Question 1

Gross national product,GNP,of the United States is the market value of all final goods and services

Accepted Answer

Gross National Product (GNP) measures the market value of all final goods and services produced by the residents of a country, regardless of where the production takes place. Hence, it includes the activities of citizens and businesses from that country operating abroad.

Question 2

Table 8-24
 
-Refer to Table 8-24.Suppose that a very simple economy produces three goods: pizzas,haircuts,and backpacks.Suppose the quantities produced and their corresponding prices for 2007 and 2013 are shown in the table above.Use the information to compute real GDP in the year 2007 and 2013.Calculate real GDP in 2013 assuming the base year is 2007.Do the same calculation assuming the base year is 2013.Are the calculations different? Why?

Accepted Answer

The answer of Table 8-24
 
-Refer to Table 8-24.Suppose that...

Question 3

National income equals gross domestic product

Accepted Answer

National income is calculated by subtracting the consumption of fixed capital (depreciation) from gross domestic product (GDP), which gives the net domestic product (NDP). Therefore, option C is the correct answer. Option A is incorrect because sales taxes are not included in national income. Option B is incorrect because government transfer payments are not included in national income. Option D is incorrect because transfer payments are not subtracted from GDP to calculate national income.

Question 4

National income is equal to

Accepted Answer

National income is essentially the total income earned by a country's factors of production. It is calculated as the Gross Domestic Product (GDP) minus depreciation (the decrease in value of the country's capital goods). This accounts for the wear and tear on machinery, buildings, and other physical capital over time, providing a more accurate reflection of the country's actual income.

Question 5

Table 8-25
 
-Refer to Table 8-25.Given the following information,calculate the rate of increase in the price level from 2012 to 2013.Use the percent change in the GDP deflator.

Accepted Answer

The answer of Table 8-25
 
-Refer to Table 8-25.Given the...

Question 6

Table 8-23
2007 2013
 
-Refer to Table 8-23.Suppose that a very simple economy produces three goods: pizzas,haircuts,and backpacks.Suppose the quantities produced and their corresponding prices for 2007 and 2013 are shown in the table above.Use the information to compute real GDP in the year 2007 and 2013.Assume that 2007 is the base year.Is output higher in 2013 or 2007? Why?

Accepted Answer

The answer of Table 8-23
2007 2013
 
-Refer to Table 8-23.Suppose...

Question 7

Depreciation is

Accepted Answer

Depreciation is the decrease in value of an asset over time due to wear and tear, obsolescence, or other factors. It applies to equipment, machinery, and buildings used in a business, and is typically calculated as an expense on the company's income statement. This expense reflects the estimated decrease in the value of the asset each year, which is important for tax and accounting purposes. Depreciation does not apply to inventory or capital stock, and is not related to the stock market.

Question 8

If an American firm opens a production facility in India,the total value of the production will be included in the

Accepted Answer

Gross domestic product (GDP) measures the total value of goods and services produced within a country's borders, while national income measures the total income earned by a country's citizens, including income earned abroad. Therefore, if an American firm opens a production facility in India, the value of the production will be included in the GDP of India, as it is produced within India's borders. It will not be included in the GDP or national income of the United States, as it is not produced within the United States' borders or by its citizens.

Question 9

National income equals gross national product minus

Accepted Answer

National income represents the total income earned by the factors of production in a country. Gross national product (GNP) is the total value of goods and services produced by a country's residents and businesses, regardless of their location. To calculate national income, we need to subtract depreciation from GNP because depreciation represents the wear and tear of capital equipment over time, which reduces the value of the stock of capital. This subtraction provides a measure of the net income generated by the productive assets in the economy. Therefore, the correct answer is B) depreciation.

Question 10

Suppose that in 2013,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 2013 is

Accepted Answer

Gross domestic product (GDP) is calculated by adding up four components: consumption (C), investment (I), government spending (G), and net exports (NX). We can use the equation GDP = C + I + G + NX to find the answer. Given the information provided, we can calculate the components as follows:

Consumption = National income - Taxes + Transfer payments
C = $200 billion - $20 billion + $10 billion
C = $190 billion

Investment = National income - Depreciation
I = $200 billion - $15 billion
I = $185 billion

Government spending = Not given
Since government spending is not given, we cannot calculate it directly. However, we can use the fact that GDP is the sum of the four components to solve for it:
GDP = C + I + G + NX
GDP = $190 billion + $185 billion + G + NX
GDP = $375 billion + G + NX

Net exports = Not given
Since net exports are not given, we cannot calculate them directly. However, we can use the fact that GDP is the sum of the four components to solve for them:
GDP = C + I + G + NX
GDP = $190 billion + $185 billion + G + NX
GDP - $375 billion - G = NX

Putting it all together, we have:

GDP = C + I + G + NX
GDP = $190 billion + $185 billion + G + GDP - $375 billion - G
2GDP - $365 billion = $375 billion
2GDP = $740 billion
GDP = $370 billion

Therefore, the answer is B) $215 billion, which is the sum of consumption ($190 billion) and investment ($185 billion). We cannot determine the values of government spending or net exports from the information given.

Question 11

Table 8-27
  The components of national income for an economy are represented in Table 8-27 above.All values are in billions of dollars.
-Refer to Table 8-27.What is the level of disposable personal income for this economy?

Accepted Answer

The answer of Table 8-27
  The components of national...

Question 12

The output of U.S.citizens who work in Canada would be included in the

Accepted Answer

The output of U.S. citizens working in Canada is included in the Gross Domestic Product (GDP) of Canada because GDP measures the value of goods and services produced within a country's borders, regardless of the nationality of the workers.

Question 13

Disposable personal income equals personal income

Accepted Answer

Disposable personal income is the income that is available for households to spend or save after accounting for taxes. Hence, it is calculated by subtracting personal tax payments from personal income. Therefore, option A is the correct answer.

Question 14

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

Accepted Answer

Disposable personal income is the best measure of the income households actually have available to spend because it reflects all income received by households, including transfer payments and taxes, minus personal income taxes. This measure takes into account the amount of money households have left after paying their taxes and other mandatory payments, making it a more accurate representation of their purchasing power. Personal income, national income, and net national income do not reflect these deductions and therefore do not provide an accurate reflection of household spending power.

Question 15

Table 8-27
  The components of national income for an economy are represented in Table 8-27 above.All values are in billions of dollars.
-Refer to Table 8-27.What is the level of personal income for this economy?

Accepted Answer

The answer of Table 8-27
  The components of national...

Question 16

Which of the following is included in both the U.S.GDP and U.S.GNP?

Accepted Answer

The value of all cars produced by General Motors in the United States is included in both the U.S. GDP (Gross Domestic Product) and GNP (Gross National Product). GDP includes all goods and services produced within a country's borders, while GNP includes all goods and services produced by the citizens of a country, regardless of where they are produced. Since General Motors is a U.S. company, the cars it produces in the United States count towards both U.S. GDP and GNP.

Question 17

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

Gross Domestic Product (GDP) measures the total value of goods and services produced within a country's borders, while Gross National Product (GNP) measures the total value of goods and services produced by a country's residents, regardless of their location. If a significant fraction of domestic production takes place in foreign-owned factories and facilities, it means that the residents of the country are not producing as much as they would be if the factories were domestically owned. Therefore, GDP (which only measures production within the country's borders) would be larger than GNP (which measures production by the country's residents). Thus, option B is the best choice.

Question 18

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 19

The output of Mexican citizens who work in Texas would be included in the

Accepted Answer

The gross national product (GNP) of a country includes the output of its citizens, regardless of where they are working in the world. Therefore, the output of Mexican citizens who work in Texas would be included in the gross national product of Mexico.

Question 20

Table 8-26
 
-Refer to Table 8-26.Given the information above,calculate the GDP deflator for both 2012 and 2013.What does the value of the deflator in the year 2012 tell you about that year with respect to the base year? What happened to prices in 2013 as compared to 2012?

Accepted Answer

The answer of Table 8-26
 
-Refer to Table 8-26.Given the...

Quiz 8: GDP: Measuring Total Production and Income