Question 1

If personal income is $925 billion and personal income taxes are $70 billion, the value of disposable personal income is

Accepted Answer

A)   $835 billion.
B)   $855 billion.
C)   $890 billion.
D)   $995 billion.E) None of the above
F) B) and C)

Question 2

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 D)
F) All of the above

Question 3

The ratio of nominal GDP to real GDP multiplied by 100 is the

Accepted Answer

A)   NNP.
B)   GDP deflator.
C)   national income.
D)   same as depreciation.E) C) and D)
F) B) and C)

Question 4

GDP measured in current dollars is nominal GDP.

Accepted Answer

A) True 
 B)False

Question 5

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

Accepted Answer

A) True 
 B)False

Question 6

Gross national income (GNI) is GDP converted into dollars using an average of currency exchange rates over several years adjusted for rates of inflation.

Accepted Answer

A) True 
 B)False

Question 7

Transfer payments are subtracted from national income to get to personal income.

Accepted Answer

A) True 
 B)False

Question 8

In 2016 final sales equal $400 billion, and the change in business inventories is $100 billion. GDP in 2016 is

Accepted Answer

A)   $100 billion.
B)   $300 billion.
C)   $400 billion.
D)   $500 billion.E) B) and C)
F) All of the above

Question 9

If disposable personal income is $400 billion and personal saving is $8 billion, the personal saving rate is

Accepted Answer

A)   1.5%.
B)   2%.
C)   5%.
D)   12%.E) C) and D)
F) All of the above

Question 10

Which of the following would not be counted in 2016's GDP?

Accepted Answer

A)   the value of a 2008 boat you purchase from a boat dealer in 2016
B)   the 2016 salary of a used motorcycle salesperson
C)   the commissions earned by a real estate agent in selling condominiums built prior to 2016
D)   the value of a refrigerator manufactured in 2016 but not sold in 2016E) None of the above
F) All of the above

Question 11

Refer to the information provided in Table 21.4 below to answer the question(s)  that follow.
Table 21.4 
-Refer to Table 21.4. The value for personal income in billions of dollars is

Accepted Answer

A)   870.
B)   890.
C)   950.
D)   960.E) A) and B)
F) A) and C)

Question 12

GDP generally reflects the production of social ills such as pollution.

Accepted Answer

A) True 
 B)False

Question 13

Double counting can be avoided by

Accepted Answer

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.E) B) and D)
F) None of the above

Question 14

The GDP deflator in year 3 is 85 using year 1 as a base year. This means that, on average, the price of goods and services is

Accepted Answer

A)   15% higher in year 3 than in year 1.
B)   7.5% higher in year 3 than in year 1.
C)   15% higher in year 1 than in year 3.
D)   7.5% higher in year 1 than in year 3.E) A) and B)
F) C) and D)

Question 15

Double counting can be avoided by using the value-added approach when calculating GDP.

Accepted Answer

A) True 
 B)False

Question 16

In 2016, there was no change in inventories, which implies that GDP was ________ in 2016.

Accepted Answer

A)   exactly equal to final sales
B)   greater than final sales
C)   less than final sales
D)   zeroE) A) and D)
F) All of the above

Question 17

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

Accepted Answer

A) True 
 B)False

Question 18

Refer to the information provided in Table 21.3 below to answer the question(s)  that follow.
Table 21.3 
-Refer to Table 21.3. The value of disposable income in billions of dollars

Accepted Answer

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

Question 19

The change in business inventories is a component of investment.

Accepted Answer

A) True 
 B)False

Question 20

The GDP deflator in year 2 is 110 using year 1 as a base year. This means that, on average, the price of goods and services is

Accepted Answer

A)   110% higher in year 2 than in year 1.
B)   10% higher in year 2 than in year 1.
C)   5% higher in year 1 than in year 2.
D)   110% higher in year 1 than in year 2.E) A) and B)
F) A) and C)

Exam 21: Measuring National Output and National Income

In 2016, there was no change in inventories, which implies that GDP was ________ in 2016.

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In 2016 final sales equal $400 billion, and the change in business inventories is $100 billion. GDP in 2016 is

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

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The GDP deflator in year 3 is 85 using year 1 as a base year. This means that, on average, the price of goods and services is

Correct AnswerverifiedShow Answer

GDP measured in current dollars is nominal GDP.

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Transfer payments are subtracted from national income to get to personal income.

Correct AnswerverifiedShow Answer

If personal income is $925 billion and personal income taxes are $70 billion, the value of disposable personal income is

Correct AnswerverifiedShow Answer

Double counting can be avoided by

Correct AnswerverifiedShow Answer

The GDP deflator in year 2 is 110 using year 1 as a base year. This means that, on average, the price of goods and services is

Correct AnswerverifiedShow Answer

Gross national income (GNI) is GDP converted into dollars using an average of currency exchange rates over several years adjusted for rates of inflation.

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What should be added to national income to calculate GNP?

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The change in business inventories is a component of investment.

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Refer to the information provided in Table 21.4 below to answer the question(s) that follow. Table 21.4 -Refer to Table 21.4. The value for personal income in billions of dollars is

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The ratio of nominal GDP to real GDP multiplied by 100 is the

Correct AnswerverifiedShow Answer

If disposable personal income is $400 billion and personal saving is $8 billion, the personal saving rate is

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Which of the following would not be counted in 2016's GDP?

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Double counting can be avoided by using the value-added approach when calculating GDP.

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Refer to the information provided in Table 21.3 below to answer the question(s) that follow. Table 21.3 -Refer to Table 21.3. The value of disposable income in billions of dollars

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GDP generally reflects the production of social ills such as pollution.

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