Question 1

The National Income and Product Accounts (NIPA) for the U.S. are compiled by the:

Accepted Answer

A)  National Bureau of Economic Research 
B)  Bureau of Economic Analysis 
C)  National Census Bureau 
D)  Council of Economic Advisers

Question 2

(The following national income data for an economy are in billions of dollars.)  Refer to the above data. Corporate profits are equal to:

Accepted Answer

A)  $442 billion 
B)  $532 billion 
C)  $621 billion 
D)  $788 billion

Question 3

Refer to the above table. Nominal GDP rises faster than real GDP between years:

Accepted Answer

A)  1 and 2 
B)  2 and 4 
C)  4 and 5 
D)  5 and 6

Question 4

The value of a price index in the base year is always 100.

Accepted Answer

A) True 
 B)False

Question 5

"Corporate profits" in the national income accounts consists of the following, except:

Accepted Answer

A)  Retained earnings 
B)  Interest 
C)  Dividends 
D)  Corporate income taxes

Question 6

The GDP deflator or price index equals:

Accepted Answer

A)  Gross private domestic investment less the consumption of fixed capital 
B)  Gross national product less net foreign factor income earned in the United States 
C)  Nominal GDP divided by real GDP 
D)  Real GDP divided by nominal GDP

Question 7

Refer to the graph above. Which of the following statements is correct on the basis of the information shown?

Accepted Answer

A)  Real GDP must be deflated in each year after 2000 to determine nominal GDP 
B)  Nominal GDP must be inflated in each year since 2000 to determine real GDP 
C)  Nominal GDP must be deflated in each year before 2000 to determine real GDP 
D)  Nominal GDP must be inflated in each year before 2000 to determine real GDP

Question 8

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

Question 9

National income (NI) is estimated as the sum of four categories of income (wages, rent, interest, profits) plus taxes on production and imports.

Accepted Answer

A) True 
 B)False

Question 10

The amount of new output produced per year for both consumption and additions to capital stock is measured by:

Accepted Answer

A)  GDP 
B)  Net investment 
C)  NDP 
D)  Net exports

Question 11

Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year.  Refer to the above data. If year 2 is the base year, then the percentage increase in real GDP from year 2 to year 4 is:

Accepted Answer

A)  40 percent 
B)  60 percent 
C)  80 percent 
D)  100 percent

Question 12

Gordon is a person who sells narcotics "on the street." This type of illegal activity:

Accepted Answer

A)  Would be considered double counting in calculating GDP 
B)  Is estimated and included in GDP figures 
C)  Is excluded from GDP figures 
D)  Causes GDP to be overstated

Question 13

In an economy, the value of inventories was $75 billion in 2009 and $63 billion in 2010. In calculating total investment for 2010, national income accountants would:

Accepted Answer

A)  Decrease it by $75 billion 
B)  Increase it by $63 billion 
C)  Decrease it by $12 billion 
D)  Increase it by $138 billion

Question 14

Computation of GDP by the expenditures method would include the purchase of:

Accepted Answer

A)  Fertilizer by a farmer 
B)  Cement by a construction company 
C)  Land by the U.S. Department of Interior 
D)  Government bonds by a commercial bank

Question 15

Most activities in the so-called underground economy are illegal activities involving drugs or gambling, for example.

Accepted Answer

A) True 
 B)False

Question 16

Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year.  Refer to the above data. If year 2 is the base year, then Real GDP in year 5 is:

Accepted Answer

A)  $120 
B)  $90 
C)  $60 
D)  $30

Question 17

If the price index is rising over a period of time, then the real GDP in years:

Accepted Answer

A)  Prior to the base year will be larger than the nominal GDP 
B)  Prior to the base year will be less than the nominal GDP 
C)  After the base year will be higher than the nominal GDP 
D)  After the base year will be rising faster than the nominal GDP

Question 18

Which of the following government agencies estimates and compiles the U.S. GDP accounts?

Accepted Answer

A)  The American Economic Association 
B)  The Federal Reserve System 
C)  The Bureau of Economic Analysis 
D)  The Internal Revenue Service

Question 19

If inflows to the capital stock are greater than outflows, then:

Accepted Answer

A)  Net investment is positive 
B)  Net investment is negative 
C)  Depreciation equals gross investment 
D)  Depreciation is greater than gross investment

Question 20

Which of the following represents an income flow in the circular flow of domestic output and national income?

Accepted Answer

A)  Net exports 
B)  Investment expenditures 
C)  Government purchases 
D)  Corporate profits

Exam 7: Measuring Domestic Output and National Income

The National Income and Product Accounts (NIPA) for the U.S. are compiled by the:

(The following national income data for an economy are in billions of dollars.) Refer to the above data. Corporate profits are equal to:

Refer to the above table. Nominal GDP rises faster than real GDP between years:

The value of a price index in the base year is always 100.

"Corporate profits" in the national income accounts consists of the following, except:

The GDP deflator or price index equals:

Refer to the graph above. Which of the following statements is correct on the basis of the information shown?

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

National income (NI) is estimated as the sum of four categories of income (wages, rent, interest, profits) plus taxes on production and imports.

The amount of new output produced per year for both consumption and additions to capital stock is measured by:

Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Refer to the above data. If year 2 is the base year, then the percentage increase in real GDP from year 2 to year 4 is:

Gordon is a person who sells narcotics "on the street." This type of illegal activity:

In an economy, the value of inventories was $75 billion in 2009 and $63 billion in 2010. In calculating total investment for 2010, national income accountants would:

Computation of GDP by the expenditures method would include the purchase of:

Most activities in the so-called underground economy are illegal activities involving drugs or gambling, for example.

Answer the question based on the following price and output data over a five-year period for an economy that produces only one good. Assume that year 2 is the base year. Refer to the above data. If year 2 is the base year, then Real GDP in year 5 is:

If the price index is rising over a period of time, then the real GDP in years:

Which of the following government agencies estimates and compiles the U.S. GDP accounts?

If inflows to the capital stock are greater than outflows, then:

Which of the following represents an income flow in the circular flow of domestic output and national income?