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Exam 7: Measuring Domestic Output and National Income

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Question 41

Multiple Choice

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Which of the following do national income accountants consider to be investment?

A) the purchase of an automobile for private, nonbusiness use
B) the purchase of a new house
C) the purchase of corporate bonds
D) the purchase of gold coins

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Question 42

Multiple Choice

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$\begin{array} { | r | l | r | } \hline 1 & \text { Consumption of Fixed Capital } & \$ 438 \\\hline 2 & \text { Taxes on Production and Imports } & 326 \\\hline 3 & \text { Compensation of Employees } & 2,347 \\\hline 4 & \text { Rents } & 14 \\\hline 5 & \text { Interest } & 287 \\\hline 6 & \text { Proprietors' Income } & 242 \\\hline 7 & \text { Corporate Profits } & 297 \\\hline 8 & \text { Personal Consumption Expenditures } & 2,582 \\\hline 9 & \text { Gross Private Domestic Investment } & 669 \\\hline 10 & \text { Government Purchases } & 815 \\\hline 11 & \text { Net Exports } & - 78 \\\hline 12 & \text { Net Foreign Factor Income } & 46 \\\hline 13 & \text { Statistical Discrepancy } & 50 \\\hline\end{array}$ Refer to the accompanying national income data (in billions of dollars) . The national income in this economy can be estimated by adding items

A) 1 through 7.
B) 8 through 11.
C) 2 through 7.
D) 1 through 13.

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Question 43

Multiple Choice

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If intermediate goods and services were included in GDP,

$\begin{array} { | l | c | } \hline \text { Proprietors' Income } & \$ 20 \\\hline \text { Compensation of Employees } & 300 \\\hline \text { Consumption of Fixed Capital } & 15 \\\hline \text { Gross Investment } & 80 \\\hline \text { Rents } & 10 \\\hline \text { Interest } & 20 \\\hline \text { Exports } & 30 \\\hline \text { Imports } & 50 \\\hline \text { Corporate Profits } & 25 \\\hline \text { Taxes on Production and Imports } & 5 \\\hline \text { Net Foreign Factor Income } & 0 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data. All ?gures are in billions of dollars. Gross domestic product is

The largest component of total expenditures in the United States is

GDP can be calculated by summing

$\begin{array} { | l | c | } \hline \text { Proprietors' Income } & \$ 20 \\\hline \text { Compensation of Employees } & 300 \\\hline \text { Consumption of Fixed Capital } & 15 \\\hline \text { Gross Investment } & 80 \\\hline \text { Rents } & 10 \\\hline \text { Interest } & 20 \\\hline \text { Exports } & 30 \\\hline \text { Imports } & 50 \\\hline \text { Corporate Profits } & 25 \\\hline \text { Taxes on Production and Imports } & 5 \\\hline \text { Net Foreign Factor Income } & 0 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data. All ?gures are in billions of dollars. National income is

Economy A: gross investment equals depreciation Economy B: depreciation exceeds gross investment Economy C: gross investment exceeds depreciation Based on this information, positive net investment is occurring in

Value added refers to

Interest on the public debt is included as a part of government purchases in determining GDP by the expenditures method.

Nominal GDP is

Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5. The current year per-unit prices of these three goods are A = $2, B = $3, and C = $1. Nominal GDP in the Current year is

$\begin{array} { | c | c | c | c | } \hline \text { Year } & \text { Units of Output } & \text { Price of Bagel per Unit } & \text { Price Index (Year 1=100) } \\\hline 1 & 10 & \$ 10 & 100 \\\hline 2 & 12 & 20 & 200 \\\hline 3 & 15 & 30 & 300 \\\hline 4 & 20 & 40 & 400 \\\hline\end{array}$ The table contains data for a hypothetical single-product economy. Nominal GDP in year 4 is

An example of final goods in national income accounts would be

If the per-unit prices of the three goods were each $1 in a base year used to construct a GDP price index, then real GDP in the current year is

Value added can be determined by

The sale of a used automobile would not be included in GDP of the current year because it is a

Alejandro Scoobertini owns a store specializing in soccer jerseys. One year, he purchased $150,000 worth of jerseys from manufacturers and later that year, sold the jerseys for $280,000. Based on this Information, what was the value added at Alejandro's store?

A business buys $5,000 worth of inputs from other firms in order to produce a product. The business makes 100 units of the product and each of them sells for $65. The value added by the Business to these products is

The purchase of Walmart stock is a part of gross investment but not of net investment.