Exam 23: Measuring a Nations Income

The residents of Australia earn $400 million of income from abroad. Residents of other countries earn $290 million in Australia. Therefore, Australia's net factor payments from abroad are

Table 23-1 The following table contains data for Mindalion for the year 2019. ​ GDP \ 700 Income earned by citizens abroad \ 13 Income foreigners earn here \ 12 Losses from depreciation \ 5 Indirect business taxes \ 10 Statistical discrepancy \ 0 Retained earnings \ 8 Corporate income taxes \ 12 Social insurance contributions \ 30 Interest paid to households by government \ 8 Transfer payments to households from government \ 55 Personal taxes \ 60 Nontax payments to government \ 11 -Refer to Table 23-1. Personal income for Mindalion in 2019 is

Countries with low GDP per person tend to have

GDP is a useful measure since it provides a single measure of the value of the entire variety of goods and services produced by an economy. ​

If a firm produces a good and then adds it to its inventory rather than selling it, for the purposes of GDP accounting the firm is considered to have "purchased" the good so it will count as part of that period's investment expenditures.

List the four components of GDP.

For an economy as a whole,

Gross domestic product includes all

Expenditures by households on education are included in the consumption component of GDP.

In the simple circular-flow diagram, with households and firms, GDP can be computed as the

The term real GDP refers to a country's actual GDP as opposed to its estimated GDP.

Table 23-7 A country produces only ice cream and cake in the quantities and prices listed below. Use 2011 as the base year. Year Price of Ice Cream Quantity of Ice Cream Price of Cake Quantity of Cake 2011 \ 2.00 200 \ 10 40 2012 \ 2.30 250 \ 14 50 2013 \ 2.75 280 \ 18 80 -Refer to Table 23-7. Calculate real and nominal GDP for the year 2013.

Purchases by American tourists in other countries increase GDP for both the country in which the purchase was made and for the U.S., since a U.S. citizen carried out the expenditure. ​

A U.S.-owned automobile factory uses $50 million worth of materials produced in the U.S. and $10 million worth of material purchased from foreign countries to produce $100 million of automobiles. $70 million worth of these automobiles are purchased by U.S. consumers, $25 million are sold in foreign countries, and $5 million are added to inventory. How much of this production is included in U.S. GDP? By how much do these transactions alone affect U.S. net exports?

In 2012 a country had a real GDP $15.4 trillion and GDP deflator of 125. If that country's GDP deflator equals 115 in 2013, what is the rate of inflation in 2013?

If real GDP doubles and the GDP deflator doubles, then nominal GDP

If total spending rises from one year to the next, then the economy must be producing a larger output of goods and services.

GDP is defined as the market value of all final goods and services produced within a country in a given period of time. In spite of this definition, some production is left out of GDP. Explain why some final goods and services are not included.

The Carters' oldest son attends Big State University. He and his parents pay all his fees and tuition. These payments count in GDP as

​GDP can be measured in terms of expenditures but not income, since income is subject to taxation.