Deck 21: National Income Accounts

Question 1

Income earned but not received refers to

A)government transfers, business transfers, and social insurance taxes
B)government transfers, social insurance taxes, and corporate income taxes
C)business transfers, net personal interest income, and rental income
D)social insurance taxes, undistributed corporate profits, and corporate income taxes
E)business transfers, social insurance taxes, and corporate profits

Answer 1

D

Question 2

The difference between Personal Income and Disposable Income is

A)personal taxes (e.g., federal personal income tax)
B)indirect business taxes
C)corporate income taxes
D)payroll taxes paid by employers
E)Social Security contributions paid by employers

Answer 2

A

Question 3

Disposable Income is Personal Income minus personal taxes.

Answer 3

True

Question 4

Exhibit 6-4

In Exhibit 6-4, Net Domestic Product equals

A)$365 billion
B)$375 billion
C)$385 billion
D)$390 billion
E)$420 billion

Question 5

Factors that explain the differences between National Income and Personal Income include all of the following, except one. Which is the exception?

A)Social Security contributions paid by employers
B)corporate income taxes
C)undistributed corporate profits
D)government and business transfers
E)indirect business taxes

Question 6

Exhibit 6-4

In Exhibit 6-4, National Income equals

A)$375 billion
B)$420 billion
C)$365 billion
D)$385 billion
E)$375 billion

Question 7

The reason that indirect business taxes are subtracted from NDP to get NI is that they

A)represent income received but not earned
B)do not represent income to any individual
C)represent income that we earn but do not receive
D)represent investment undertaken merely to replace worn-out capital
E)reflect double counting of intermediate goods

Question 8

Exhibit 6-4

In Exhibit 6-4, Gross Domestic Product equals

A)$365 billion
B)$385 billion
C)$375 billion
D)$390 billion
E)$420 billion

Question 9

National income is

A)GDP minus depreciation
B)NDP minus depreciation
C)GDP minus depreciation plus indirect business taxes
D)GDP plus depreciation minus indirect business taxes
E)NDP minus indirect business taxes

Question 10

Which of the following does not help account for the difference between GDP and National Income (NI)?

A)depreciation
B)net indirect business taxes
C)personal income taxes
D)earnings of American owned resources located abroad
E)earnings of foreign owned resources located in the U.S.

Question 11

Disposable income is commonly referred to as take home pay.

Question 12

Exhibit 6-4

In Exhibit 6-4, Disposable Income equals

A)$365 billion
B)$375 billion
C)$385 billion
D)$390 billion
E)$420 billion

Question 13

Disposable income is

A)personal income minus personal taxes
B)national income plus transfer payments
C)NDP minus personal income tax
D)personal income minus transfer payments
E)national income minus transfer payments plus taxes

Question 14

National Income is best defined as sum of all income earned by

A)American-owned resources, located in the U.S. and abroad
B)resources located in the U.S.
C)American-owned resources located abroad
D)American-owned resources minus income earned by foreign owned resources located in the U.S.
E)American owned resources in the U.S. minus income earned by American owned resources located abroad

Question 15

Personal income equals national income minus personal taxes.

Question 16

Exhibit 6-4

In Exhibit 6-4, Personal Income equals

A)$420 billion
B)$385 billion
C)$375 billion
D)$365 billion
E)$390 billion

Question 17

Disposable income is personal income after taxes.

Question 18

What accounts for the difference between GDP and NDP?

A)inventory changes
B)depreciation
C)undistributed corporate profits
D)transfer payments
E)business taxes

Question 19

Personal income is

A)NDP minus indirect business taxes
B)NDP minus depreciation minus taxes
C)national income minus taxes
D)national income plus income received but not earned minus income earned but not received
E)national income minus income received but not earned plus income earned but not received

Question 20

Personal income minus personal taxes equals disposable income.

Question 21

Exhibit 6-5

In Exhibit 6-5, Gross Domestic Product equals

A)$365 billion
B)$390 billion
C)$420 billion
D)$375 billion
E)$385 billion

Question 22

In 2007, if the country of Moolah had consumption of $20 trillion, gross investment of $4 trillion, government purchases of $5 trillion, and GDP of $26 trillion, then net exports must have been

A)+ $3 trillion
B)+ $29 trillion
C)- $29 trillion
D)- $3 trillion
E)The question cannot be answered without knowing the amount of imports

Question 23

National income captures all income earned by American-owned resources, whether located in the United States or abroad.

Question 24

Exhibit 6-5

In Exhibit 6-5, National Income equals

A)$420 billion
B)$390 billion
C)$365 billion
D)$385 billion
E)$375 billion

Question 25

Exhibit 6-5

In Exhibit 6-5, Disposable Income equals

A)$365 billion
B)$375 billion
C)$385 billion
D)$390 billion
E)$420 billion

Question 26

Given the following data: GDP = $5,200; NI = $4,700; PI = $4,300; indirect business taxes net of subsidies = $300; depreciation equals

A)-$600
B)-$200
C)$200
D)$600
E)$1,200

Question 27

Given the following data: depreciation = $450; net indirect business taxes = $400; employee compensation = $3,000; proprietor's income = $200; corporate profits = $400; net interest = $300; rental income = $50; national income equals

A)$3,100
B)$3,500
C)$3,550
D)$3,950
E)$4,400

Question 28

Exhibit 6-5

In Exhibit 6-5, Personal Income equals

A)$410 billion
B)$385 billion
C)$365 billion
D)$390 billion
E)$420 billion

Question 29

Which one of the following is not included in National Income?

A)employee compensation
B)proprietors' income
C)rental incomes of persons
D)corporate profits
E)gross interest income

Question 30

Imputed rent is included in

A)consumption
B)investment
C)government spending
D)national income
E)indirect business taxes

Question 31

Exhibit 6-5

In Exhibit 6-5, Gross private domestic investment is equal to

A)$30 billion
B)$40 billion
C)$60 billion
D)$70 billion
E)$80 billion

Question 32

Given the following data: national income = $4,400; income earned but not received = $700; income received but not earned = $600; personal taxes and nontax charges = $900; disposable income equals

A)$3,400
B)$3,500
C)$3,600
D)$4,200
E)$4,400

Question 33

The income approach to GDP reveals that compensation of employees (i.e., wages and salaries) is larger than profits.

Question 34

Exhibit 6-5

In Exhibit 6-5, Net Domestic Product equals

A)$365 billion
B)$375 billion
C)$385 billion
D)$390 billion
E)$420 billion