Question 1

To get Personal Income from National Income,one must:

Accepted Answer

A)  subtract out retained earnings, Social Security taxes, and transfer payments, and add in corporate business taxes. 
B)  subtract corporate profits and Social Security taxes, and add in transfer payments and other income. 
C)  subtract retained earnings, corporate business taxes, and transfer payments, and add in Social Security taxes. 
D)  subtract out corporate business taxes, Social Security taxes and transfer payments, and add in retained earnings. 
A)  subtract out retained earnings, Social Security taxes, and transfer payments, and add in corporate business taxes. 
B)  subtract corporate profits and Social Security taxes, and add in transfer payments and other income. 
C)  subtract retained earnings, corporate business taxes, and transfer payments, and add in Social Security taxes. 
D)  subtract out corporate business taxes, Social Security taxes and transfer payments, and add in retained earnings.

Question 2

The income that people receive is called:

Accepted Answer

A)  national income. 
B)  personal income. 
C)  disposable personal income. 
D)  transfer payments. 
A)  national income. 
B)  personal income. 
C)  disposable personal income. 
D)  transfer payments.

Question 3

National income:

Accepted Answer

A)  is included in gross private domestic investment. 
B)  includes the sum of all payments made to resource owners for the use of their resources. 
C)  includes depreciation. 
D)  is often measured as C + I + G + (X - M). 
A)  is included in gross private domestic investment. 
B)  includes the sum of all payments made to resource owners for the use of their resources. 
C)  includes depreciation. 
D)  is often measured as C + I + G + (X - M).

Question 4

Intermediate goods are goods and services used:

Accepted Answer

A)  by the ultimate user. 
B)  by state and local governments. 
C)  as inputs. 
D)  both as inputs and final goods. 
A)  by the ultimate user. 
B)  by state and local governments. 
C)  as inputs. 
D)  both as inputs and final goods.

Question 5

Exhibit 11-9 GDP data (billions of dollars)
 $$\begin{array} { | l | r | } 
\hline \text { Personal consumption expenditures } & \$ 4,750 \
\hline \text { Exgarts } & 810 \
\hline \text { Govemment spending } & 1,400 \
\hline \text { Social Security taxes } & 600 \
\hline \text { Depreciation } & 450 \
\hline \text { Indirect business taxes } & 550 \
\hline \text { Imparts } & 850 \
\hline \text { Gross private domestic investment } & 900 \
\hline \text { Corparate income taxes } & 200 \
\hline \text { Persanal taxes } & 800 \
\hline \text { Corporate profits } & 50 \
\hline \text { Transfer payments } & 700 \
\hline
\end{array}$$
-In Exhibit 11-9,national income (NI)equals:

Accepted Answer

A)  $9,910 billion. 
B)  $6,210 billion. 
C)  $9,210 billion. 
D)  $7,410 billion. 
E)  $6,560 billion. 
A)  $9,910 billion. 
B)  $6,210 billion. 
C)  $9,210 billion. 
D)  $7,410 billion. 
E)  $6,560 billion.

Question 6

Exhibit 11-1
  
-Refer to Exhibit 11-1.What is this country's net exports?

Accepted Answer

A)  $35. 
B)  $-35. 
C)  $379. 
D)  $-379. 
A)  $35. 
B)  $-35. 
C)  $379. 
D)  $-379.

Question 7

In any year,nominal GDP divided by the GDP chain price index equals real GDP.

Accepted Answer

A) True 
 B)False

Question 8

Net exports equal imports minus exports.

Accepted Answer

A) True 
 B)False

Question 9

In a given year,U.S.nominal GDP was $527 billion and the GDP chain price index for that year is 23.3.Real GDP is:

Accepted Answer

A)  $1,228 billion. 
B)  $2,262 billion. 
C)  $3,000 billion. 
D)  $3,262 billion. 
A)  $1,228 billion. 
B)  $2,262 billion. 
C)  $3,000 billion. 
D)  $3,262 billion.

Question 10

Which national income account should be examined to discover trends in the after-tax income that people have to save and spend?

Accepted Answer

A)  Gross domestic product (GDP). 
B)  Personal income (PI). 
C)  National income (NI). 
D)  Disposable personal income (DI). 
A)  Gross domestic product (GDP). 
B)  Personal income (PI). 
C)  National income (NI). 
D)  Disposable personal income (DI).

Question 11

Personal consumption expenditures include:

Accepted Answer

A)  all commodities that business firms buy. 
B)  the purchase prices paid for stocks and bonds by individual households. 
C)  the construction of residential housing. 
D)  all goods and services bought by households. 
E)  the corrected value of housewives' services. 
A)  all commodities that business firms buy. 
B)  the purchase prices paid for stocks and bonds by individual households. 
C)  the construction of residential housing. 
D)  all goods and services bought by households. 
E)  the corrected value of housewives' services.

Question 12

Based on the circular flow model,money flows from households to businesses in:

Accepted Answer

A)  factor markets. 
B)  product markets. 
C)  neither factor nor product markets. 
D)  both factor and product markets. 
A)  factor markets. 
B)  product markets. 
C)  neither factor nor product markets. 
D)  both factor and product markets.

Question 13

The effect of the Environment Protection Agency (EPA)ordering a firm to clean-up damages from pollution would have which of the following effects?

Accepted Answer

A)  GDP would increase. 
B)  GDP would decrease. 
C)  GDP remains unchanged. 
A)  GDP would increase. 
B)  GDP would decrease. 
C)  GDP remains unchanged.

Question 14

Personal income minus personal taxes is:

Accepted Answer

A)  disposable personal income. 
B)  net national income. 
C)  proprietors' income. 
D)  indirect business taxes. 
E)  savings income. 
A)  disposable personal income. 
B)  net national income. 
C)  proprietors' income. 
D)  indirect business taxes. 
E)  savings income.

Question 15

If the underground economy is sizable,then GDP will:

Accepted Answer

A)  understate the economy's performance. 
B)  overstate the economy's performance. 
C)  fluctuate unpredictably. 
D)  accurately reflect this subterranean activity. 
A)  understate the economy's performance. 
B)  overstate the economy's performance. 
C)  fluctuate unpredictably. 
D)  accurately reflect this subterranean activity.

Question 16

Exhibit 11-6 GDP data (billions of dollars)
 $$\begin{array} { | l | r | } 
\hline \text { Personal consumption exgenfitures } & \$ 850 \
\hline \text { Interest } & 90 \
\hline \text { Corporate profits } & 150 \
\hline \text { Government 5pending } & 400 \
\hline \text { Depreciation } & 100 \
\hline \text { Rental income } & 70 \
\hline \text { Grass private dometic investment } & 120 \
\hline \text { Compensation of emplayees } & 830 \
\hline \text { Exgarts } & 120 \
\hline \text { Imparts } & 70 \
\hline \text { Indirect business taxes } & 80 \
\hline \text { Proprietars' income } & 120 \
\hline \text { Personal income taxes } & 110 \
\hline \text { Social Security taxes } & 50 \
\hline \text { Transfer payments } & 160 \
\hline
\end{array}$$
-In Exhibit 11-6,disposable personal income (PI)is:

Accepted Answer

A)  $2,180 billion. 
B)  $1,200 billion. 
C)  $2,210 billion. 
D)  $1,180 billion. 
E)  $1,290 billion. 
A)  $2,180 billion. 
B)  $1,200 billion. 
C)  $2,210 billion. 
D)  $1,180 billion. 
E)  $1,290 billion.

Question 17

The largest component of GDP is:

Accepted Answer

A)  personal consumption expenditures. 
B)  government spending. 
C)  durable goods. 
D)  net exports. 
E)  gross private domestic investment. 
A)  personal consumption expenditures. 
B)  government spending. 
C)  durable goods. 
D)  net exports. 
E)  gross private domestic investment.

Question 18

Which one of the following statements is true?

Accepted Answer

A)  Resources flow from the government to firms. 
B)  Taxes flow from foreign economies to the government. 
C)  Goods and services flow from households to foreign economies. 
D)  Resources flow from households to firms. 
E)  Resource payments flow from households to the government. 
A)  Resources flow from the government to firms. 
B)  Taxes flow from foreign economies to the government. 
C)  Goods and services flow from households to foreign economies. 
D)  Resources flow from households to firms. 
E)  Resource payments flow from households to the government.

Question 19

Exhibit 11-2 Gross domestic product data
  
-As shown in Exhibit 11-2,total spending by government is:

Accepted Answer

A)  $600 billion. 
B)  $100 billion. 
C)  $200 billion. 
D)  $300 billion. 
E)  $800 billion. 
A)  $600 billion. 
B)  $100 billion. 
C)  $200 billion. 
D)  $300 billion. 
E)  $800 billion.

Question 20

The equation for determining real GDP for year X is:

Accepted Answer

A)  **EQ** 
B)  **EQ**, 
C)  **EQ**.. 
D)  **EQ**. 
A)  **EQ** 
B)  **EQ**, 
C)  **EQ**.. 
D)  **EQ**.

Exam 11: Gross Domestic Product

To get Personal Income from National Income,one must:

The income that people receive is called:

National income:

Intermediate goods are goods and services used:

Exhibit 11-1 -Refer to Exhibit 11-1.What is this country's net exports?

In any year,nominal GDP divided by the GDP chain price index equals real GDP.

Net exports equal imports minus exports.

In a given year,U.S.nominal GDP was $527 billion and the GDP chain price index for that year is 23.3.Real GDP is:

Which national income account should be examined to discover trends in the after-tax income that people have to save and spend?

Personal consumption expenditures include:

Based on the circular flow model,money flows from households to businesses in:

The effect of the Environment Protection Agency (EPA)ordering a firm to clean-up damages from pollution would have which of the following effects?

Personal income minus personal taxes is:

If the underground economy is sizable,then GDP will:

The largest component of GDP is:

Which one of the following statements is true?

Exhibit 11-2 Gross domestic product data -As shown in Exhibit 11-2,total spending by government is:

The equation for determining real GDP for year X is:

Introducing the Economic Way of Thinking

A: Appendix: Applying Graphs to Economics

Production Possibilities,Opportunity Cost,and Economic Growth

Part 1: Market Demand and Supply

Part 2: Market Demand and Supply

Markets in Action

Price Elasticity of Demand

Production Costs

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

Labor Markets and Income Distribution

Business Cycles and Unemployment

Inflation

Aggregate Demand and Supply

A: Appendix: The Self-Correcting Aggregate Demand and Supply Model

Fiscal Policy

The Public Sector

Federal Deficits,Surpluses,and the National Debt

Money and the Federal Reserve System

Money Creation

Monetary Policy

A: Appendix: Policy Disputes Using the Self-Correcting Aggregate Demand and Supply Model

International Trade and Finance

Economies in Transition

Growth and the Less-Developed Countries

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