Question 1

Write out the equation for calculating personal income as it relates to national income, retained corporate earnings, social insurance payments, personal interest income and transfer payments.

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Question 2

Assume that GDP is $9 Trillion, receipts of factor income from the rest of the world are $2 Trillion, and payments of factor income to the rest of the world are $1 Trillion. Calculate GNP from this information.

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Question 3

Explain why each of the following items is excluded from GDP: (a) profits from the stock and bond market (b) transfer payments (c) sale of used goods (d) goods and services produced in the home.Explain why the following items are included in GDP: (a) depreciation (b) change in business inventories( c) indirect taxes

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Question 4

Explain the two approaches that can be used to compute GDP. Why do these two approaches lead to the same value for GDP?

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Question 5

Explain the terms nominal GDP and real GDP.
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Question 6

Identify which of the following item (s) would be included in U.S. GDP. (a) The salary of an American consultant hired by a British firm to go and analyze their European operations (b) The output of a U.S.-owned family farm in Kansas (c) Food stamp payments (d) Welfare checks (e) The wages of a field worker in Louisiana

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Question 7

Explain and define NNP.

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Question 8

Refer to the information provided in Table 6.4 below to answer the questions that follow.

-Answer Parts (a) through (g) using the information in Table 6.4 describing the Macrovian economy. Quantities are given in millions of Macrovian dollars (M$).
(a) Calculate gross private investment.
(b) Calculate Macrovian GDP.
(c) Calculate gross national product (GNP).
(d) Calculate net national product (NNP).
(e) Calculate national income.
(f) Calculate personal income.
(g) Calculate disposable personal income.

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Question 9

Define disposable personal income.

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Question 10

Write out the equation for calculating national income as derived from NNP.

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Question 11

What does it mean when net factor income to the rest of the world is a positive figure?

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Question 12

Explain the difference between GNP and NNP. Explain why NNP is sometimes a better measure of how the economy is doing than GNP is.

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Question 13

If NNP is $7 trillion, net investment is $500 billion and gross investment is $1 trillion determine the level of GNP.

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Question 14

Refer to the information provided in Table 6.5 below to answer the questions that follow.

-Table 6.5 contains the national income and product accounts data on the Freedonia economy. Quantities following are given in millions of Freedonian dollars (F$). Use this information to answer Parts (a) through (g) below.
(a) Calculate Freedonian gross private investment.
(b) Calculate Freedonian GDP.
(c) Calculate Freedonian GNP.
(d) Calculate net national product (NNP).
(e) Calculate national income.
(f) Calculate personal income.
(g) Calculate disposable personal income.

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Question 15

-Using the above table calculate GNP, NNP, National Income, Personal Income and Disposable income.

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-Using the above table calculate GNP,...

Question 16

Explain in broad terms what personal income is.

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Question 17

Assume that the government begins to spend more money on services that were previously produced in the private sector like health care. Why would this not necessarily increase the measured GDP?

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Question 18

How are transfer payments reconciled in the national income and personal income accounts? Explain your reasoning.

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Question 19

How are interest payments by households and government reconciled in the GDP accounts? Explain your reasoning.

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Question 20

Assume that you are given GDP and depreciation data for 1998. Explain why this is not enough information to calculate Net National Product.

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Quiz 6: Measuring National Output and National Income