Question 1

What are the differences between national income,personal income,and disposable personal income?

Accepted Answer

The answer of What are the differences between national income,personal...

Question 2

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

Accepted Answer

If a significant fraction of domestic production takes place in foreign-owned factories and facilities, then the profits generated by those facilities would likely be repatriated to the foreign owners, reducing the country's GNP relative to its GDP. Therefore, the GDP would be larger than the GNP.

Question 3

Suppose that in 2011,the national income in the United States was $200 billion,depreciation was $15 billion,personal taxes were $20 billion,and transfer payments were $10 billion.Gross domestic product in 2011 is

Accepted Answer

GDP can be calculated using the formula: GDP = National Income + Depreciation + Indirect Business Taxes + Net Foreign Factor Income + Other. In this question, we have been given the National Income and Depreciation. We do not have any information about Indirect Business Taxes, Net Foreign Factor Income or Other. However, we can assume that the sum of these three components is zero for simplicity. In this case, GDP = National Income + Depreciation = $200 billion + $15 billion = $215 billion. Therefore, B is the correct answer.

Question 4

For developed countries like the United States,GDP will always exceed GNP.

Accepted Answer

GDP is the total value of goods and services produced within a country's borders, regardless of the nationality of the individuals or companies producing them. GNP, on the other hand, is the total value of goods and services produced by a country's citizens, regardless of where they are produced. For developed countries like the United States, where companies have significant foreign operations and foreign companies have significant operations within the country, the income generated by foreign operations can be large enough to make GNP exceed GDP in some years.

Question 5

Disposable personal income equals personal income

Accepted Answer

Disposable personal income is the income that households have left after they have paid their taxes. Therefore, disposable personal income is equal to personal income minus personal tax payments.

Question 6

The best measure of the income households actually have available to spend is

Accepted Answer

Disposable personal income subtracts personal taxes from personal income, giving a more accurate measure of the income available for households to spend. Personal income measures all income received by individuals regardless of taxes and transfers, while national and net national income measure the total income generated in a country before accounting for taxes and transfers to individuals.

Question 7

The total value of production from Ford's manufacturing plant in Cologne,Germany would be included in Germany's gross national product.

Accepted Answer

The total value of production from Ford's manufacturing plant in Cologne, Germany would be included in Germany's gross domestic product (GDP), not its gross national product (GNP), because GDP measures the value of production within a country's borders regardless of who owns the production facilities. GNP measures the total value produced by the residents of a country, regardless of where they produce it.

Question 8

Table 19-16
 
-Refer to Table 19-16.The table above represents hypothetical data from the National Income Accounts for 2011.Use the data to calculate personal income and disposable income.

Accepted Answer

The answer of Table 19-16
 
-Refer to Table 19-16.The table...

Question 9

Table 19-15
  
The components of national income for an economy are represented in Table 19-15 above. All values are in billions of dollars.
-Refer to Table 19-15.What is the level of disposable personal income for this economy?

Accepted Answer

The answer of Table 19-15
  
The components of national...

Question 10

Transfer payments are subtracted from national income to get to personal income.

Accepted Answer

The answer of Transfer payments are subtracted from national income...

Question 11

National income equals gross domestic product

Accepted Answer

National income represents the total income earned by a country's factors of production, regardless of the nationality of the owners, during a given period of time. It is calculated as the sum of all factor incomes (wages, rental income, interest income, and profits) generated in the production process, minus consumption of fixed capital, which represents the depreciation of physical capital used in the production process. Therefore, option C, minus the consumption of fixed capital, is the correct answer. Options A and B are incorrect because sales taxes and government transfer payments are not included in national income. Option D is incorrect because government transfer payments are not subtracted from national income.

Question 12

Depreciation is

Accepted Answer

Depreciation refers to the decrease in the value of assets such as equipment, machinery, and buildings over time due to wear and tear, obsolescence, or other factors. It is commonly used for accounting purposes to determine the value of assets on a company's balance sheet and for tax purposes to calculate deductions for the wear and tear of business assets.

Question 13

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S.________ and the South Korean ________.

Accepted Answer

The value of what a U.S.-owned McDonald's produces in South Korea is included in the U.S. Gross National Product (GNP) because GNP measures the value of goods and services produced by the residents of a country, regardless of where they are located. It is included in the South Korean Gross Domestic Product (GDP) because GDP measures the value of goods and services produced within a country's borders.

Question 14

National income equals gross national product minus

Accepted Answer

National income equals gross national product (GNP) minus depreciation, also known as consumption of fixed capital. This is because depreciation represents the reduction in value of capital goods (such as machinery and buildings) that are used up in the production process. Option A is incorrect because imports are not subtracted from GNP to calculate national income, as imports are not a part of domestic production. Option C is incorrect because inventories are a part of production, but changes in inventories are already accounted for in GNP.

Question 15

Table 19-15
  
The components of national income for an economy are represented in Table 19-15 above. All values are in billions of dollars.
-Refer to Table 19-15.What is the level of personal income for this economy?

Accepted Answer

The correct answer is $1,010 billion, which is the level of personal income for the economy as per the given table.

Quiz 8: Gdp: Measuring Total Production and Income