Chapter 07 – Measuring Domestic Output and National Income
1. The National Income and Product Accounts (NIPA) help economists and policymakers to:
2. The agency responsible for compiling the National Income Product Accounts for the U.S.
economy is the:
Chapter 07 – Measuring Domestic Output and National Income
3. The system that measures the economy’s overall performance is formally known as:
4. A nation’s gross domestic product (GDP):
5. A nation’s gross domestic product (GDP):
Chapter 07 – Measuring Domestic Output and National Income
6. GDP is the:
7. Suppose Smith pays $100 to Jones.
8. Suppose the total monetary value of all final goods and services produced in a particular
country in 2010 is $500 billion and the total monetary value of final goods and services sold is
$450 billion. We can conclude that:
Chapter 07 – Measuring Domestic Output and National Income
9. National income accountants can avoid multiple counting by:
10. Gross domestic product (GDP) measures and reports output:
11. By summing the dollar value of all market transactions in the economy we would:
Chapter 07 – Measuring Domestic Output and National Income
12. Final goods and services refer to:
13. If intermediate goods and services were included in GDP:
14. Which of the following is a final good or service?
Chapter 07 – Measuring Domestic Output and National Income
15. Which of the following is an intermediate good?
16. Tom Atoe grows fruits and vegetables for home consumption. This activity is:
17. The value added of a firm is the market value of:
Chapter 07 – Measuring Domestic Output and National Income
18. Alejandro Scoobertini owns a store specializing in soccer jerseys. In 2008, he purchased
$150,000 worth of jerseys from manufacturers, employed one worker for $40,000, purchased
$20,000 worth of supplies from an office supply store, and sold jerseys for $280,000. Based
on this information, what was the value added at Alejandro’s store in 2008?
19. Arthur sells $100 worth of cotton to Bob. Bob turns the cotton into cloth, which he sells to
Camille for $300. Camille uses the cloth to make prom dresses that she sells to Donita for
$700. Donita sells the dresses for $1200 to kids attending the prom. The total contribution to
GDP of this series of transactions is:
20. Which of the following transactions would be included in GDP?
Chapter 07 – Measuring Domestic Output and National Income
21. Value added refers to:
22. Assume that a manufacturer of stereo speakers purchases $40 worth of components for
each speaker. The completed speaker sells for $70. The value added by the manufacturer for
each speaker is:
23. Setup Corporation buys $100,000 of sand, rock, and cement to produce ready-mix
concrete. It sells 10,000 cubic yards of concrete at $30 a cubic yard. The value added by
Setup Corporation is:
Chapter 07 – Measuring Domestic Output and National Income
24. Value added can be determined by:
25. If depreciation exceeds gross investment:
26. The concept of net domestic investment refers to:
Chapter 07 – Measuring Domestic Output and National Income
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27. If depreciation (consumption of fixed capital) exceeds gross domestic investment, we can
conclude that:
28. When an economy’s production capacity is expanding:
Economy A: gross investment equals depreciation
Economy B: depreciation exceeds gross investment
Economy C: gross investment exceeds depreciation
Chapter 07 – Measuring Domestic Output and National Income
29. Refer to the above information. Positive net investment is occurring in:
30. Other things equal, the above information suggests that the production capacity in
economy:
31. In 1933, net private domestic investment was a minus $6.0 billion. This means that:
Chapter 07 – Measuring Domestic Output and National Income
32. An economy is enlarging its stock of capital goods:
33. If in some year gross investment was $120 billion and net investment was $65 billion,
then in that year the country’s capital stock:
34. GDP can be calculated by summing:
Chapter 07 – Measuring Domestic Output and National Income
35. In national income accounting, consumption expenditures include purchases of:
36. In national income accounting, consumption expenditures include:
37. Net exports are:
Chapter 07 – Measuring Domestic Output and National Income
38. Net exports are negative when:
39. Which of the following is not economic investment?
40. Which of the following do national income accountants consider to be investment?
Chapter 07 – Measuring Domestic Output and National Income
41. National income accountants define investment to include:
42. Suppose that inventories were $40 billion in 2007 and $50 billion in 2008. In 2008,
accountants would:
43. Suppose that inventories were $80 billion in 2007 and $70 billion in 2008. In 2008,
accountants would:
Chapter 07 – Measuring Domestic Output and National Income
44. Suppose that GDP was $200 billion in year 1 and that all other components of
expenditures remained the same in year 2 except that business inventories increased by $10
billion. GDP in year 2 is:
45. Suppose that GDP was $200 billion in year 1 and that all other components of
expenditures remained the same in year 2 except that business inventories fell by $10 billion.
GDP in year 2 is:
46. If the economy adds to its inventory of goods during some year:
Chapter 07 – Measuring Domestic Output and National Income
47. The smallest component of aggregate spending in the United States is:
48. In calculating GDP, governmental transfer payments, such as social security or
unemployment compensation, are:
49. The largest component of total expenditures in the United States is:
Chapter 07 – Measuring Domestic Output and National Income
50. Government purchases include government spending on:
51. In national income accounting, government purchases include:
52. Transfer payments are:
Chapter 07 – Measuring Domestic Output and National Income
53. The value of U.S. imports is:
54. In the treatment of U.S. exports and imports, national income accountants:
55. In calculating the GDP national income accountants:
Chapter 07 – Measuring Domestic Output and National Income
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56. The ZZZ Corporation issued $25 million in new common stock in 2008. It used $18
million of the proceeds to replace obsolete equipment in its factory and $7 million to repay
bank loans. As a result, investment:
57. In 2007, Trailblazer Bicycle Company produced a mountain bike that was delivered to a
retail outlet in November of 2007. The bicycle was sold to E.Z. Ryder in March of 2008. This
bicycle is counted as:
Answer the question on the basis of the following data. All figures are in billions of dollars: