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Exam 11: Gross Domestic Product

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Question 71

True/False

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Fixed investment refers to investment in stocks,bonds,and improvements to land.

A) True
B) False

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Question 72

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All final goods and services that make up GDP can be expressed in the form:

A) GDP = C + I - G + (X + M) .
B) GDP = C + I + G + (X + M) .
C) GDP = C + I + G + (X - M) .
D) GDP = C + I + (X - M) .
E) GDP = C + I + G.

F) B) and D)
G) A) and D)

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Question 73

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Exhibit 11-6 GDP data (billions of dollars) $\begin{array} { | l | r | } \hline \text { Personal consumption exgenfitures } & \$ 850 \\\hline \text { Interest } & 90 \\\hline \text { Corporate profits } & 150 \\\hline \text { Government 5pending } & 400 \\\hline \text { Depreciation } & 100 \\\hline \text { Rental income } & 70 \\\hline \text { Grass private dometic investment } & 120 \\\hline \text { Compensation of emplayees } & 830 \\\hline \text { Exgarts } & 120 \\\hline \text { Imparts } & 70 \\\hline \text { Indirect business taxes } & 80 \\\hline \text { Proprietars' income } & 120 \\\hline \text { Personal income taxes } & 110 \\\hline \text { Social Security taxes } & 50 \\\hline \text { Transfer payments } & 160 \\\hline\end{array}$ -In Exhibit 11-6,personal income (PI) equals:

The circular flow model illustrates that aggregate spending in the product markets equals 70 percent of aggregate income earned in the factor markets.

Nominal gross domestic product is based on:

Real GDP,as opposed to money (nominal)GDP,has been adjusted for changes in the general level of prices.

Which of the following correctly gives us national income (NI) ?

Gross private domestic investment includes business:

Gross domestic product that is based on existing prices is called:

Exhibit 11-8 GDP data (billions of dollars) $\begin{array} { | l | r | } \hline \text { Indirect business taxes } & \$ 600 \\\hline \text { Depreciation } & 950 \\\hline \text { Change in business inventaries } & 50 \\\hline \text { Compensation of employees } & 5,400 \\\hline \text { Corparate profits } & 700 \\\hline \text { Durable goads } & 600 \\\hline \text { Expurts } & 100 \\\hline \text { Social Security taxes } & 360 \\\hline \text { Transfer payments } & 300 \\\hline \text { Fixed investment } & 950 \\\hline \text { Government 5pending } & 900 \\\hline \text { Imparts } & 150 \\\hline \text { Net interest } & 500 \\\hline \text { Nondurable goods } & 2,000 \\\hline \text { Persanal taxes } & 1,000 \\\hline \text { Rental income } & 200 \\\hline \text { Services } & 4,000 \\\hline\end{array}$ -In Exhibit 11-8,compute personal income (PI) .Which of the following is correct?

Personal consumption expenditures:

Intermediate goods are included and final goods are not included in calculating gross domestic product.

The market value of all final goods and services in an economy produced by resources owned by people of that economy:

Which of the following items is included in the calculation of GDP?

The unreported or illegal production of goods and services in the economy that is not counted in GDP is termed:

Social Security payments are included in personal income.

The lower portion of the circular flow model contains factor markets in which households provide:

When net exports are negative,

Gross domestic product is officially measured by adding together the:

Exhibit 11-6 GDP data (billions of dollars) $\begin{array} { | l | r | } \hline \text { Personal consumption exgenfitures } & \$ 850 \\\hline \text { Interest } & 90 \\\hline \text { Corporate profits } & 150 \\\hline \text { Government 5pending } & 400 \\\hline \text { Depreciation } & 100 \\\hline \text { Rental income } & 70 \\\hline \text { Grass private dometic investment } & 120 \\\hline \text { Compensation of emplayees } & 830 \\\hline \text { Exgarts } & 120 \\\hline \text { Imparts } & 70 \\\hline \text { Indirect business taxes } & 80 \\\hline \text { Proprietars' income } & 120 \\\hline \text { Personal income taxes } & 110 \\\hline \text { Social Security taxes } & 50 \\\hline \text { Transfer payments } & 160 \\\hline\end{array}$ -In Exhibit 11-6,and using the expenditures approach,gross domestic product (GDP) equals: