Deck 37: National Income Accounting How to Map the Circulation of Money and Goods

Question 1

Whats defention of terms:
-circular flow

Answer 1

the supply of goods and services moves in one direction, while demand in the form of money moves in the other direction

Question 2

Whats defention of terms:
-consumption

Answer 2

the money that individuals spend for food, clothing, shelter ,and everything else they buy

Question 3

Whats defention of terms:
-depreciation

Answer 3

decrease in the value of plants and equipment over time (14); the funds set aside to replace the machinery and factory buildings that are used up or eventually worn out in the process of production

Question 4

Whats defention of terms:
-disposable personal income

Question 5

Whats defention of terms:
-effective demand

Question 6

Whats defention of terms:
-employee compensation

Question 7

Whats defention of terms:
-expenditures

Question 8

Whats defention of terms:
-government spending

Question 9

Whats defention of terms:
-gross domestic product

Question 10

Whats defention of terms:
-gross investment spending

Question 11

Whats defention of terms:
-investment

Question 12

Whats defention of terms:
-national income

Question 13

Whats defention of terms:
-net exports

Question 14

Whats defention of terms:
-personal savings

Question 15

Whats defention of terms:
-property income

Question 16

Whats defention of terms:
-tax loophole

Question 17

Whats defention of terms:
-trade deficit

Question 18

Whats defention of terms:
-trade surplus

Question 19

Whats defention of terms:
-transfer payment

Question 20

Explain the flows of money and goods between businesses and households.
-Explain how and why money goes from businesses to households and how and why money goes from households to businesses.

Question 21

Explain the flows of money and goods between businesses and households.
-Explain how demand and supply flows between businesses and households.

Question 22

Discuss the relationships of GDP, expenditures, and national income.
-How is GDP measured?

Question 23

Discuss the relationships of GDP, expenditures, and national income.
-What is national income used for? How does this correspond to expenditures and GDP?

Question 24

Describe the components of expenditures, GDP, and national income and explain how each is calculated.
-What are the components of expenditures? Describe each one in detail. What is the difference between gross and net expenditures?

Question 25

Describe the components of expenditures, GDP, and national income and explain how each is calculated.
-What are the sources of income from production? What are other sources of income to households?

Question 26

Describe how official government agencies track aggregate economic activity in great detail.
-What agency tracks flows of dollars and production?

Question 27

Describe how official government agencies track aggregate economic activity in great detail.
-What are some measures listed under national income?

Question 28

Explain the difference between GDP, GNP, and national income.
-How is GDP calculated? How is GNP calculated?

Question 29

Explain the difference between GDP, GNP, and national income.
-How is national income calculated from GNP?

Question 30

Discuss why GDP is not necessarily a reflection of social and individual well-being.
-What are some "costs" not captured by GDP?

Question 31

Discuss why GDP is not necessarily a reflection of social and individual well-being.
-What goods and services are not captured by GDP?

Question 32

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.

Question 33

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.

Question 34

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.

Question 35

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.

Question 36

When exports are less than imports, the US

A) a trade surplus
B) a trade deficit
C) a income surplus
D) a government deficit

Question 37

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.

Question 38

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.

Question 39

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

Question 40

What's the difference between GNP and GDP?

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.
D) there is no difference.

Question 41

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) GDP will go down, since Mary's housekeeping chores will be unpaid.
D) It depends on whether John gives Mary any money as an allowance

Question 42

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.