Question 1

If GNP is $200 billion and depreciation is $20 billion, then net national product is

Accepted Answer

A)  $100 billion. 
B)  $180 billion. 
C)  $210 billion. 
D)  $220 billion. 
A)  $100 billion. 
B)  $180 billion. 
C)  $210 billion. 
D)  $220 billion.

Question 2

Gross national income is

Accepted Answer

A)  GNP converted into dollars using an average exchange rate over several years adjusted for rates of inflation. 
B)  GDP converted into dollars using an average exchange rate over several years adjusted for rates of inflation. 
C)  GNP measured using an incomes approach. 
D)  GNP divided by population. 
A)  GNP converted into dollars using an average exchange rate over several years adjusted for rates of inflation. 
B)  GDP converted into dollars using an average exchange rate over several years adjusted for rates of inflation. 
C)  GNP measured using an incomes approach. 
D)  GNP divided by population.

Question 3

Interest paid by households and by the government is

Accepted Answer

A)  counted in national income, but not in GDP. 
B)  not counted in GDP because it is not assumed to flow from the production of goods and services. 
C)  not counted in GDP but is counted in GNP because it is paid by U.S. citizens to people living in the United States. 
D)  included in both GDP and GNP because it represents an expenditure by one group and a receipt of income by another group. 
A)  counted in national income, but not in GDP. 
B)  not counted in GDP because it is not assumed to flow from the production of goods and services. 
C)  not counted in GDP but is counted in GNP because it is paid by U.S. citizens to people living in the United States. 
D)  included in both GDP and GNP because it represents an expenditure by one group and a receipt of income by another group.

Question 4

The income of U.S. citizens working abroad counts in U.S. GNP.

Accepted Answer

A) True 
 B)False

Question 5

New houses count as consumer durables.

Accepted Answer

A) True 
 B)False

Question 6

Refer to the information provided in Table 6.8 below to answer the questions that follow.
Table 6.8  
-Refer to Table 6.8. The value for national income in billions of dollars is

Accepted Answer

A)  970. 
B)  1,030. 
C)  1,060. 
D)  1,200. 
A)  970. 
B)  1,030. 
C)  1,060. 
D)  1,200.

Question 7

The GDP includes

Accepted Answer

A)  the value of all intermediate goods and services. 
B)  the value of all final goods and services. 
C)  the value of both intermediate and final goods and services. 
D)  the value of all transactions. 
A)  the value of all intermediate goods and services. 
B)  the value of all final goods and services. 
C)  the value of both intermediate and final goods and services. 
D)  the value of all transactions.

Question 8

The informal economies of developing nations are generally larger than that of the United States.

Accepted Answer

A) True 
 B)False

Question 9

If real GDP decreased during a year, then output must have decreased.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the information provided in Table 6.10 below to answer the questions that follow.
Table 6.10  
-Refer to Table 6.10. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 2 is

Accepted Answer

A)  84.5. 
B)  92.4. 
C)  105.0. 
D)  108.2. 
A)  84.5. 
B)  92.4. 
C)  105.0. 
D)  108.2.

Question 11

If gross investment in 2017 is $200 billion and depreciation in 2017 is $1,000 billion, net investment in 2017 is

Accepted Answer

A)  -$900 billion. 
B)  -$800 billion. 
C)  $1,000 billion. 
D)  $1,200 billion. 
A)  -$900 billion. 
B)  -$800 billion. 
C)  $1,000 billion. 
D)  $1,200 billion.

Question 12

What should be subtracted from GDP to calculate national income?

Accepted Answer

A)  depreciation 
B)  indirect taxes 
C)  personal income taxes 
D)  net factor payments to the rest of the world 
A)  depreciation 
B)  indirect taxes 
C)  personal income taxes 
D)  net factor payments to the rest of the world

Question 13

Related to the Economics in Practice on p. 112: The National Income and Product Accounts (NIPAs) allow policymakers and economists to analyze the impact of

Accepted Answer

A)  spending and tax plans. 
B)  price shocks. 
C)  monetary policy. 
D)  all of the above 
A)  spending and tax plans. 
B)  price shocks. 
C)  monetary policy. 
D)  all of the above

Question 14

A rancher raises alpaca. Once a year, he shears them and sells the raw wool to a processor who spins it into yarn. The yarn is then sold to a mill which produces and sells alpaca sweaters. In calculating GDP we would count

Accepted Answer

A)  the raw wool, the yarn and the sweaters. 
B)  only the yarn and the sweaters. 
C)  only the sweaters. 
D)  only the raw wool and the yarn. 
A)  the raw wool, the yarn and the sweaters. 
B)  only the yarn and the sweaters. 
C)  only the sweaters. 
D)  only the raw wool and the yarn.

Question 15

National income

Accepted Answer

A)  is always less than personal income. 
B)  is always greater than personal income. 
C)  may be greater than or less than personal income. 
D)  will always equal personal income. 
A)  is always less than personal income. 
B)  is always greater than personal income. 
C)  may be greater than or less than personal income. 
D)  will always equal personal income.

Question 16

Gross domestic product calculations count only final goods and services because

Accepted Answer

A)  one cannot calculate the quantities of intermediate goods produced. 
B)  it is difficult to measure the prices of intermediate goods produced. 
C)  these are the only goods and services that are produced in an economy. 
D)  counting all goods and services would lead to double-counting of many activities. 
A)  one cannot calculate the quantities of intermediate goods produced. 
B)  it is difficult to measure the prices of intermediate goods produced. 
C)  these are the only goods and services that are produced in an economy. 
D)  counting all goods and services would lead to double-counting of many activities.

Question 17

Refer to the information provided in Table 6.3 below to answer the questions that follow.
Table 6.3  
-Refer to Table 6.3. The value for national income in billions of dollars is

Accepted Answer

A)  585. 
B)  600. 
C)  635. 
D)  850. 
A)  585. 
B)  600. 
C)  635. 
D)  850.

Question 18

If disposable personal income is $500 billion and personal saving is $15 billion, the personal saving rate is

Accepted Answer

A)  1.5%. 
B)  3%. 
C)  7.5%. 
D)  15%. 
A)  1.5%. 
B)  3%. 
C)  7.5%. 
D)  15%.

Question 19

All economic activities in the economy are included in the GDP.

Accepted Answer

A) True 
 B)False

Question 20

If net investment in 2016 is $550 billion and gross investment in 2016 is $900 billion, depreciation in 2016 is

Accepted Answer

A)  $900 billion. 
B)  $550 billion. 
C)  $450 billion. 
D)  $350 billion. 
A)  $900 billion. 
B)  $550 billion. 
C)  $450 billion. 
D)  $350 billion.

Exam 6: Measuring National Output and National Income

If GNP is $200 billion and depreciation is $20 billion, then net national product is

Gross national income is

Interest paid by households and by the government is

The income of U.S. citizens working abroad counts in U.S. GNP.

New houses count as consumer durables.

Refer to the information provided in Table 6.8 below to answer the questions that follow. Table 6.8 -Refer to Table 6.8. The value for national income in billions of dollars is

The GDP includes

The informal economies of developing nations are generally larger than that of the United States.

If real GDP decreased during a year, then output must have decreased.

Refer to the information provided in Table 6.10 below to answer the questions that follow. Table 6.10 -Refer to Table 6.10. Assume that this economy produces only two goods Good X and Good Y. If year 1 is the base year, the value for this economy's GDP deflator in year 2 is

If gross investment in 2017 is $200 billion and depreciation in 2017 is $1,000 billion, net investment in 2017 is

What should be subtracted from GDP to calculate national income?

Related to the Economics in Practice on p. 112: The National Income and Product Accounts (NIPAs) allow policymakers and economists to analyze the impact of

A rancher raises alpaca. Once a year, he shears them and sells the raw wool to a processor who spins it into yarn. The yarn is then sold to a mill which produces and sells alpaca sweaters. In calculating GDP we would count

National income

Gross domestic product calculations count only final goods and services because

Refer to the information provided in Table 6.3 below to answer the questions that follow. Table 6.3 -Refer to Table 6.3. The value for national income in billions of dollars is

If disposable personal income is $500 billion and personal saving is $15 billion, the personal saving rate is

All economic activities in the economy are included in the GDP.

If net investment in 2016 is $550 billion and gross investment in 2016 is $900 billion, depreciation in 2016 is

The Scope and Method of Economics

The Economic Problem: Scarcity and Choice

Demand, Supply, and Market Equilibrium

Demand and Supply Applications

Introduction to Macroeconomics

Unemployment, Inflation, and Long-Run Growth

Aggregate Expenditure and Equilibrium Output

The Government and Fiscal Policy

Money, the Federal Reserve, and the Interest Rate

The Determination of Aggregate Output, the Price Level, and the Interest Rate

Policy Effects and Cost Shocks in the Asad Model

The Labor Market in the Macroeconomy

Financial Crises, Stabilization, and Deficits

Household and Firm Behavior in the Macroeconomy: a Further Look

Long-Run Growth

Alternative Views in Macroeconomics

International Trade, Comparative Advantage, and Protectionism

Open-Economy Macroeconomics: the Balance of Payments and Exchange Rates

Economic Growth in Developing Economies

Critical Thinking About Research

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