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Exam 7: Measuring Domestic Output and National Income

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Question 121

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The consumption of fixed capital in each year's production is called

A) indirect business taxes.
B) inventory reduction.
C) depreciation.
D) net investment.

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Question 122

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If real disposable income fell during a particular year, we can conclude that

A) personal taxes increased.
B) inflation occurred.
C) transfer payments declined.
D) none of these necessarily occurred.

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Question 123

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In November of year 1, Econland Motors produced an automobile that was delivered to a local dealership in December that same year. The auto was then sold to Sharon Smith for personal use The next year in February, year 2. Following national income accounting practices, this auto would Be counted as part of

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

The fact that nominal GDP has risen faster than real GDP

When gross investment is positive, net investment

In national income accounting, government purchases include

$\begin{array} { | l | r | } \hline \text { Gross Investment } & \$ 18 \\\hline \text { National Income } & 100 \\\hline \text { Net Exports } & 2 \\\hline \text { Personal Income } & 85 \\\hline \text { Personal Consumption Expenditures } & 70 \\\hline \text { Saving } & 5 \\\hline \text { Government Purchases } & 20 \\\hline \text { Net Domestic Product } & 105 \\\hline \text { Statistical Discrepancy } & 0 \\\hline\end{array}$ Refer to the accompanying data (all ?gures in billions of dollars) . From this information we can conclude that the net foreign factor income is

$\begin{array} { | l | c | } \hline \text { Personal Consumption Expenditures } & \$ 4,500 \\\hline \text { Consumption of Fixed Capital } & 150 \\\hline \text { Gross Private Domestic Investment } & 800 \\\hline \text { Government Purchases } & 950 \\\hline \text { Exports } & 65 \\\hline \text { Imports } & 85 \\\hline\end{array}$ Refer to the accompanying data about a hypothetical economy (in billions of dollars) . GDP in this economy is

Which of the following best defines disposable income?

GDP is the market value of

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

The gross domestic product (GDP) concept accounts for society's valuation of the relative worth of goods and services by using

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

Suppose a nation's nominal GDP is $972 billion and the general price index is 90. To make this year?s GDP comparable with an earlier base year?s GDP, then this year?s GDP must be

GDP tends to

The system that measures the economy's overall performance is formally known as

Disposable income measures the before-tax income received by resource suppliers.