Deck 6: Measuring National Output and National Income

Question 1

Which of the following is an example of an intermediate good?

A)the dough you buy to fix yourself a pizza for dinner
B)the chocolate you buy to make yourself some cookies
C)the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to
D)lumber you buy to build a house for your dog

Answer 1

C

Question 2

GDP measures the total income of everyone and the total spending by everyone in the economy.

Answer 2

False

Question 3

The GDP includes

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.

Answer 3

B

Question 4

Which of the following is a good or service counted in GDP?

A)tires Ford buys to put on a car
B)a used tire you buy for your personal car
C)a new tire you buy for your personal car
D)used tires bought by a used car dealer to put on a car on his lot

Question 5

Total income in the economy can sometimes be greater than total spending.

Question 6

Gross national product is the total market value of

A)all final and intermediate goods and service produced by resources owned by a country in a given year.
B)all final and intermediate goods and services produced in a country,regardless of who owns the resources.
C)all final goods and services produced in a country in a given year,regardless of who owns the resources.
D)all final goods and services produced by resources owned by a country,regardless of where production takes place.

Question 7

Which of the following would NOT be counted in 2013's GDP?

A)the value of a 2008 boat you purchase from a boat dealer in 2013
B)the 2013 salary of a used motorcycle salesperson
C)the commissions earned by a real estate agent in selling condominiums built prior to 2013
D)the value of a refrigerator manufactured in 2013 but not sold in 2013

Question 8

Income Mexican citizens earn in the U.S.counts in

A)U.S.GNP.
B)Mexican GNP.
C)Mexican GDP.
D)both U.S.and Mexican GDP.

Question 9

Which of the following would be counted in 2013's GDP?

A)the value of a loan you take in 2013
B)the value of a TV that was produced in 2012 but not sold until 2013
C)the bonus check a stockbroker gets from his/her company in 2013
D)the value of a bond sold by the federal government

Question 10

The total market value of all final goods and services produced within a given period by factors of production located within a country is

A)gross domestic product.
B)gross national product.
C)net national product.
D)net national income.

Question 11

If no foreign companies produce in a country,but many of the country's companies produce abroad,then

A)the country's GNP will tend to exceed its GDP.
B)the country's GDP will tend to exceed its GNP.
C)the country's GNP and GDP will tend to be equal.
D)the country's GDP will tend to be equal to its domestic income.

Question 12

Double counting can be avoided by

A)including the value of intermediate goods in the current year.
B)not counting the value of intermediate goods in GDP.
C)including the value of intermediate goods in the GNP but not in the GDP.
D)including the value of intermediate goods in the production year but not in the selling year of those goods.

Question 13

Which of the following is an example of a final good or service?

A)wheat a bakery purchases to make bread
B)coffee beans Starbucks purchases to make coffee
C)lumber purchased by a construction company to used in building houses
D)a computer purchased by Federal Express to track shipments

Question 14

Which of the following is NOT included in 2013's GDP?

A)the value of a motorcycle produced in the United States and exported to Japan
B)the profit earned in 2013 from selling a stock that you purchased in 2008
C)the value of a motor that is used in the production of a lawn mower
D)the commission earned by a headhunter when she locates a job for a client

Question 15

The value of what KFC produces in Japan is included in the U.S.________ and in the Japanese ________.

A)GDP;GDP
B)GNP;GNP
C)GNP;GDP
D)GDP;GNP

Question 16

The GDP of the U.S.in 2012 was around $15.9 trillion.This means

A)that the value of output in the U.S.in 2012 was around $15.9 trillion.
B)that total income in the U.S.in 2012 was around $15.9 trillion.
C)that total spending on final goods and services in the U.S.in 2012 was around $15.9 trillion.
D)all of the above

Question 17

Gross domestic product measures

A)the total spending of everyone in the economy.
B)the value of all output in the economy.
C)the total income of everyone in the economy.
D)all of the above

Question 18

Which of the following is included in both the U.S.GDP and GNP?

A)The value of all cars produced by Ford in Mexico.
B)The value of all cars produced by General Motors in the U.S.
C)The value of all cars produced by Toyota in the U.S.
D)The value of cars produced by Nissan in Japan and the U.S.

Question 19

Which of the following is NOT counted in the GNP of the United States?

A)The wage of a U.S.citizen who works in a foreign country for a foreign firm.
B)The interest earned by a U.S.bank on loans to a business firm located in Brazil.
C)The profit earned by a restaurant located in the United States but owned by a Mexican company.
D)The value of services that are produced by state and local governments in the United States.

Question 20

Profits earned in the United States by foreign-owned companies are included in

A)the U.S.GDP but not GNP.
B)neither the U.S.GDP nor GNP.
C)the U.S.GNP but not GDP.
D)both the U.S.GDP and GNP.

Question 21

Refer to the information provided in Table 6.1 below to answer the questions that follow.
Table 6.1
Refer to Table 6.1.The value of gross domestic product in billions of dollars is

A)3,000.
B)3,075.
C)3,125.
D)3,750.

Question 22

Refer to the information provided in Table 6.2 below to answer the questions that follow.
Table 6.2
Refer to Table 6.2.The value for gross domestic product in billions of dollars is

A)2,900.
B)3,140.
C)3,440.
D)3,650.

Question 23

The single largest expenditure component in GDP is

A)government spending.
B)investment.
C)consumption.
D)net exports.

Question 24

Refer to the information provided in Table 6.2 below to answer the questions that follow.
Table 6.2
Refer to Table 6.2.Personal consumption expenditures in billions of dollars are

A)900.
B)1,100.
C)1,400.
D)1,600.

Question 25

Refer to the information provided in Table 6.2 below to answer the questions that follow.
Table 6.2
Refer to Table 6.2.The value for net exports in billions of dollars is

A)-200.
B)-150.
C)50.
D)250.

Question 26

Refer to the information provided in Table 6.1 below to answer the questions that follow.
Table 6.1
Refer to Table 6.1.The value of government spending in billions of dollars is

A)100.
B)200.
C)300.
D)500.

Question 27

Value added is the difference between the value of good as they leave a stage of production and cost of the goods as they entered that stage of production.

Question 28

The change in business inventories is measured as

A)final sales minus GDP.
B)final sales plus GDP.
C)GDP minus final sales.
D)the ratio of final sales to GDP.

Question 29

Refer to the information provided in Table 6.2 below to answer the questions that follow.
Table 6.2
Refer to Table 6.2.The value of government spending in billions of dollars is

A)200.
B)600.
C)800.
D)1,000.

Question 30

In 2012 final sales equal $200 billion,and the change in business inventories is $50 billion.GDP in 2012

A)is $250 billion.
B)is $200 billion.
C)is $150 billion.
D)is $40 billion.

Question 31

The equation for GDP using the expenditure approach is

A)GDP = C + I + G + EX - IM.
B)GDP = C + I + G + (IM - EX).
C)GDP = C + I + G + EX + IM.
D)GDP = C + I + G - EX - IM.

Question 32

Stock market transactions are part of GNP.

Question 33

A company produced 8 dishwasher machines in 2012.The company sold 6 in 2012 and added 2 to its inventories.The market value of the dishwasher machines in 2012 was $200 per unit.What is the value of this company's output that will be included in the 2012 GDP?

A)$400.
B)$1,400.
C)$1,600.
D)$2,000.

Question 34

Refer to the information provided in Table 6.1 below to answer the questions that follow.
Table 6.1
Refer to Table 6.1.The value for net exports in billions of dollars is

A)150.
B)250.
C)650.
D)800.

Question 35

Refer to the information provided in Table 6.1 below to answer the questions that follow.
Table 6.1
Refer to Table 6.1.The value for gross private domestic investment in billions of dollars is

A)300.
B)375.
C)425.
D)450.

Question 36

A farmer buys a new tractor from John Deere to use on her cotton farm.This tractor is included in GDP as

A)part of gross private domestic investment.
B)a durable consumption good.
C)a service.
D)a nondurable consumption good.

Question 37

Refer to the information provided in Table 6.1 below to answer the questions that follow.
Table 6.1
Refer to Table 6.1.Personal consumption expenditures in billions of dollars are

A)1,000.
B)1,300.
C)1,500.
D)2,000.

Question 38

In 2012 final sales equal $350 billion and the change in business inventories is -$60 billion.GDP in 2012

A)is $290 billion.
B)is $295 billion.
C)is $410 billion.
D)cannot be determined from this information.

Question 39

Refer to the information provided in Table 6.2 below to answer the questions that follow.
Table 6.2
Refer to Table 6.2.The value for gross private domestic investment in billions of dollars is

A)740.
B)810.
C)850.
D)890.

Question 40

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

Question 41

If in a year there is a positive inventory investment,then final sales

A)exceed GDP.
B)are less than GDP.
C)equal GDP.
D)are zero.

Question 42

If the change in business inventories is zero,then final sales are

A)zero.
B)less than GDP.
C)greater than GDP.
D)equal to GDP.

Question 43

If net investment in 2012 is $350 billion and gross investment in 2012 is $500 billion,depreciation in 2012 is

A)$0.7 billion.
B)$150 billion.
C)$175 billion.
D)$250 billion.

Question 44

Net investment is

A)gross investment minus depreciation.
B)gross investment plus depreciation.
C)depreciation minus gross investment.
D)GNP minus final sales.

Question 45

Depreciation is

A)the decrease in the overall price level.
B)the additional capital stock in a year.
C)the amount of used up machinery in a year.
D)the amount of decline in business inventories.

Question 46

Suppose that net investment in 2012 was $20 billion and depreciation was $4 billion.Gross investment in 2012 was

A)$16 billion.
B)$20 billion.
C)$24 billion.
D)$28 billion.

Question 47

The largest income component of GDP is

A)proprietors' income.
B)rental income.
C)compensation of employees.
D)corporate profit.

Question 48

The total value of all capital goods newly produced in a given period is

A)the change in business inventories.
B)depreciation.
C)net investment.
D)gross investment.

Question 49

If gross investment in 2012 is $750 billion and depreciation in 2012 is $850 billion,net investment in 2012 is

A)-$50 billion.
B)-$100 billion.
C)-$800 billion.
D)-$1,600 billion.

Question 50

In 2012 the change in business inventories is -$70 billion and GDP is $200 billion.Final sales in 2012

A)are $130 billion.
B)are $200 billion.
C)are $270 billion.
D)are $340 billion.

Question 51

If the value of net exports is negative,then

A)exports exceed imports.
B)imports exceed exports.
C)exports equal imports.
D)imports are zero.

Question 52

In 2012,GDP was exactly equal to final sales.This implies that

A)there was accumulation of inventories that year.
B)there was a decline in inventories that year.
C)there was no change in inventories that year.
D)GDP did not grow that year compared to the year before.

Question 53

Exports equal

A)imports - net exports.
B)net exports + imports.
C)net exports - imports.
D)imports + (exports + imports).

Question 54

Net investment equals

A)GDP minus final sales.
B)gross investment minus final sales.
C)gross investment minus depreciation.
D)depreciation plus GDP.

Question 55

The change in capital stock in a period is equal to

A)the ratio of the amount of the capital at the beginning of the period to the amount of depreciation.
B)the amount of the capital stock at the beginning of the period plus gross investment minus depreciation.
C)the amount of the capital at the beginning of the period plus gross investment.
D)the amount of the capital at the beginning of the period minus net investment.

Question 56

If net investment is zero,then

A)gross investment is greater than depreciation.
B)gross investment is less than depreciation.
C)gross investment equals depreciation.
D)depreciation is zero.

Question 57

When calculating GDP,exports are ________ and imports are ________.

A)added;added
B)added;subtracted
C)subtracted;added
D)subtracted;subtracted

Question 58

What should be subtracted from GDP to calculate national income?

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

Question 59

If gross investment in 2013 is $200 billion and depreciation in 2013 is $1,000 billion,net investment in 2013 is

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

Question 60

If net investment in 2013 is $500 billion and gross investment in 2013 is $900 billion,depreciation in 2013 is

A)-$500 billion.
B)$0.
C)$400 billion.
D)$1,400 billion.

Question 61

If GDP is $500 billion and depreciation is $40 billion,then net national product

A)is $460 billion.
B)is $500 billion.
C)is $540 billion.
D)cannot be determined from this information.

Question 62

Refer to the information provided in Table 6.4 below to answer the questions that follow.
Table 6.4
Refer to Table 6.4.The value for national income in billions of dollars is

A)890.
B)910.
C)940.
D)970.

Question 63

If GNP is $600 billion,receipts of factor income from the rest of the world are $50 billion,and payments of factor income to the rest of the world are $30 billion,then GDP is

A)$520 billion.
B)$580 billion.
C)$620 billion.
D)$680 billion.

Question 64

Refer to the information provided in Table 6.4 below to answer the questions that follow.
Table 6.4
Refer to Table 6.4.The value for GDP in billions of dollars is

A)910.
B)920.
C)950.
D)1,050.

Question 65

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 gross domestic product in billions of dollars is

A)485.
B)680.
C)685.
D)710.

Question 66

Refer to the information provided in Table 6.4 below to answer the questions that follow.
Table 6.4
Refer to Table 6.4.The value for NNP in billions of dollars is

A)890.
B)910.
C)940.
D)970.

Question 67

Refer to the information provided in Table 6.4 below to answer the questions that follow.
Table 6.4
Refer to Table 6.4.The value for personal income in billions of dollars is

A)870.
B)890.
C)950.
D)960.

Question 68

Refer to the information provided in Table 6.4 below to answer the questions that follow.
Table 6.4
Refer to Table 6.4.The value for disposable personal income in billions of dollars is

A)750.
B)770.
C)820.
D)990.

Question 69

Interest paid by households and by the government is

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 70

Proprietors' income is

A)the income of unincorporated businesses.
B)the income of all businesses-incorporated and unincorporated.
C)the income of sole proprietorships.
D)the income of partnerships.

Question 71

Depreciation is

A)subtracted from national income to get GDP.
B)added to national income to get GDP.
C)subtracted from GNP to get NNP.
D)added to GNP to get NNP.

Question 72

If GDP is $300 billion,depreciation is $30 billion,and net factor income from the rest of the world is -$40 billion,then net national product is

A)$230 billion.
B)$270 billion.
C)$290 billion.
D)$310 billion.

Question 73

Net interest is the interest on loans paid by

A)businesses,households,and the government.
B)businesses and households.
C)businesses and the government.
D)businesses.

Question 74

Refer to the information provided in Table 6.4 below to answer the questions that follow.
Table 6.4
Refer to Table 6.4.The value for GNP in billions of dollars is

A)900.
B)930.
C)980.
D)1,010.

Question 75

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

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

Question 76

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 of net factor payments to the rest of the world is

A)5.
B)15.
C)25.
D)35.

Question 77

What type of tax affects the amount of money you pay for a product?

A)direct tax
B)income tax
C)indirect tax
D)all of the above

Question 78

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 of disposable income

A)is 505.
B)is 560.
C)is 605.
D)cannot be calculated given the information in Table 6.3.

Question 79

If receipts of factor income from the rest of the world exceed payments of factor income to the rest of the world,then

A)GDP is greater than GNP.
B)GDP equals GNP.
C)GNP equals NNP.
D)GNP is greater than GDP.

Question 80

If GNP is $200 billion,receipts of factor income from the rest of the world are $10 billion,and payments of factor income to the rest of the world are $30 billion,then GDP is

A)$160 billion.
B)$210 billion.
C)$220 billion.
D)$240 billion.