

Payments to households not in exchange for goods and services currently produced are:

Correct AnswerverifiedShow Answer

Which of the following is a shortcoming of GDP?

Correct AnswerverifiedShow Answer

In the circular flow model,

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
verified
GDP is simply a measure of total product...
View Answer

Correct Answer
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