Chapter 5: National-Income Accounting

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Chapter 5: National-Income Accounting

Multiple Choice Questions

MEASURES OF OUTPUT

1.The primary purpose of the national-income accounts is to assist: A)Market investors in making more profitable investments. B)Wage earners in maximizing their incomes.
C)Economic historians to better understand the economic past. D)Government policy makers in formulating economic policies and evaluating performance.

Answer: D Type: Definition Page: 93

2.Prices are used in national accounting to:
A)Add the values of output from different sectors of the economy. B)Compare the value of output of one period with that of another. C)Provide an index to measure the rate of inflation.

D)All of the above.

Answer: D Type: Basic Understanding Page: 93

3.The GDP is:
A)C + I + G + (X - IM).
B)The sum of value added at every stage of the production process. C)The total market value of final goods and services.
D)All of the above.

Answer: D Type: Definition Page: 93

4.The total market value of all final goods and services produced in an economy during a given time period is the definition of: A)Gross domestic product. B) Net domestic product. C) National income. D) Personal income.

Answer: A Type: Definition Page: 93

5.GDP can be calculated by:
A)Adding up the spending on goods and services by business, government, households, and foreigners, and subtracting imports. B)Adding up the "value added" at every stage of production in the economy. C)Adding up all of the receipts of households, government, and business. D)All of the above.

Answer: D Type: Definition Page: 94

6.The GDP can be calculated as:
A)The sum of value added and intermediate goods.
B)The sum of final transactions in the production process. C)NI plus depreciation.
D)PI plus depreciation.

Answer: B Type: Definition Page: 94

7.The measure of the production of new goods and services in the United States is: A)GDP. B) GNP. C) NI. D) DI.

Answer: A Type: Complex Understanding Page: 94

8.DVD players can be added to bicycles to compute the GDP by: A)Multiplying output by price and adding dollar values. B)Dividing output by price and adding dollar values.
C)Multiplying dollar values of output by price and adding the result. D)Dividing dollar values of output by price and adding the result.

Answer: A Type: Analytical Page: 94

9.The value of goods that have been produced but not sold during a given time period: A)Increases business inventories and GDP for the period. B)Decreases GDP by preventing resources from being used in their best alternative use. C)Increases government stockpiles but leaves the GDP unchanged. D)Is included in the next period's GDP when the goods are sold.

Answer: A Type: Definition Page: 93

10.Suppose autos cost consumers $30,000 and trucks cost consumers $15,000. What contribution does the production of 200 autos and 200 trucks make to the GDP? A)$45,000. B) $3,000,000. C) $9,000,000. D) $450,000.

Answer: C Type: Analytical Page: 94

11.Suppose DVD players cost consumers $100 and computers cost consumers $600. What contribution does the production of 100 DVD players and 100 computers make to the GDP? A)$70,000. B) $7,000. C) $6,000. D) $700.

Answer: A Type: Analytical Page: 94

12.Which of the following are treated differently in computations of the GNP as compared with the GDP? A)Sales in the underground economy.
B)Goods produced by U.S. firms located in foreign countries. C)Intermediate goods.
D)The value of service performed by housewives.

Answer: B Type: Complex Understanding Page: 94

13.One difference between...
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