Chapter 07 – Measuring Domestic Output and National Income
1. Which of the following is a primary use for national income accounts?
2. GDP is the market value of:
Chapter 07 – Measuring Domestic Output and National Income
3. The gross domestic product (GDP) concept accounts for society’s valuation of the relative
worth of goods and services by using:
4. To avoid multiple counting in national income accounts:
5. Adding the market value of all final and intermediate goods and services in an economy in
a given year would result in:
Chapter 07 – Measuring Domestic Output and National Income
6. An example of final goods in national income accounts would be:
7. The following are examples of final goods in national income accounting, except:
8. An example of intermediate goods would be:
Chapter 07 – Measuring Domestic Output and National Income
9. All of the following are examples of intermediate goods, except:
10. The total volume of business sales in our economy is several times larger than GDP
because:
11. Value added by a firm is the market value of the firm’s output minus the:
Chapter 07 – Measuring Domestic Output and National Income
12. A business buys $5,000 worth of inputs from other firms in order to produce a product.
The business makes 100 units of the product and each of them sells for $65. The value added
by the business to these products is:
13. Firm A produces something that Firm B uses as an input. The product of Firm B, in turn,
is purchased and used as an input by Firm C, and so on down the line through Firm E, which
produces the end product. The total value added by Firms A-E from the production of the end
product described here is:
Chapter 07 – Measuring Domestic Output and National Income
14. Subtracting the purchase of intermediate products and supplies from the value of the sales
of final products determines the amount of:
15. Consider the following data for a firm over a period of time.
The contribution of the firm to domestic output by the value-added method is:
Chapter 07 – Measuring Domestic Output and National Income
16. Which of the following is a private transfer payment?
17. Which of the following is included in GDP?
18. The sale of a used automobile would not be included in GDP of the current year because it
is a:
Chapter 07 – Measuring Domestic Output and National Income
19. The two ways of looking at GDP are the:
20. Which of the following is included in the expenditures approach to GDP?
21. The largest expenditure component of GDP is:
Chapter 07 – Measuring Domestic Output and National Income
22. Which of the following is not a component of GDP in the expenditures approach?
23. Which of the following is not included in personal consumption expenditures?
24. Money spent on the purchase of a new house is included in the GDP as a part of:
Chapter 07 – Measuring Domestic Output and National Income
25. The value of corporate stocks and bonds traded in a given year is:
26. In November 2009, Econland Motors produced an automobile that was delivered to a
local dealership in December 2009. The auto was then sold to Sharon Smith for personal use
in February of 2010. Following national income accounting practices, this auto would be
counted as part of:
27. Which would be considered an investment according to economists?
Chapter 07 – Measuring Domestic Output and National Income
28. Business inventories increase when firms produce:
29. Gross domestic private investment, as defined in national income accounts, would
include:
30. Gross private domestic investment is the value of capital goods bought by firms plus:
Chapter 07 – Measuring Domestic Output and National Income
31. In an economy, the value of inventories was $75 billion in 2009 and $63 billion in 2010.
In calculating total investment for 2010, national income accountants would:
32. When gross investment is positive, net investment:
33. When gross private domestic investment exceeds depreciation, it can be concluded that:
Chapter 07 – Measuring Domestic Output and National Income
34. A nation’s capital stock was valued at $500 billion at the start of the year and $575 billion
at the end. Consumption of private fixed capital in the year was $35 billion. Assuming stable
prices, net investment was:
35. A nation’s capital stock was valued at $300 billion at the start of the year and $350 billion
at the end. Consumption of private fixed capital in the year was $25 billion. Assuming stable
prices, gross investment was:
36. The consumption of fixed capital in each year’s production is called:
Chapter 07 – Measuring Domestic Output and National Income
37. In an economy that is experiencing a shrinking production capacity:
38. In an economy that has stationary production capacity:
39. Disinvestment occurs when:
Chapter 07 – Measuring Domestic Output and National Income
40. Government purchases in national income accounts would include payments for:
41. When the local police and fire departments buy new cars for their operations, these are
counted as part of:
42. A distinguishing characteristic of public transfer payments is that:
Chapter 07 – Measuring Domestic Output and National Income
43. Net exports is a positive number when:
44. In the expenditures approach of national income accounting, C, Ig, and G include
expenditures for:
45. Computation of GDP by the expenditures method would include the purchase of:
Chapter 07 – Measuring Domestic Output and National Income
46. In the reservoir analogy for stock versus flow, the stock of capital is similar to the:
47. In the reservoir analogy of stock and flow for the economy:
48. If inflows to the capital stock are greater than outflows, then:
Chapter 07 – Measuring Domestic Output and National Income
49. GDP in an economy is $11,050 billion. Consumer expenditures are $7,735 billion,
government purchases are $1,989 billion, and gross investment is $1,410 billion. Net exports
are:
50. The following are national income account data for a hypothetical economy in billions of
dollars: gross private domestic investment ($320); imports ($35); exports ($22); personal
consumption expenditures ($2,460); and, government purchases ($470). What is GDP in this
economy?
Chapter 07 – Measuring Domestic Output and National Income
51. The following are national income account data for a hypothetical economy in billions of
dollars: government purchases ($1,050); personal consumption expenditures ($4,800);
imports ($370); exports ($240); gross private domestic investment ($1,130). Personal
consumption expenditures are approximately what percentage of this economy?
The following data about a hypothetical economy are in billions of dollars.
52. Refer to the above data. GDP in this economy is:
Chapter 07 – Measuring Domestic Output and National Income
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53. Refer to the above data. Personal consumption expenditures are approximately what
percent of GDP in this economy?
54. The expenditures or output approach to GDP measures it by summing up:
(The following national income data are in billions of dollars.)