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100. U.S. GDP
a.
includes production of foreigners working in the U.S. and production by U.S. residents working in foreign
countries.
b.
includes production of foreigners working in the U.S. but excludes production by U.S. residents working in
foreign countries.
c.
excludes production of foreigners working in the U.S. but includes production by U.S. residents working in
foreign countries.
d.
excludes production of foreigners working in the U.S. and production by U.S. residents working in foreign
countries.
101. Which of the following is not correct?
a.
GNP equals net national product plus losses from depreciation.
b.
For most countries, including the United States, GDP and GNP are nearly the same.
c.
GDP and GNP typically move in opposite directions.
d.
Personal income equals disposable personal income plus personal taxes plus certain nontax payments.
102. For monitoring fluctuations in the national economy, which measure of income is best?
a.
GDP
b.
GNP
c.
NNP
d.
It does not matter very much which measure we use.
103. How is net national product (NNP) calculated?
a.
Saving is subtracted from the total income of a nation’s citizens.
b.
Saving is added to the total income of a nation’s citizens
c.
Depreciation losses are subtracted from the total income of a nation’s citizens.
d.
Depreciation losses are added to the total income of a nation’s citizens.
104. In the national income accounts, depreciation is called
a.
"consumption of fixed capital."
b.
"negative investment."
c.
"diminished value."
d.
"loss due to wear."
105. Which of the following is an example of depreciation?
a.
falling stock prices
b.
the retirement of several employees
c.
computers becoming obsolete
d.
All of the above are examples of depreciation.
106. How is net national product (NNP) calculated?
a.
Saving is added to the total income of a nation’s citizens.
b.
Saving is added to the total income earned within a nation.
c.
Depreciation losses are subtracted from the total income of a nation’s citizens.
d.
Depreciation losses are subtracted from the total income earned within a nation.
107. National income is defined as
a.
the total income of a nation’s permanent residents minus losses from depreciation.
b.
the income that households and noncorporate businesses receive.
c.
the total income earned by a nation’s permanent residents in the production of goods and services.
d.
the income that households and noncorporate businesses have left after satisfying all their obligations to the
government.
108. National income differs from net national product because
a.
it includes profits of corporations.
b.
of a statistical discrepancy.
c.
it includes transfer payments.
d.
it excludes depreciation.
109. The income that households and noncorporate businesses receive is called
a.
personal income.
b.
net national product.
c.
disposable personal income.
d.
national income.
110. Unlike national income, personal income
a.
includes retained earnings, indirect business taxes, corporate income taxes and social insurance contributions,
and excludes interest and transfer payments received by households from the government.
b.
excludes retained earnings, indirect business taxes corporate income taxes, social insurance contributions and
interest and transfer payments received by households from the government.
c.
excludes retained earnings, indirect business taxes, corporate income taxes and social insurance contributions,
and includes interest and transfer payments received by households from the government.
d.
includes retained earnings, indirect business taxes, corporate income taxes, social insurance contributions, and
interest and transfer payments received by households from the government.
111. Retained earnings is income that
a.
households retain after paying taxes.
b.
businesses retain after paying taxes.
c.
corporations have earned but have not used to invest in plant, equipment, and inventories.
d.
corporations have earned but have not paid out to their owners.
112. Disposable personal income is the income that
a.
households have left after paying taxes and non-tax payments to the government.
b.
businesses have left after paying taxes and non-tax payments to the government.
c.
households and noncorporate businesses have left after paying taxes and non-tax payments to the government.
d.
households and businesses have left after paying taxes and non-tax payments to the government.
113. Disposable personal income is
a.
the total income earned by a nation’s permanent residents.
b.
the total income earned by a nation’s residents in the production of goods and services.
c.
the income that households and non-corporate businesses receive.
d.
the income that households and businesses have remaining after satisfying their obligations to the government.
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Table 23-1
The table below contains data for Chereaux for the year 2015.
GDP
$200
Income earned by citizens abroad
$9
Income foreigners earn here
$5
Losses from depreciation
$6
Indirect business taxes
$10
Statistical discrepancy
$0
Retained earnings
$8
Corporate income taxes
$12
Social insurance contributions
$30
Interest paid to households by government
$8
Transfer payments to households from government
$55
Personal taxes
$60
Nontax payments to government
$11
114. Refer to Table 23-1. The market value of all final goods and services produced within Chereaux in 2015 is
a.
$214.
b.
$200.
c.
$204.
d.
$230.
115. Refer to Table 23-1. Gross national product for Chereaux in 2015 is
a.
$186.
b.
$214.
c.
$200.
d.
$204.
116. Refer to Table 23-1. Net national product for Chereaux in 2015 is
a.
$194.
b.
$196.
c.
$198.
d.
$204.
117. Refer to Table 23-1. Personal income for Chereaux in 2015 is
a.
$178.
b.
$201.
c.
$259.
d.
$196.
118. Refer to Table 23-1. Disposable personal income for Chereaux in 2015 is
a.
$190.
b.
$211.
c.
$130.
d.
$141.
119. In computing GDP, market prices are used in the calculations because
a.
market prices are constant over time.
b.
market prices do not reflect how prices change over time.
c.
market prices are consistently free of inflation.
d.
market prices can be used to combine the variety of goods and services produced in an economy into a single
measure.
120. Tom is an organic gardener. When Tom produces vegetables only for consumption by his family,
a.
the value of the vegetables he produces is not included in GDP.
b.
the value of organic vegetables cannot be included in GDP, because organic production does not fit a category
of GDP.
c.
if Tom registers his garden with the Department of Agriculture, the value of his vegetables will be included in
GDP.
d.
the value of farm production is not a part of GDP.
121. Tom is an organic gardener. For several years, he produced only for his own consumption, but this year he has sold
his vegetables at a farmer’s market. The vegetables Tom produces
a.
are not included in GDP, not for this year nor for previous years.
b.
are included in GDP for this year, but prior to this year the value of his vegetables was not included in GDP.
c.
would be included in GDP only if the vegetables were registered with the Department of Agriculture.
d.
are not part of GDP, since vegetables are not a good included in GDP.
122. Tom is an organic gardener. For several years, he produced only for his own consumption. Last year, he sold his
vegetables at a farmer’s market. This year, he sold all of his vegetables to a company producing organic vegetable soup.
When is the value of Tom’s vegetables included in GDP?
a.
None of his production is included in GDP, since it is considered home production.
b.
Only when he sells his vegetable at the farmer's market.
c.
Only when he sells his vegetables to the organic soup company.
d.
When he sells his vegetables at the farmer's market and when he sells the vegetables to the organic soup
company.
123. Leo works in a Mercedes Benz factory in Alabama. He is then transferred to Mercedes’s plant in South Africa.
When does the value of Leo’s work for Mercedes contribute to U.S. GDP?
a.
The value of his work does not contribute to U.S. GDP, since Mercedes Benz is a German company.
b.
The value of his work always contributes to U.S. GDP because Leo is a U.S. citizen.
c.
The value of his work contributes to U.S. GDP when he works in the Alabama plant.
d.
The value of his work contributes to U.S. GDP only for Mercedes Benz vehicles sold in the U.S. market.
124. Beth, an American citizen, travels to Italy on vacation and buys an espresso machine to bring home. Her purchase
increases
a.
Italy's GDP.
b.
Italy's GDP and U.S. GDP, since Beth spent dollars buying the machine.
c.
U.S. GDP since she will have the machine with her at home in the U.S.
d.
Neither U.S. nor Italy's GDP, since the product was bought in one country and used in another.
125. Tesla builds a new vehicle, and completes it in December 2015. It sells the vehicle in January 2016. The value of
this vehicle affects U.S. GDP
a.
for 2015 only, since it was completed in December of 2015.
b.
for both 2015 and 2016.
c.
for 2016 only, when it is sold to the buyer.
d.
for neither year if it is sold to a citizen of Canada.
