Question 1

Value added refers to

Accepted Answer

A)  any increase in GDP that has been adjusted for adverse environmental effects.
B)  the excess of gross investment over net investment.
C)  the difference between the value of a firm's output and the value of the inputs it has purchased from others.
D)  the portion of any increase in GDP that is caused by inflation as opposed to an increase in real output.E) A) and B)
F) B) and D)

Question 2

Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is

Accepted Answer

A)  $110.
B)  $30.
C)  $40.
D)  $70.E) None of the above
F) All of the above

Question 3

When U.S.households buy new imported European and Japanese cars, the total value of the cars is counted as part of C in the GDP accounts.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A)  may have either increased or decreased.
B)  increased by $65 billion.
C)  increased by $55 billion.
D)  decreased by $55 billion.E) A) and C)
F) B) and C)

Question 5

Nominal GDP is less than real GDP in an economy in both year 1 and year 2.In year 3, nominal GDP is equal to real GDP.In year 4, nominal GDP is slightly greater than real GDP.In year 5, nominal GDP is significantly greater than real GDP.Which year is the base year being used to calculate the price index for this economy?

Accepted Answer

A)  2
B)  3
C)  4
D)  5E) A) and D)
F) B) and D)

Question 6

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

Accepted Answer

A)  deflated to $678 billion.
B)  deflated to $896 billion.
C)  inflated to $1,080 billion.
D)  deflated to $1,080 billion.E) All of the above
F) C) and D)

Question 7

Gross output (GO) reflects the overall status of the productive side of the economy better than GDP does.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following transactions would be included in GDP?

Accepted Answer

A)  Mary buys a used book for $5 at a garage sale.
B)  Nick buys $5,000 worth of stock in Microsoft.
C)  Olivia receives a tax refund of $500.
D)  Peter buys a newly constructed house.E) None of the above
F) All of the above

Question 9

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

Accepted Answer

A)  spending on meals by consumers at restaurants
B)  expenditures on used clothing at garage sales
C)  the value of stocks and bonds bought by businesspersons
D)  government spending on welfare paymentsE) None of the above
F) A) and B)

Question 10

Changes in business inventories are included as part of investment in the national income accounts.

Accepted Answer

A) True 
 B)False

Question 11

Gross domestic product (GDP)  measures and reports output

Accepted Answer

A)  as an index number.
B)  in percentage terms.
C)  in dollar amounts and percentage growth.
D)  in quantities of physical units (for example, pounds, gallons, and bushels) .E) None of the above
F) C) and D)

Question 12

Personal income usually exceeds disposable income.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

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

Question 14

Most activities in the so-called underground economy are illegal activities, such as drugs or gambling.

Accepted Answer

A) True 
 B)False

Question 15

That portion of corporate profits which is included in personal income is

Accepted Answer

A)  dividends.
B)  corporate income taxes.
C)  consumption of fixed capital.
D)  undistributed corporate profits.E) B) and C)
F) None of the above

Question 16

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 17

Gross output (GO)  and GDP both measure

Accepted Answer

A)  resource extraction.
B)  production.
C)  distribution.
D)  final output.E) C) and D)
F) A) and B)

Question 18

Over a year, a nation's GDP at current prices rose by 15 percent, while the price index increased from 100 to 110.GDP at constant prices rose by about

Accepted Answer

A)  3 percent.
B)  5 percent.
C)  7 percent.
D)  9 percent.E) A) and D)
F) All of the above

Question 19

When an economy's production capacity is expanding,

Accepted Answer

A)  nominal GDP, but not necessarily real GDP, is rising.
B)  net exports is always a positive amount.
C)  DI exceeds PI.
D)  gross domestic investment exceeds depreciation.E) A) and D)
F) C) and D)

Question 20

The amount of after-tax income received by households is measured by

Accepted Answer

A)  discretionary income.
B)  national income.
C)  disposable income.
D)  personal income.E) C) and D)
F) A) and D)

Exam 27: Measuring Domestic Output and National Income

Value added refers to

Correct Answer
verified

Changes in business inventories are included as part of investment in the national income accounts.

Correct Answer
verified

When U.S.households buy new imported European and Japanese cars, the total value of the cars is counted as part of C in the GDP accounts.

Correct Answer
verified

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

Correct Answer
verified

Which of the following transactions would be included in GDP?

Correct Answer
verified

Gross output (GO) reflects the overall status of the productive side of the economy better than GDP does.

Correct Answer
verified

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

Correct Answer
verified

Gross output (GO) and GDP both measure

Correct Answer
verified

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

Correct Answer
verified

Gross domestic product (GDP) measures and reports output

Correct Answer
verified

Personal income usually exceeds disposable income.

Correct Answer
verified

When an economy's production capacity is expanding,

Correct Answer
verified

Most activities in the so-called underground economy are illegal activities, such as drugs or gambling.

Correct Answer
verified

Correct Answer
verified

Over a year, a nation's GDP at current prices rose by 15 percent, while the price index increased from 100 to 110.GDP at constant prices rose by about

Correct Answer
verified

Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is

Correct Answer
verified

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

Correct Answer
verified

That portion of corporate profits which is included in personal income is

Correct Answer
verified

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

Correct Answer
verified

The amount of after-tax income received by households is measured by

Correct Answer
verified

Exam 27: Measuring Domestic Output and National Income

Value added refers to

Correct AnswerverifiedShow Answer

Changes in business inventories are included as part of investment in the national income accounts.

Correct AnswerverifiedShow Answer

When U.S.households buy new imported European and Japanese cars, the total value of the cars is counted as part of C in the GDP accounts.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Which of the following transactions would be included in GDP?

Correct AnswerverifiedShow Answer

Gross output (GO) reflects the overall status of the productive side of the economy better than GDP does.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Gross output (GO) and GDP both measure

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Gross domestic product (GDP) measures and reports output

Correct AnswerverifiedShow Answer

Personal income usually exceeds disposable income.

Correct AnswerverifiedShow Answer

When an economy's production capacity is expanding,

Correct AnswerverifiedShow Answer

Most activities in the so-called underground economy are illegal activities, such as drugs or gambling.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Over a year, a nation's GDP at current prices rose by 15 percent, while the price index increased from 100 to 110.GDP at constant prices rose by about

Correct AnswerverifiedShow Answer

Assume that a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

That portion of corporate profits which is included in personal income is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The amount of after-tax income received by households is measured by

Correct AnswerverifiedShow Answer

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