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Exam 7: Measuring Domestic Output and National Income

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Question 91

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Real GDP is

A) the nominal value of all final goods and services produced in the economy.
B) the nominal value of all final goods and services produced in the domestic economy, adjusted for inflation or deflation.
C) that aggregate output that is produced when the economy is operating at full employment.
D) always greater than nominal GDP.

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

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Question 92

Multiple Choice

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In 2017, the three largest economies in the world were (listed in order, from largest)

A) the U.S., China, Germany.
B) China, the U.S., Japan.
C) the U.S., China, Japan.
D) China, the U.S., Germany.

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

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Question 93

Multiple Choice

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If depreciation exceeds gross investment,

Gross domestic private investment, as defined in national income accounts, would include the following, except

$\begin{array} { | l | r | } \hline \text { Gross Investment } & \$ 18 \\\hline \text { National Income } & 100 \\\hline \text { Net Exports } & 2 \\\hline \text { Personal Income } & 85 \\\hline \text { Personal Consumption Expenditures } & 70 \\\hline \text { Saving } & 5 \\\hline \text { Government Purchases } & 20 \\\hline \text { Net Domestic Product } & 105 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data (all ?gures in billions of dollars) . Consumption of ?xed capital (depreciation) is

Net exports is a positive number when

Exports are subtracted from imports in calculating U.S. GDP because exports are not available for domestic consumption.

Which of the following is the smallest dollar amount in the United States?

$\begin{array} { | c | c | c | } \hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \\\hline 1 & 3 & \$ 3 \\\hline 2 & 4 & 4 \\\hline 3 & 6 & 5 \\\hline 4 & 7 & 7 \\\hline 5 & 8 & 8 \\\hline\end{array}$ Assume an economy that makes only one product and that year 3 is the base year. Output and price data for a ?ve-year period are shown in the table. The price index for year 1 is

Assume that in year 1, an economy's nominal GDP was $350 billion and in year 2, it was $375 billion. Based on this information, we

$\begin{array} { | l | c | } \hline \text { Personal Taxes } & \$ 40 \\\hline \text { Social Security Contributions } & 15 \\\hline \text { Taxes on Production and Imports } & 20 \\\hline \text { Corporate Income Taxes } & 40 \\\hline \text { Transfer Payments } & 22 \\\hline \text { U.S. Exports } & 24 \\\hline \text { Undistributed Corporate Profits } & 35 \\\hline \text { Government Purchases } & 90 \\\hline \text { Gross Private Domestic Investment } & 75 \\\hline \text { U.S. Imports } & 22 \\\hline \text { Personal Consumption Expenditures } & 250 \\\hline \text { Consumption of Fixed Capital (depreciation) } & 25 \\\hline \text { Net Foreign Factor Income } & 10 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data (all ?gures in billions of dollars) . PI is

Which of the following is a private transfer payment?

Personal income usually exceeds disposable income.

$\begin{array} { | l | r | } \hline \text { Disposable Income } & \$ 200 \\\hline \text { Net Private Domestic Investment } & 40 \\\hline \text { US Imports } & 15 \\\hline \text { National Income } & 300 \\\hline \text { Personal Taxes } & 31 \\\hline \text { Net Exports } & 9 \\\hline \text { Gross Private Domestic Investment } & 55 \\\hline \text { Net Foreign Factor Income } & 10 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying national income data (in billions of dollars) . In these data, U.S. GDP is

$\begin{array} { | c | c | c | } \hline \text { Year } & \text { Units of Output } & \text { Price Per Unit } \\\hline 1 & 20 & \$ 4 \\\hline 2 & 25 & 4 \\\hline 3 & 30 & 6 \\\hline\end{array}$ Assume an economy that is producing only one product. Output and price data for a three-year period are shown in the table. If year 2 is chosen as the base year, the price index for year 1 is

$\begin{array} { | l | c | } \hline \text { Gross Private Domestic Investment } & \$ 46 \\\hline \text { Exports of the U.S. } & 9 \\\hline \text { Disposable Income } & 190 \\\hline \text { Personal Saving } & 10 \\\hline \text { Government Purchases } & 84 \\\hline \text { Net Foreign Factor Income } & 10 \\\hline \text { Consumption of Fixed Capital } & 52 \\\hline \text { Dividends } & 13 \\\hline \text { Imports of the U.S. } & 12 \\\hline \text { Taxes on Production and Imports } & 22 \\\hline \text { Personal Taxes } & 38 \\\hline \text { Social Security Contributions } & 23 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data. All ?gures are in billions of dollars. Personal income is

An economy is enlarging its stock of capital goods

Net exports are negative when

Suppose that inventories were $80 billion in year 1 and $70 billion in year 2. For year 2, national income accountants would

Economy A: gross investment equals depreciation Economy B: depreciation exceeds gross investment Economy C: gross investment exceeds depreciation Other things equal, the information suggests that the production capacity in economy