Exam 6: Measuring National Output and National Income

Identify which of the following item (s) would be included in U.S. GDP. (a) The salary of an American consultant hired by a British firm to go and analyze their European operations (b) The output of a U.S.-owned family farm in Kansas (c) Food stamp payments (d) Welfare checks (e) The wages of a field worker in Louisiana

Explain what the phrase "net factor income to the rest of the world" means and explain why this item is added when using the income approach to calculate GDP.

Explain the relationship between final sales in the economy and GDP. In addition, explain why it would be inaccurate to say that final sales and GDP are the same thing.

Assume that you are given GDP and depreciation data for 1998. Explain why this is not enough information to calculate Net National Product.

Explain the difference between GNP and NNP. Explain why NNP is sometimes a better measure of how the economy is doing than GNP is.

Define residential investment.

-Using the above table, calculate the value added at each stage of the production process.

Explain the terms nominal GDP and real GDP. :

Give examples of indirect taxes.

If nominal GDP is $8 trillion and real GDP is $5 trillion, calculate the value of the GDP deflator.

Explain in broad terms what personal income is.

Label the following as either being a final or intermediate good.

Discuss some of the problems associated with using fixed weights to compute real GDP.

Write out the equation for calculating personal income as it relates to national income, retained corporate earnings, social insurance payments, personal interest income and transfer payments.

How would you adjust GDP to make it a better measure of social welfare?

Refer to the information provided in Table 6.5 below to answer the questions that follow. -Table 6.5 contains the national income and product accounts data on the Freedonia economy. Quantities following are given in millions of Freedonian dollars (F$). Use this information to answer Parts (a) through (g) below. (a) Calculate Freedonian gross private investment. (b) Calculate Freedonian GDP. (c) Calculate Freedonian GNP. (d) Calculate net national product (NNP). (e) Calculate national income. (f) Calculate personal income. (g) Calculate disposable personal income.

Typically when there is growth in GDP this also means more energy consumption and more pollution as well. However, we often discover that rich nations have cleaner environments than poorer ones even though the former out produce the latter. Explain this apparent paradox.

Define GDP in broad terms.

Define GNP and GDP. Explain the difference between GNP and GDP. Why is the difference between GNP and GDP small for most countries?

Based on the expenditure approach, discuss and explain each of the components of GDP.