Question 1

National income accounting can best be characterized as:

Accepted Answer

A)  a set of rules used to summarize economic activity over a given period of time. 
B)  a method for comparing different political systems. 
C)  a microeconomic model of the economy used by the Federal Reserve bank. 
D)  a statistical measure of the income received by consumers as opposed to businesses. 
E)  a standardized economic report authored by politicians. 
A)  a set of rules used to summarize economic activity over a given period of time. 
B)  a method for comparing different political systems. 
C)  a microeconomic model of the economy used by the Federal Reserve bank. 
D)  a statistical measure of the income received by consumers as opposed to businesses. 
E)  a standardized economic report authored by politicians.

Question 2

The term "value added" is used to describe:

Accepted Answer

A)  the increase in the value of a product that occurs at each stage of production. 
B)  the amount subtracted from the value of goods because of inflation. 
C)  the total value of all intermediate goods used in the production of the final good. 
D)  the amount paid in the final sale of a product or service. 
E)  the amount subtracted from the value of resources because of depreciation. 
A)  the increase in the value of a product that occurs at each stage of production. 
B)  the amount subtracted from the value of goods because of inflation. 
C)  the total value of all intermediate goods used in the production of the final good. 
D)  the amount paid in the final sale of a product or service. 
E)  the amount subtracted from the value of resources because of depreciation.

Question 3

In-kind wages are not included in GDP.

Accepted Answer

A) True 
 B)False

Question 4

The value of a price index in the base year will always be zero.

Accepted Answer

A) True 
 B)False

Question 5

The table given below reports the price of soda over four consecutive years.?
  
-Refer to Table 5.7. Compute the price index for the base year.

Accepted Answer

A)  130 
B)  30 
C)  80 
D)  100 
E)  120 
A)  130 
B)  30 
C)  80 
D)  100 
E)  120

Question 6

Which of the following is subtracted from GNP when calculating net national product?

Accepted Answer

A)  Interest 
B)  Capital consumption allowance 
C)  Rent 
D)  Indirect business taxes 
E)  Income tax 
A)  Interest 
B)  Capital consumption allowance 
C)  Rent 
D)  Indirect business taxes 
E)  Income tax

Question 7

Most countries tend to follow only one price index to measure the price level in an economy because all prices rise or fall at the same time or by the same amount.

Accepted Answer

A) True 
 B)False

Question 8

Suppose the price index is 100 in the base year and the price of a pound of oranges in that year is $1.96. Now, if the price index changes to 105 in the following year, how much would a pound of oranges cost?

Accepted Answer

A)  $2.45 
B)  $0.25 
C)  $1.96 
D)  $2.06 
E)  $1.50 
A)  $2.45 
B)  $0.25 
C)  $1.96 
D)  $2.06 
E)  $1.50

Question 9

If both real GDP and nominal GDP of a country increased at the same rate in a particular year, which of the following is most likely to have taken place?

Accepted Answer

A)  Output increased and the price level increased 
B)  Output increased and the price level decreased 
C)  Output decreased and the price level increased 
D)  Output decreased and the price level decreased 
E)  Output increased and the price level remained constant 
A)  Output increased and the price level increased 
B)  Output increased and the price level decreased 
C)  Output decreased and the price level increased 
D)  Output decreased and the price level decreased 
E)  Output increased and the price level remained constant

Question 10

If 'C' denotes consumption expenditure, 'I' denotes investment expenditure, 'G' denotes government expenditure and 'X' denotes net exports, then C + I + G + X equals:

Accepted Answer

A)  net national product. 
B)  disposable personal income. 
C)  net exports. 
D)  personal income. 
E)  gross domestic product. 
A)  net national product. 
B)  disposable personal income. 
C)  net exports. 
D)  personal income. 
E)  gross domestic product.

Question 11

The difference between GNP and NNP is equal to:

Accepted Answer

A)  the statistical discrepancy in calculation. 
B)  the capital consumption allowance. 
C)  the transfer payments. 
D)  the value of net exports. 
E)  the change in inventory. 
A)  the statistical discrepancy in calculation. 
B)  the capital consumption allowance. 
C)  the transfer payments. 
D)  the value of net exports. 
E)  the change in inventory.

Question 12

A soft-drink bottling company supplies six-packs of orange flavored soda to retailers for a price of $2 each. If the components in each six-pack costs the bottling company $1.50, the value added, to each six-pack, by the bottling company is:

Accepted Answer

A)  $2.00. 
B)  $1.50. 
C)  $1.25. 
D)  $1.00. 
E)  $0.50. 
A)  $2.00. 
B)  $1.50. 
C)  $1.25. 
D)  $1.00. 
E)  $0.50.

Question 13

Personal income is equal to:

Accepted Answer

A)  national income plus business profits. 
B)  disposable personal income minus personal taxes. 
C)  national income minus transfer payments. 
D)  national income plus welfare benefits minus corporate retained earnings. 
E)  disposable personal income plus transfer payments. 
A)  national income plus business profits. 
B)  disposable personal income minus personal taxes. 
C)  national income minus transfer payments. 
D)  national income plus welfare benefits minus corporate retained earnings. 
E)  disposable personal income plus transfer payments.

Question 14

To avoid double counting in the calculation of GDP,

Accepted Answer

A)  net exports should be excluded. 
B)  the value of intermediate goods and services should be excluded. 
C)  the capital consumption allowance should be excluded. 
D)  business investment should be excluded. 
E)  government purchases should be excluded. 
A)  net exports should be excluded. 
B)  the value of intermediate goods and services should be excluded. 
C)  the capital consumption allowance should be excluded. 
D)  business investment should be excluded. 
E)  government purchases should be excluded.

Question 15

GDP, according to the income method, is the sum of:

Accepted Answer

A)  wages, rent, interest, and profits. 
B)  consumption, gross investment, depreciation, and net exports. 
C)  depreciation, net factor income from abroad, and indirect business taxes. 
D)  gross investment, wages, profits, rent, and indirect business taxes. 
E)  consumption, profits, interest, rent, and net exports. 
A)  wages, rent, interest, and profits. 
B)  consumption, gross investment, depreciation, and net exports. 
C)  depreciation, net factor income from abroad, and indirect business taxes. 
D)  gross investment, wages, profits, rent, and indirect business taxes. 
E)  consumption, profits, interest, rent, and net exports.

Question 16

The consumer price index:

Accepted Answer

A)  tracks the value of output over time. 
B)  is not tied to cost-of-living adjustments. 
C)  doubles every five years in the economy. 
D)  is a weighted average of consumer prices. 
E)  is a broader price index measure than the implicit GDP deflator. 
A)  tracks the value of output over time. 
B)  is not tied to cost-of-living adjustments. 
C)  doubles every five years in the economy. 
D)  is a weighted average of consumer prices. 
E)  is a broader price index measure than the implicit GDP deflator.

Question 17

The market basket of goods and services used to calculate the consumer price index [CPI] by the Department of Labor in the U.S. changes only every two years.

Accepted Answer

A) True 
 B)False

Question 18

Consider a small country producing only two commodities (coffee beans and corn). Following are the price and output of these two commodities in the year 2008: Assuming the price level in the economy remains same while the output of both these products increase by 10 percent in 2009, calculate the value of real GDP in this country for the year 2009?
Price
Quantity
$12
500 lbs. of coffee beans
$6
600 bushels of corn

Accepted Answer

A)  $9,600 
B)  $10,560 
C)  $1,056 
D)  $6,900 
E)  $10, 960 
A)  $9,600 
B)  $10,560 
C)  $1,056 
D)  $6,900 
E)  $10, 960

Question 19

Which of the following accounts for the largest percentage of output in the United States?

Accepted Answer

A)  The government 
B)  Business firms 
C)  Households 
D)  Banks 
E)  The rest of the world 
A)  The government 
B)  Business firms 
C)  Households 
D)  Banks 
E)  The rest of the world

Question 20

To arrive at a more accurate measure of real output changes in an economy, nominal GDP figures should be adjusted for inflation.

Accepted Answer

A) True 
 B)False

National income accounting can best be characterized as:

The term "value added" is used to describe:

In-kind wages are not included in GDP.

The value of a price index in the base year will always be zero.

The table given below reports the price of soda over four consecutive years.? -Refer to Table 5.7. Compute the price index for the base year.

Which of the following is subtracted from GNP when calculating net national product?

Most countries tend to follow only one price index to measure the price level in an economy because all prices rise or fall at the same time or by the same amount.

Suppose the price index is 100 in the base year and the price of a pound of oranges in that year is $1.96. Now, if the price index changes to 105 in the following year, how much would a pound of oranges cost?

If both real GDP and nominal GDP of a country increased at the same rate in a particular year, which of the following is most likely to have taken place?

If 'C' denotes consumption expenditure, 'I' denotes investment expenditure, 'G' denotes government expenditure and 'X' denotes net exports, then C + I + G + X equals:

The difference between GNP and NNP is equal to:

A soft-drink bottling company supplies six-packs of orange flavored soda to retailers for a price of $2 each. If the components in each six-pack costs the bottling company $1.50, the value added, to each six-pack, by the bottling company is:

Personal income is equal to:

To avoid double counting in the calculation of GDP,

GDP, according to the income method, is the sum of:

The consumer price index:

The market basket of goods and services used to calculate the consumer price index [CPI] by the Department of Labor in the U.S. changes only every two years.

Which of the following accounts for the largest percentage of output in the United States?

To arrive at a more accurate measure of real output changes in an economy, nominal GDP figures should be adjusted for inflation.

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters

Exam 5: National Income Accounting

National income accounting can best be characterized as:

The term "value added" is used to describe:

In-kind wages are not included in GDP.

The value of a price index in the base year will always be zero.

The table given below reports the price of soda over four consecutive years.? -Refer to Table 5.7. Compute the price index for the base year.

Which of the following is subtracted from GNP when calculating net national product?

Most countries tend to follow only one price index to measure the price level in an economy because all prices rise or fall at the same time or by the same amount.

Suppose the price index is 100 in the base year and the price of a pound of oranges in that year is $1.96. Now, if the price index changes to 105 in the following year, how much would a pound of oranges cost?

If both real GDP and nominal GDP of a country increased at the same rate in a particular year, which of the following is most likely to have taken place?

If 'C' denotes consumption expenditure, 'I' denotes investment expenditure, 'G' denotes government expenditure and 'X' denotes net exports, then C + I + G + X equals:

The difference between GNP and NNP is equal to:

A soft-drink bottling company supplies six-packs of orange flavored soda to retailers for a price of $2 each. If the components in each six-pack costs the bottling company $1.50, the value added, to each six-pack, by the bottling company is:

Personal income is equal to:

To avoid double counting in the calculation of GDP,

GDP, according to the income method, is the sum of:

The consumer price index:

The market basket of goods and services used to calculate the consumer price index [CPI] by the Department of Labor in the U.S. changes only every two years.

Which of the following accounts for the largest percentage of output in the United States?

To arrive at a more accurate measure of real output changes in an economy, nominal GDP figures should be adjusted for inflation.

The Wealth of Nations: Ownership and Economic Freedom

Scarcity and Opportunity Costs

The Market and Price System

The Aggregate Economy

An Introduction to the Foreign Exchapterange Market and the Balance of Payments

Unemployment and Inflation

Macroeconomic Equilibrium: Aggregate Demand and Supply

Aggregate Expenditures

Income and Expenditures Equilibrium

Fiscal Policy

Money and Banking

Monetary Policy

Macroeconomic Policy: Tradeoffs, Expectations, Credibility, and Sources of Business Cycles

Macroeconomic Viewpoints: New Keynesian, Monetarist, and New Classical

Economic Growth

Development Economics

Globalization

World Trade Equilibrium

International Trade Restrictions

Exchapterange Rates and Financial Links Between Countries

Filters