Question 1

What should be added to national income to calculate GNP?

Accepted Answer

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

Question 2

GDP is not a perfect measure of social welfare and the society's economic well-being because

Accepted Answer

A)   it does not say anything about the distribution of income.
B)   GDP accounting rules do not adjust for production that causes negative externalities.
C)   it does not include all economic activities in the economy.
D)   all of the aboveE) None of the above
F) All of the above

Question 3

Refer to the information provided in Table 6.9 below to answer the questions that follow.
Table 6.9 
-Refer to Table 6.9. 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 real GDP in year 2 is

Accepted Answer

A)   $168.
B)   $179.
C)   $202.
D)   $214.E) All of the above
F) A) and B)

Question 4

The change in capital stock in a period is equal to

Accepted Answer

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.E) A) and C)
F) A) and D)

Question 5

Related to the Economics in Practice on p. 112: ________ is responsible for producing and maintaining the National Income and Product Accounts (NIPAs) .

Accepted Answer

A)   The Department of the Treasury
B)   The Federal Reserve Bank
C)   Congress
D)   The Department of CommerceE) None of the above
F) B) and C)

Question 6

If real GDP in 2016 using 2015 prices is higher than nominal GDP of 2016, then

Accepted Answer

A)   prices in 2016 are lower than prices in the base year.
B)   nominal GDP in 2016 equals nominal GDP in 2015.
C)   prices in 2016 are higher than prices in the base year.
D)   real GDP in 2016 is larger than real GDP in 2015.E) None of the above
F) All of the above

Question 7

If net investment in 2017 is $500 billion and gross investment in 2017 is $900 billion, depreciation in 2017 is

Accepted Answer

A)   -$500 billion.
B)   $0.
C)   $400 billion.
D)   $1,400 billion.E) None of the above
F) B) and D)

Question 8

Since services do not involve the production of physical things, they are not included in GDP calculations.

Accepted Answer

A) True 
 B)False

Question 9

If NNP is $175 billion and depreciation is $20 billion, then GDP

Accepted Answer

A)   is $155 billion.
B)   is $195 billion.
C)   is $215 billion.
D)   cannot be determined from this information.E) C) and D)
F) B) and D)

Question 10

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

Accepted Answer

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.E) B) and C)
F) A) and D)

Question 11

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

Accepted Answer

A)   150.
B)   250.
C)   650.
D)   800.E) A) and B)
F) All of the above

Question 12

The yearly value of worn out machinery is called

Accepted Answer

A)   depreciation.
B)   capital gains.
C)   net investment.
D)   non-durable goods.E) A) and B)
F) B) and C)

Question 13

Gross investment is

Accepted Answer

A)   the total value of all capital goods newly produced in a given period.
B)   GDP minus GNP.
C)   net investment divided by depreciation.
D)   GDP minus depreciation.E) B) and C)
F) A) and B)

Question 14

Depreciation is

Accepted Answer

A)   the difference between exports and imports.
B)   subtracted from net investment to obtain gross investment.
C)   added to NNP to get GNP.
D)   added to GDP to get gross investment.E) A) and B)
F) All of the above

Question 15

Consumers can spend their entire disposable income.

Accepted Answer

A) True 
 B)False

Question 16

Refer to the information provided in Table 6.6 below to answer the questions that follow.
Table 6.6 
-Refer to Table 6.6. The value for net exports in billions of dollars is

Accepted Answer

A)   800.
B)   200.
C)   -200.
D)   -500.E) None of the above
F) B) and D)

Question 17

Refer to the information provided in Table 6.7 below to answer the questions that follow.
Table 6.7 
-Refer to Table 6.7. The value of net factor payments to the rest of the world in billions of dollars is

Accepted Answer

A)   45.
B)   5.
C)   -5.
D)   -45.E) None of the above
F) B) and D)

Question 18

Gross investment minus depreciation is equal to

Accepted Answer

A)   non-residential investment.
B)   gross national product.
C)   the value of durable goods.
D)   the change in capital stock.E) A) and B)
F) A) and C)

Question 19

The equation for GDP using the expenditure approach is

Accepted Answer

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.E) C) and D)
F) B) and C)

Question 20

The value of what Burger King produces in France is included in the United States ________ and in the French ________.

Accepted Answer

A)   GDP; GDP
B)   GNP; GNP
C)   GNP; GDP
D)   GDP; GNPE) B) and C)
F) B) and D)

Exam 6: Measuring National Output and National Income

Refer to the information provided in Table 6.9 below to answer the questions that follow. Table 6.9 -Refer to Table 6.9. 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 real GDP in year 2 is

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The change in capital stock in a period is equal to

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If NNP is $175 billion and depreciation is $20 billion, then GDP

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Depreciation is

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Consumers can spend their entire disposable income.

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Since services do not involve the production of physical things, they are not included in GDP calculations.

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What should be added to national income to calculate GNP?

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Related to the Economics in Practice on p. 112: ________ is responsible for producing and maintaining the National Income and Product Accounts (NIPAs) .

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Gross investment minus depreciation is equal to

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GDP is not a perfect measure of social welfare and the society's economic well-being because

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The value of what Burger King produces in France is included in the United States ________ and in the French ________.

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The yearly value of worn out machinery is called

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Refer to the information provided in Table 6.6 below to answer the questions that follow. Table 6.6 -Refer to Table 6.6. The value for net exports in billions of dollars is

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The equation for GDP using the expenditure approach is

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If net investment in 2017 is $500 billion and gross investment in 2017 is $900 billion, depreciation in 2017 is

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

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Gross investment is

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If real GDP in 2016 using 2015 prices is higher than nominal GDP of 2016, then

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Refer to the information provided in Table 6.7 below to answer the questions that follow. Table 6.7 -Refer to Table 6.7. The value of net factor payments to the rest of the world in billions of dollars is

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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

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The value of what Burger King produces in France is included in the United States and in the French .

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