Economics (McConnell), 18th Edition

Chapter 24: Measuring Domestic Output and National Income

Quiz

1
GDP excludes expenditures for:
A)additions to inventories
B)new housing
C)government purchases of military equipment
D)corporate stock
2
The "G" term in C + Ig + G + Xn includes all of the following except:
A)state government purchases of new computers
B)Social Security checks received by retirees
C)salaries received by members of the military
D)local government expenditures for building new roads
3
The income approach to GDP sums the total income earned by resource suppliers and adds:
A)net transfer payments and personal taxes
B)net investment and depreciation
C)depreciation, taxes on production and imports, and subtracts net foreign factor income
D)net transfer payments, depreciation, and net foreign factor income
4
Refer to the following data:

Year

Units of Output

Price per unit

1

4

$3

2

5

$4

3

8

$5

4

9

$6

5

10

$7

This economy produces only one product; price and output data are shown for a five-year period. Year 3 is the base year.
The price index for year 4 is:
A)80
B)120
C)20%
D)1.2
5
The change in real GDP is not an accurate measure of the change in economic welfare because, for example:
A)improvements in product quality are overstated
B)expenditures for personal services are excluded
C)the price level changes over time
D)some production creates pollution
6
"The market value of all final goods and services produced within a nation in a given year." This best describes:
A)Net domestic product
B)Gross domestic product
C)National income
D)Personal income
7
In calculating GDP:
A)both exports and imports are added
B)neither exports nor imports are added
C)exports are added and imports are subtracted
D)imports are added and exports are subtracted
8
Suppose that last year domestic firms spent $80 billion on final purchases of plant and equipment, of which $15 billion replaced equipment that had worn out during the year. In addition, firms collectively added $10 billion to inventories and new construction totaled $35 billion. In calculating GDP, national income accountants would add gross investment of:
A)$95 billion
B)$100 billion
C)$110 billion
D)$125 billion
9
Suppose nominal GDP in the base year was $380 billion. Five years later, nominal GDP was $480 and the GDP price index was 120. Over those five years, real GDP:
A)increased by $20 billion
B)increased by $96 billion
C)increased by $80 billion
D)did not change
10
Disposable income consists of:
A)personal income plus personal taxes
B)net domestic product minus personal taxes
C)GDP corrected for inflation
D)consumption plus saving
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