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Exam 5: National Income Accounting

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Question 1

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What is the difference between GDP and GNP?

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GDP is the market value of all final goo...

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Question 2

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According to the hypothetical economy in Figure 5.1,between 1960 and 1970 real GDP declined but nominal GDP continued to rise.The increase in nominal GDP was due to

A) An increase in the price level greater than the decrease in output,causing the nominal dollar value of output produced to increase.
B) An increase in the quantity of output produced.
C) A decrease in the price level.
D) An increase in the standard of living.

E) B) and C)
F) A) and D)

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Question 3

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Table 5.2 National Income Accounts (dollar figures are in billions) $\begin{array}{|l|r|}\hline \text { Expenditures for consumer goods and services } & \$ 2,850 \\\hline \text { Exports } & \$ 300\\\hline \text { Government purchases of goods and services } & \$810 \\\hline \text { Social Security taxes } & \$ 295 \\\hline\text { Net investment } & \$510 \\\hline\text { Indirect business taxes } & \$ 445 \\\hline\text { Imports } & \$450 \\\hline \text { Gross investment } & \$700 \\\hline \text { Corporate income taxes } & \$ 190\\\hline \text { Personal incometaxes } & \$ 875 \\\hline \text { Corporateretained earnings } & \$ 210 \\\hline\text { Net foreign factor income } & \$ 0 \\\hline \text { Govermment transfer payments to households } & \$780 \\\hline \text { Net interest payments to households } & \$ 20 \\\hline\end{array}$ On the basis of Table 5.2,GDP is

Table 5.1 National Income Accounts (dollar figures are in billions) $\begin{array}{|l|r|}\hline \text { Expenditures for consumer goods and services } & \$ 4,565 \\\hline \text { Exports } & \$ 740 \\\hline \text { Government purchases of goods and services } & \$ 1,465 \\\hline \text { Social Security taxes } & \$ 510 \\\hline\text { Net investment } & \$ 225 \\\hline\text { Indirect business taxes } & \$ 520 \\\hline\text { Imports } & \$ 825 \\\hline \text { Gross investment } & \$ 865 \\\hline \text { Corporate income taxes } & \$ 185 \\\hline \text { Personal incometaxes } & \$ 750 \\\hline \text { Corporateretained earnings } & \$ 45 \\\hline\text { Net foreign factor income } & \$ 20 \\\hline \text { Govermment transfer payments to households } & \$ 690 \\\hline \text { Net interest payments to households } & \$ 0 \\\hline\end{array}$ On the basis of Table 5.1,depreciation is

An economy's production possibilities curve indicates

According to the economy in Figure 5.3,net exports

The part of disposable income not spent on current consumption is

If a farmer grows a head of cabbage with fertilizer costs of $0.10 and seed costs of $0.15 and sells it to a wholesaler for $0.55,the total value added by the farmer is

If the price level is increasing at 4% and output is increasing at 5%,then

The economic definition of investment includes all of the following except

To calculate real GDP,we

One In the News article states that the underground economy includes transactions that are untaxed or unaccounted for in GDP.According to this article,the underground economy

If one added up the value of all intermediate goods that went into the production of real GDP,the total value of intermediate goods would be

Transfer payments are part of personal income but not national income because

Suppose iPhones cost consumers $200 and USB cables cost consumers $25.What contribution does the production of 2,000 iPhones and 1,200 USB cables make to GDP?

All of the following count as unreported income except

Net domestic product (NDP) is determined by

Which of the following best measures the household sector's contribution to the support of the public sector?

The national income aggregate calculated by subtracting depreciation from GDP is known as

Which of the following items can you definitively say is part of the underground economy?