Question 1

Net domestic income is a useful concept primarily because it

Accepted Answer

Net domestic income excludes the value of output used for replacement investment, focusing on the income generated from current production activities.

Question 2

In national- income accounting, a rise in G_awill be recorded (other things being equal)if

Accepted Answer

In national-income accounting, a rise in G (government spending) is recorded when there is an increase in government expenditures, such as the total salaries paid to civil servants.

Question 3

The best measure of total income received by Canadian citizens is

Accepted Answer

GNP (Gross National Product) measures the total income received by Canadian citizens, regardless of where they are located. It includes income earned from both domestic and foreign sources. Other options such as disposable personal income, real GDP, and net domestic income at factor cost, only measure income received from domestic sources. Nominal GDP only measures the total value of goods and services produced within a country's borders, but not necessarily the income earned by its citizens.

Question 4

Which of the following statements regarding investment is correct?

Accepted Answer

Housing construction is considered an investment because it increases the existing stock of capital goods (in this case, housing). This is in contrast to consumption expenditure, which refers to purchases of goods and services for immediate use or satisfaction.

B) rental payments are not included as investment expenditures because they do not result in the acquisition of a new capital good, but rather the use of an existing one.

C) Depreciation refers to the decrease in value of existing capital stock over time, not funds used to increase it.

D) stocks and bonds are financial assets, not physical capital goods, and so are not included in the capital stock.

E) the accumulation of inventories is considered investment spending because it represents the purchase of goods that will be used or sold in the future, and thus adds to the stock of capital.

Question 5

Which of the following is included in current calculations of GDP?

Accepted Answer

GDP includes exported goods produced within the country, such as the computers in choice D. Options A, B, and E do not involve market transactions, while choice C is a second-hand sale and not a newly produced good.

Question 6

The term "fixed investment" refers to

Accepted Answer

Fixed investment refers to the creation of new plant and equipment, rather than just the maintenance or repair of existing capital stock. Therefore, choice E is the best answer.

Question 7

When calculating GDP from the expenditure side, which of the following is true of the government purchases component, G_a?

Accepted Answer

Government purchases in GDP calculations exclude transfer payments, as these are not payments for goods or services but rather redistributions of income.

Question 8

In the national income and product accounts, a reduction of inventories counts as

Accepted Answer

A reduction of inventories is considered as negative investment in the national income and product accounts. It means that businesses are selling more goods from their existing inventories than they are producing. This one-time reduction is subtracted from the Gross Domestic Product (GDP) calculation because the goods sold were produced in a previous period and they were included in the GDP at that time. Therefore, the reduction of inventories is considered as a negative investment in the context of national accounts.

Question 9

As a measure of Canadian economic activity GDP is to GNP. As a measure of the income accruing to Canadian residents, GDP is to GNP.

Accepted Answer

The answer of As a measure of Canadian economic activity...

Question 10

Which of the following statements about depreciation is true?

Accepted Answer

Net investment is the difference between gross investment (the total amount of investment in new capital goods) and depreciation (the decrease in value of existing capital goods over a period of time). Therefore, net investment is equal to gross investment minus depreciation.

Question 11

When calculating GDP from the expenditure side, G_acomprises

Accepted Answer

Government expenditures on goods and services are included in GDP calculations, but transfer payments are not, as they do not reflect the purchase of goods or services.

Question 12

If a firm's depreciation exceeds its gross investment, then its

Accepted Answer

If a firm's depreciation exceeds its gross investment, it means that the value of their capital stock is declining over time. This is because the firm is not investing enough in new capital to offset the loss in value due to depreciation. Therefore, the best choice is E, which states that the capital stock will be shrinking.

Question 13

One major reason that GDP is an inaccurate measure of the "quality of life" is that

Accepted Answer

GDP only measures economic activity and does not take into account factors such as the value of leisure time or the distribution of income, which can heavily influence the quality of life. Therefore, it is not an accurate measure of overall well-being or standard of living.

Question 14

Suppose you are hired as a consultant to estimate the increase in consumer demand for automobiles for the coming year. Which measure of aggregate income would be most useful to you for this type of forecasting?

Accepted Answer

Disposable income is the most useful measure of aggregate income for forecasting consumer demand for automobiles because it represents the amount of money individuals and households have left after paying taxes and necessary expenses, such as housing and food. This disposable income can be used to purchase durable goods, such as automobiles, and thus provides a better indication of consumer demand for such goods. GNP, GDP, GDP deflator, and NNP do not specifically take into account disposable income available to consumers.

Question 15

To calculate the change in the value of inventories for the investment component of GDP, one should use their

Accepted Answer

The answer of To calculate the change in the value...

Question 16

The "value added" for an individual firm can be calculated by

Accepted Answer

Value added is calculated by summing up the income received by the factors of production, which includes wages, rent, interest, and profit, reflecting the firm's contribution to the economy.

Question 17

Suppose a government collects $12 billion in various tax revenues, and pays $2.5 billion in debt interest, $9 billion in social security benefits, and $0.5 billion in government employee wages. What is the direct contribution to GDP coming from this government's fiscal actions?

Accepted Answer

The direct contribution to GDP from government fiscal actions is the government spending on goods and services, which in this case is the $0.5 billion in government employee wages. Other expenditures like debt interest and social security benefits are transfer payments and do not directly contribute to GDP.

Question 18

If the amount of income generated in Canada that is remitted to foreigners is greater than the amount of income generated abroad that is remitted to Canadian residents, then

Accepted Answer

GNP (Gross National Product) accounts for the income generated by a country's residents both domestically and abroad, while GDP (Gross Domestic Product) only accounts for income generated within the country. If more income is remitted to foreigners than received from abroad, GNP will be lower than GDP.

Question 19

Of the following possibilities, the best measure of the average material living standards of domestic residents is

Accepted Answer

The answer of Of the following possibilities, the best measure...

Question 20

Disposable personal income

Accepted Answer

Disposable personal income is the portion of national income that households have available for spending and saving after personal income taxes have been deducted.

Quiz 20: The Measurement of National Income

Net domestic income is a useful concept primarily because it

In national- income accounting, a rise in G_awill be recorded (other things being equal) if

The best measure of total income received by Canadian citizens is

Which of the following statements regarding investment is correct?

Which of the following is included in current calculations of GDP?

The term "fixed investment" refers to

When calculating GDP from the expenditure side, which of the following is true of the government purchases component, G_a?

In the national income and product accounts, a reduction of inventories counts as

As a measure of Canadian economic activity GDP is to GNP. As a measure of the income accruing to Canadian residents, GDP is to GNP.

Which of the following statements about depreciation is true?

When calculating GDP from the expenditure side, G_acomprises

If a firm's depreciation exceeds its gross investment, then its

One major reason that GDP is an inaccurate measure of the "quality of life" is that

Suppose you are hired as a consultant to estimate the increase in consumer demand for automobiles for the coming year. Which measure of aggregate income would be most useful to you for this type of forecasting?

To calculate the change in the value of inventories for the investment component of GDP, one should use their

The "value added" for an individual firm can be calculated by

Suppose a government collects $12 billion in various tax revenues, and pays $2.5 billion in debt interest, $9 billion in social security benefits, and $0.5 billion in government employee wages. What is the direct contribution to GDP coming from this government's fiscal actions?

If the amount of income generated in Canada that is remitted to foreigners is greater than the amount of income generated abroad that is remitted to Canadian residents, then

Of the following possibilities, the best measure of the average material living standards of domestic residents is

Disposable personal income

Quiz 20: The Measurement of National Income

Net domestic income is a useful concept primarily because it

In national- income accounting, a rise in Ga will be recorded (other things being equal) if

The best measure of total income received by Canadian citizens is

Which of the following statements regarding investment is correct?

Which of the following is included in current calculations of GDP?

The term "fixed investment" refers to

When calculating GDP from the expenditure side, which of the following is true of the government purchases component, Ga?

In the national income and product accounts, a reduction of inventories counts as

As a measure of Canadian economic activity GDP is to GNP. As a measure of the income accruing to Canadian residents, GDP is to GNP.

Which of the following statements about depreciation is true?

When calculating GDP from the expenditure side, Ga comprises

If a firm's depreciation exceeds its gross investment, then its

One major reason that GDP is an inaccurate measure of the "quality of life" is that

Suppose you are hired as a consultant to estimate the increase in consumer demand for automobiles for the coming year. Which measure of aggregate income would be most useful to you for this type of forecasting?

To calculate the change in the value of inventories for the investment component of GDP, one should use their

The "value added" for an individual firm can be calculated by

Suppose a government collects $12 billion in various tax revenues, and pays $2.5 billion in debt interest, $9 billion in social security benefits, and $0.5 billion in government employee wages. What is the direct contribution to GDP coming from this government's fiscal actions?

If the amount of income generated in Canada that is remitted to foreigners is greater than the amount of income generated abroad that is remitted to Canadian residents, then

Of the following possibilities, the best measure of the average material living standards of domestic residents is

Disposable personal income

In national- income accounting, a rise in G_awill be recorded (other things being equal) if

When calculating GDP from the expenditure side, which of the following is true of the government purchases component, G_a?

When calculating GDP from the expenditure side, G_acomprises