CHAPTER 37
National Income Accounting
How to Map the Circulation of Money and Goods
MULTIPLE CHOICE
403. Which of the following would be classified as Consumption spending?
a. new plant and equipment bought by Ford Motor Company in Michigan.
b. money spent by the U.S. government to provide assistance to flood victims.
c. money spent by individuals for food and clothing
d. money spent by state and local governments on new school building.
404. Gross Domestic Product consists of spending on
a. Consumption, Investment, Government spending, and Net Exports
b. Consumption, Investment, Government spending on goods and services, and Transfer
payments.
c. Consumption, Investment, Government spending, and Imports
d. Consumption, Depreciation, Government spending, and Employee compensation.
405. What is disposable personal income?
a. Income that is spent rather than saved.
b. Income after taxes
c. Income not including fringe benefits.
d. Income received from the government.
406. What is included in employee compensation?
a. wages, salaries, commissions, and interest.
b. wages, salaries, bonuses, commissions, and fringe benefits.
c. wages and salaries only
d. wages, salaries and bonuses but not fringe benefits.
407. When exports are less than imports, the US
a. a trade surplus
b. a trade deficit
c. a income surplus
d. a government deficit
408. The circular flow of money refers to
a. money moves from households to businesses and from businesses to households.
b. money moves from government to households and from households to government.
c. money moves from businesses to government and from government to businesses.
d. money moves from one household to another.
409. Property income includes
a. bonuses, commissions, rent and fringe benefits.
b. bonuses, rent, interest and fringe benefits.
c. rent, interest, profit and bonuses.
d. rent, interest and profit.
APPENDIX 37.1
Detailed, Systematic Income Accounts
MULTIPLE CHOICE
410. What agency tracks aggregate activity in the U.S. economy?
a. the Bureau of Labor Statistics
b. The Office of Management and Budget
c. The Supreme Court
d. The Department of Commerce
411.
a. GNP does not include depreciation.
b. GDP includes receipts from rest of world and subtracts payments to rest of world.
c. GDP subtracts receipts from rest of world and includes payments to rest of world.
APPENDIX 37.2
Net Economic Welfare
MULTIPLE CHOICE
412. Mary has been working as a housekeeper for John for 6 months at a salary of $1000 per
month. John and Mary get married, and Mary continues to take care of the house. How does
this affect GDP?
a. GDP will be unaffected, since Mary is doing the same thing as always.
b. GDP will go up, since Mary will have more income now.
c. housekeeping chores will be unpaid.
d. It depends on whether John gives Mary any money as an allowance
413. Assume that there is a devastating wildfire in Northern California. Putting out the fire is
very expensive, and many homes have to be rebuilt. How does this affect GDP?
a. GDP will go up.
b. GDP will go down.
c. GDP will be unaffected.
d. It depends on whether the government borrowed money to pay for the cost of containing
the fire.