Question 1

Which of the following best defines retained earnings?

Accepted Answer

Retained earnings are the part of a corporation's net income that is kept within the company instead of being paid out as dividends to shareholders. Option A pertains to personal income and taxes, while option B does not specify that the income is being retained by the business. Option C refers to the payment of dividends, which is not the same as retained earnings.

Question 2

The government reports that "GDP increased by 1.6 percent in the last quarter." What does this statement mean?

Accepted Answer

The statement means that GDP increased by 1.6 percent during the last quarter, which is equivalent to an annual rate of 1.6 percent. Therefore, option C is correct. Options A, B, and D are all incorrect, as they provide annual rates that are different from the actual figure stated in the statement.

Question 3

In Canada, GDP is reported each quarter. How are these numbers computed?

Accepted Answer

Canada's GDP numbers are adjusted to reflect both an annual rate and to account for seasonal variations, providing a more accurate and comparable measure of economic activity over time.

Question 4

-Refer to the Table 5-2. What is the personal income for this economy?

Accepted Answer

The answer of 
-Refer to the Table 5-2. What is...

Question 5

If GDP in the fourth quarter is announced to be $1.6 trillion, what does this number reflect?

Accepted Answer

The answer of If GDP in the fourth quarter is...

Question 6

Which term refers to income that households and noncorporate businesses receive called?

Accepted Answer

Personal income refers to the income that households and noncorporate businesses receive before paying taxes and other deductions. Disposable personal income is personal income minus taxes and other deductions, while aggregate income and national income refer to the total income of a country, including corporate profits and government revenue.

Question 7

-Refer to the Table 5-2. What is the disposable personal income for this economy?

Accepted Answer

The answer of 
-Refer to the Table 5-2. What is...

Question 8

-Refer to the Table 5-1. What is the GNP for this economy?

Accepted Answer

The answer of 
-Refer to the Table 5-1. What is...

Question 9

How is disposable personal income best defined?

Accepted Answer

The answer of How is disposable personal income best defined?
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Question 10

-Refer to the Table 5-1. What is the NNP for this economy?

Accepted Answer

NNP (Net National Product) is calculated as GDP (Gross Domestic Product) minus depreciation. In this case, NNP is calculated as $200 - $17 = $183.

Question 11

-Refer to the Table 5-1. What is the disposable personal income for this economy?

Accepted Answer

The answer of 
-Refer to the Table 5-1. What is...

Question 12

-Refer to the Table 5-2. What is the GNP for this economy?

Accepted Answer

The answer of 
-Refer to the Table 5-2. What is...

Question 13

In computing GDP, what is investment?

Accepted Answer

Investment refers to spending on new capital equipment, inventories, and structures, including new housing. This includes expenditures made by businesses, governments, and households. Spending on real estate and financial assets (option B) falls under the category of "other" non-investment transactions in GDP calculations. Spending on stocks, bonds, and other financial assets alone (option A) is not considered investment as it does not lead to the creation of new physical capital. Option D is incorrect as it excludes household purchases of new housing, which is considered a form of investment in GDP calculations.

Question 14

If the government reports that "GDP has increased at an annual rate of 6.0 percent for the fourth quarter of 2015," by how much has GDP increased?

Accepted Answer

The answer of If the government reports that "GDP has...

Question 15

In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, what will Ophelia's government statisticians most likely do?

Accepted Answer

To account for the predictable jump in GDP in the second quarter, Ophelia's government statisticians will most likely make a seasonal adjustment for the second quarter data. This will allow for more accurate comparisons of GDP data across time periods by removing the predictable seasonal pattern.

Question 16

-Refer to the Table 5-1. What is the personal income for this economy?

Accepted Answer

The answer of 
-Refer to the Table 5-1. What is...

Question 17

-Refer to the Table 5-2. What is the NNP for this economy?

Accepted Answer

NNP is calculated as GDP minus depreciation. 
NNP = GDP - depreciation 
NNP = $820 - $426 
NNP = $394

Question 18

-Refer to the Table 5-1. What is the national income for this economy?

Accepted Answer

The answer of 
-Refer to the Table 5-1. What is...

Question 19

-Refer to the Table 5-2. What is the national income for this economy?

Accepted Answer

The answer of 
-Refer to the Table 5-2. What is...

Question 20

What does personal income include and exclude?

Accepted Answer

Personal income includes the following: wages and salaries, interest, rent, proprietor’s income, and transfer payments (such as social security benefits and unemployment compensation). It excludes corporate income taxes, social insurance contributions, and retained earnings. Interest is included in personal income, but transfer payments are not excluded.

Quiz 5: Measuring a Nations Income

Which of the following best defines retained earnings?

The government reports that "GDP increased by 1.6 percent in the last quarter." What does this statement mean?

In Canada, GDP is reported each quarter. How are these numbers computed?

-Refer to the Table 5-2. What is the personal income for this economy?

If GDP in the fourth quarter is announced to be $1.6 trillion, what does this number reflect?

Which term refers to income that households and noncorporate businesses receive called?

-Refer to the Table 5-2. What is the disposable personal income for this economy?

-Refer to the Table 5-1. What is the GNP for this economy?

How is disposable personal income best defined?

-Refer to the Table 5-1. What is the NNP for this economy?

-Refer to the Table 5-1. What is the disposable personal income for this economy?

-Refer to the Table 5-2. What is the GNP for this economy?

In computing GDP, what is investment?

If the government reports that "GDP has increased at an annual rate of 6.0 percent for the fourth quarter of 2015," by how much has GDP increased?

In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, what will Ophelia's government statisticians most likely do?

-Refer to the Table 5-1. What is the personal income for this economy?

-Refer to the Table 5-2. What is the NNP for this economy?

-Refer to the Table 5-1. What is the national income for this economy?

-Refer to the Table 5-2. What is the national income for this economy?

What does personal income include and exclude?