Deck 21: Measuring National Output and National Income

Question 1

Gross domestic product measures

A) the total spending of everyone in the economy.
B) the value of all output in the economy.
C) the total income of everyone in the economy.
D) all of the above

Answer 1

all of the above

Question 2

Gross domestic product calculations count only final goods and services because

A) one cannot calculate the quantities of intermediate goods produced.
B) it is difficult to measure the prices of intermediate goods produced.
C) these are the only goods and services that are produced in an economy.
D) counting all goods and services would lead to double-counting of many activities.

Answer 2

counting all goods and services would lead to double-counting of many activities.

Question 3

Which of the following would be counted in 2016's GDP?

A) the value of a loan you take in 2016
B) the value of a TV that was produced in 2015 but not sold until 2016
C) the bonus check a stockbroker gets from his/her company in 2016
D) the value of a bond sold by the federal government

Answer 3

the bonus check a stockbroker gets from his/her company in 2016

Question 4

Which of the following is not included in 2016's GDP?

A) the value of a motorcycle produced in the United States and exported to Japan
B) the profit earned in 2016 from selling a stock that you purchased in 2008
C) the value of a motor that is used in the production of a lawn mower
D) the commission earned by a headhunter when she locates a job for a client

Question 5

Profits earned in the United States by foreign-owned companies are included in

A) the U.S. GDP but not GNP.
B) neither the U.S. GDP nor GNP.
C) the U.S. GNP but not GDP.
D) both the U.S. GDP and GNP.

Question 6

Which of the following is an example of an intermediate good?

A) the dough you buy to fix yourself a pizza for dinner
B) the chocolate you buy to make yourself some cookies
C) the pizza sauce you purchase to make pizzas to sell for a fund-raiser for an organization you belong to
D) lumber you buy to build a house for your dog

Question 7

Which of the following is a good or service counted in GDP?

A) tires Ford buys to put on a car
B) a used tire you buy for your personal car
C) a new tire you buy for your personal car
D) used tires bought by a used car dealer to put on a car on his lot

Question 8

Which of the following is an example of a final good or service?

A) wheat a bakery purchases to make bread
B) coffee beans Starbucks purchases to make coffee
C) lumber purchased by a construction company to used in building houses
D) a computer purchased by Federal Express to track shipments

Question 9

The GDP includes

A) the value of all intermediate goods and services.
B) the value of all final goods and services.
C) the value of both intermediate and final goods and services.
D) the value of all transactions.

Question 10

The GDP of the U.S. in 2014 was around $17.4 trillion. This means

A) that the value of output in the U.S. in 2014 was around $17.4 trillion.
B) that total income in the U.S. in 2014 was around $17.4 trillion.
C) that total spending on final goods and services in the U.S. in 2014 was around $17.4 trillion.
D) all of the above.

Question 11

Which of the following is included in both the U.S. GDP and GNP?

A) The value of all cars produced by Ford in Mexico.
B) The value of all cars produced by General Motors in the U.S.
C) The value of all cars produced by Toyota in the U.S.
D) The value of cars produced by Nissan in Japan and the U.S.

Question 12

Which of the following is not counted in the GNP of the United States?

A) The wage of a U.S. citizen who works in a foreign country for a foreign firm.
B) The interest earned by a U.S. bank on loans to a business firm located in Brazil.
C) The profit earned by a restaurant located in the United States but owned by a Mexican company.
D) The value of services that are produced by state and local governments in the United States.

Question 13

Which of the following would not be counted in 2016's GDP?

A) the value of a 2008 boat you purchase from a boat dealer in 2016
B) the 2016 salary of a used motorcycle salesperson
C) the commissions earned by a real estate agent in selling condominiums built prior to 2016
D) the value of a refrigerator manufactured in 2016 but not sold in 2016

Question 14

Gross national product is the total market value of

A) all final and intermediate goods and service produced by resources owned by a country in a given year.
B) all final and intermediate goods and services produced in a country, regardless of who owns the resources.
C) all final goods and services produced in a country in a given year, regardless of who owns the resources.
D) all final goods and services produced by resources owned by a country, regardless of where production takes place.

Question 15

Income Mexican citizens earn in the U.S. counts in

A) U.S. GNP.
B) Mexican GNP.
C) Mexican GDP.
D) both U.S. and Mexican GDP.

Question 16

The data in the national income and product accounts are compiled by

A) the Bureau of Economic Analysis.
B) the House Ways and Means Committee.
C) the Federal Reserve.
D) the Bureau of Labor Statistics.

Question 17

If no foreign companies produce in a country, but many of the country's companies produce abroad, then

A) the country's GNP will tend to exceed its GDP.
B) the country's GDP will tend to exceed its GNP.
C) the country's GNP and GDP will tend to be equal.
D) the country's GDP will tend to be equal to its domestic income.

Question 18

The value of what KFC produces in Japan is included in the U.S. ________ and in the Japanese ________.

A) GDP; GDP
B) GNP; GNP
C) GNP; GDP
D) GDP; GNP

Question 19

The total market value of all final goods and services produced within a given period by factors of production located within a country is

A) gross domestic product.
B) gross national product.
C) net national product.
D) net national income.

Question 20

Double counting can be avoided by

A) including the value of intermediate goods in the current year.
B) not counting the value of intermediate goods in GDP.
C) including the value of intermediate goods in the GNP but not in the GDP.
D) including the value of intermediate goods in the production year but not in the selling year of those goods.

Question 21

Which prices are used to measure goods and services in calculating GDP?

A) past year prices
B) current prices
C) average prices
D) projected prices

Question 22

"Final goods and services" are those that are

A) double counted in the calculation of GDP.
B) produced outside of the United States.
C) used in the production of other goods and services.
D) sold to the ultimate or final purchasers.

Question 23

GDP measures the total income of everyone and the total spending by everyone in the economy.

Question 24

Profits earned in a foreign country by U.S.-owned companies are included in

A) the United States GDP but not GNP.
B) neither the United States GDP nor GNP.
C) the United States GNP but not GDP.
D) both the United States GDP and GNP.

Question 25

The total market value of all final goods and services produced by resources owned by a country, regardless of where production takes place is

A) gross private domestic investment.
B) national income.
C) gross domestic product.
D) gross national product.

Question 26

Which of the following is an example of an intermediate good?

A) the tortillas you buy to make yourself a burrito for lunch
B) the blueberries you buy to bake yourself some muffins
C) the chocolate chips you purchase to make cookies to sell at a bake sale for your kids' school
D) the lumber you buy to build a house for your dog

Question 27

A country's GNP will definitely exceed its GDP if ________ foreign companies produce in the country and ________ of the country's companies produce abroad.

A) no; many
B) many; none
C) many; many
D) no; none

Question 28

Which of the following is counted in the GNP of the United States?

A) the wage of a foreign citizen who works in the United States for a U.S. firm
B) the interest earned by a Brazilian bank on loans to a business firm located in the United States
C) the profit earned by a restaurant located in the United States but owned by a Guatemalan company
D) the value of services that are produced by state and local governments in the United States

Question 29

The value of what Burger King produces in France is included in the United States ________ and in the French ________.

A) GDP; GDP
B) GNP; GNP
C) GNP; GDP
D) GDP; GNP

Question 30

The value of all motorcycles produced by Harley Davidson in the United States is

A) included in the U.S. GDP but not the U.S. GNP.
B) included in both the U.S. GDP and GNP.
C) included in the U.S. GNP but not the U.S. GDP.
D) not included in either the U.S. GDP or GNP.

Question 31

If an economy produced 10 pizzas at $20 each and fifteen gallons of root beer at $5 each, the total value of these goods and services would be

A) $75.
B) $200.
C) $275.
D) $2,750.

Question 32

The income of U.S. citizens working abroad counts in U.S. GDP.

Question 33

The GDP of the United States in 2014 was around $17.4 trillion. This means

A) that the value of output produced in the U.S. in 2014 was around $17.4 trillion.
B) that total income in the U.S. in 2014 was more than $17.4 trillion.
C) that total spending in the U.S. in 2014 was more than $17.4 trillion.
D) that the value of output produced by U.S.-owned resources was less than $17.4 trillion.

Question 34

If, in 2016, an economy's total production was 50 bushels of soybeans at $20 each and 40 gallons of honey at $15 per gallon, its gross domestic product would be

A) $400.
B) $600.
C) $1,000.
D) $1,600.

Question 35

Stock market transactions are part of GNP.

Question 36

A rancher raises alpaca. Once a year, he shears them and sells the raw wool to a processor who spins it into yarn. The yarn is then sold to a mill which produces and sells alpaca sweaters. In calculating GDP we would count

A) the raw wool, the yarn and the sweaters.
B) only the yarn and the sweaters.
C) only the sweaters.
D) only the raw wool and the yarn.

Question 37

Which of the following would not be counted in 2016's GDP?

A) the value of a laser printer manufactured in 2016 but not sold in 2016
B) the commissions earned by a sales associate in selling home theater systems built prior to 2016
C) the value of a 1976 convertible you purchase from a dealer in 2016
D) the 2016 salary of a used furniture salesperson

Question 38

Total income in the economy can sometimes be greater than total spending.

Question 39

Which of the following is not a component of gross domestic product?

A) net exports
B) government purchases
C) purchases by consumers of used goods
D) purchases by consumers of finished goods

Question 40

By not counting the value of intermediate goods when calculating GDP, you avoid

A) deficit spending.
B) double counting.
C) black-market accounting.
D) year-to-date calculations.

Question 41

Refer to the information provided in Table 21.2 below to answer the question(s) that follow.
Table 21.2
Refer to Table 21.2. The value of government spending in billions of dollars is

A) 200.
B) 600.
C) 800.
D) 1,000.

Question 42

The single largest expenditure component in GDP is

A) government spending.
B) investment.
C) consumption.
D) net exports.

Question 43

Refer to the information provided in Table 21.2 below to answer the question(s) that follow.
Table 21.2
Refer to Table 21.2. The value for gross domestic product in billions of dollars is

A) 2,900.
B) 3,140.
C) 3,440.
D) 3,650.

Question 44

Refer to the information provided in Table 21.1 below to answer the question(s) that follow.
Table 21.1
Refer to Table 21.1. Personal consumption expenditures in billions of dollars are

A) 1,000.
B) 1,300.
C) 1,500.
D) 2,000.

Question 45

Refer to the information provided in Table 21.1 below to answer the question(s) that follow.
Table 21.1
Refer to Table 21.1. The value for gross private domestic investment in billions of dollars is

A) 300.
B) 375.
C) 425.
D) 450.

Question 46

A farmer buys a new tractor from John Deere to use on her cotton farm. This tractor is included in GDP as

A) part of gross private domestic investment.
B) a durable consumption good.
C) a service.
D) a nondurable consumption good.

Question 47

Double counting can be avoided by using the value-added approach when calculating GDP.

Question 48

The income of U.S. citizens working abroad counts in U.S. GNP.

Question 49

Intermediate goods are produced by one firm for use in further processing by another firm.

Question 50

Refer to the information provided in Table 21.1 below to answer the question(s) that follow.
Table 21.1
Refer to Table 21.1. The value for net exports in billions of dollars is

A) 150.
B) 250.
C) 650.
D) 800.

Question 51

Value added is the difference between the value of good as they leave a stage of production and cost of the goods as they entered that stage of production.

Question 52

A company produced 8 dishwasher machines in 2015. The company sold 6 in 2015 and added 2 to its inventories. The market value of the dishwasher machines in 2015 was $200 per unit. What is the value of this company's output that will be included in the 2015 GDP?

A) $400
B) $1,400
C) $1,600
D) $2,000

Question 53

Refer to the information provided in Table 21.1 below to answer the question(s) that follow.
Table 21.1
Refer to Table 21.1. The value of government spending in billions of dollars is

A) 100.
B) 200.
C) 300.
D) 500.

Question 54

GDP calculations include goods, but not services.

Question 55

Refer to the information provided in Table 21.2 below to answer the question(s) that follow.
Table 21.2
Refer to Table 21.2. The value for gross private domestic investment in billions of dollars is

A) 740.
B) 810.
C) 850.
D) 890.

Question 56

Refer to the information provided in Table 21.2 below to answer the question(s) that follow.
Table 21.2
Refer to Table 21.2. The value for net exports in billions of dollars is

A) -200.
B) -150.
C) 50.
D) 250.

Question 57

Refer to the information provided in Table 21.1 below to answer the question(s) that follow.
Table 21.1
Refer to Table 21.1. The value of gross domestic product in billions of dollars is

A) 3,000.
B) 3,075.
C) 3,125.
D) 3,750.

Question 58

As long as an item has never been sold, its value is counted in GDP for the year in which it is finally sold.

Question 59

The equation for GDP using the expenditure approach is

A) GDP = C + I + G + EX - IM.
B) GDP = C + I + G + (IM - EX).
C) GDP = C + I + G + EX + IM.
D) GDP = C + I + G - EX - IM.

Question 60

Refer to the information provided in Table 21.2 below to answer the question(s) that follow.
Table 21.2
Refer to Table 21.2. Personal consumption expenditures in billions of dollars are

A) 900.
B) 1,100.
C) 1,400.
D) 1,600.

Question 61

Net investment equals

A) GDP minus final sales.
B) gross investment minus final sales.
C) gross investment minus depreciation.
D) depreciation plus GDP.

Question 62

Net investment is

A) gross investment minus depreciation.
B) gross investment plus depreciation.
C) depreciation minus gross investment.
D) GNP minus final sales.

Question 63

If gross investment in 2017 is $200 billion and depreciation in 2017 is $1,000 billion, net investment in 2017 is

A) -$900 billion.
B) -$800 billion.
C) $1,000 billion.
D) $1,200 billion.

Question 64

If net investment in 2016 is $350 billion and gross investment in 2016 is $500 billion, depreciation in 2016 is

A) $0.7 billion.
B) $150 billion.
C) $175 billion.
D) $250 billion.

Question 65

The total value of all capital goods newly produced in a given period is

A) the change in business inventories.
B) depreciation.
C) net investment.
D) gross investment.

Question 66

If gross investment in 2016 is $750 billion and depreciation in 2016 is $850 billion, net investment in 2016 is

A) -$50 billion.
B) -$100 billion.
C) -$800 billion.
D) -$1,600 billion.

Question 67

The change in business inventories is measured as

A) final sales minus GDP.
B) final sales plus GDP.
C) GDP minus final sales.
D) the ratio of final sales to GDP.

Question 68

In 2016 the change in business inventories is -$70 billion and GDP is $200 billion. Final sales in 2016

A) are $130 billion.
B) are $200 billion.
C) are $270 billion.
D) are $340 billion.

Question 69

Exports equal

A) imports - net exports.
B) net exports + imports.
C) net exports - imports.
D) imports + (exports + imports).

Question 70

When calculating GDP, exports are ________ and imports are ________.

A) added; added
B) added; subtracted
C) subtracted; added
D) subtracted; subtracted

Question 71

The change in capital stock in a period is equal to

A) the ratio of the amount of the capital at the beginning of the period to the amount of depreciation.
B) the amount of the capital stock at the beginning of the period plus gross investment minus depreciation.
C) the amount of the capital at the beginning of the period plus gross investment.
D) the amount of the capital at the beginning of the period minus net investment.

Question 72

In 2016 final sales equal $200 billion, and the change in business inventories is $50 billion. GDP in 2016

A) is $250 billion.
B) is $200 billion.
C) is $150 billion.
D) is $40 billion.

Question 73

In 2016 final sales equal $350 billion and the change in business inventories is -$60 billion. GDP in 2016

A) is $290 billion.
B) is $295 billion.
C) is $410 billion.
D) cannot be determined from this information.

Question 74

If the change in business inventories is zero, then final sales are

A) zero.
B) less than GDP.
C) greater than GDP.
D) equal to GDP.

Question 75

In 2016, GDP was exactly equal to final sales. This implies that

A) there was accumulation of inventories that year.
B) there was a decline in inventories that year.
C) there was no change in inventories that year.
D) GDP did not grow that year compared to the year before.

Question 76

If in a year there is a positive inventory investment, then final sales

A) exceed GDP.
B) are less than GDP.
C) equal GDP.
D) are zero.

Question 77

If net investment in 2017 is $500 billion and gross investment in 2017 is $900 billion, depreciation in 2017 is

A) -$500 billion.
B) $0.
C) $400 billion.
D) $1,400 billion.

Question 78

If net investment is zero, then

A) gross investment is greater than depreciation.
B) gross investment is less than depreciation.
C) gross investment equals depreciation.
D) depreciation is zero.

Question 79

Suppose that net investment in 2016 was $20 billion and depreciation was $4 billion. Gross investment in 2016 was

A) $16 billion.
B) $20 billion.
C) $24 billion.
D) $28 billion.

Question 80

Depreciation is

A) the decrease in the overall price level.
B) the additional capital stock in a year.
C) the amount of used up machinery in a year.
D) the amount of decline in business inventories.