Macroeconomic identities

National income accounts

• Can be understood only by accountants

• Clearly identify who owes how much to whom

• Avoid the technical problems of aggregating data

• Provide macro economist with much of the data needed for macroeconomic analysis, research, and forecasting

According to the fundamental identity of national income accounting

• S = ( Y+ NFP - T + TR + INT) - C

• Total production = total income = total expenditure

• GDP = GNP - NFP

• Y =C + I + G +NX

Which of the following statements is true?

• Capital goods are produced in one year and final goods are produced over a period of more than one year

• Intermediate goods are type of capital goods

• Final goods are produced in the same year as the related final goods, whereas capital goods are produced in different years.

• Capital goods are not final goods, because they are used up in the same period in which they are produced

Mobin and Mona just bought their new house. In the national income accounting, this transaction is considered as

• Consumption on semi-durable goods

• Consumption on durable goods

• Inventory investment

• Fixed investment

Gross national product

• Is identical to gross domestic product in Canada

• Will be higher in a private sector economy than in an economy where there is also a public sector that taxes the private sector

• Will exceed gross domestic product if net factor payments from abroad are positive

• Will always exceed gross domestic product in a closed economy

In using the expenditure approach to GDP, consumption

• Includes consumer durables, semi durables, non durable goods, and services, but excludes services

• Includes consumers spending on durable goods, and non durable goods, and services

• Includes houses and all purchases by business firms

• Includes houses and services

Which if the following is considered to be an investment in the national income accounts

• Purchases of treasury bills

• Purchases of land

• Money deposited in a bank

• Increases in inventories on unsold goods

Which of the following is not a government transfer

• Unemployment insurance benefits

• Public pension

• Government spending on education

• Welfare payments

Other things held constant, private disposal income would increase if

• Government purchases increase

• Government transfers increase

• Consumption increases

• Taxes increases

Wealth

• Is a flow variable, measured at a point in time

• Is a flow variable, measured per unit of time

• Is a stock variable, measured at a point in time

• In a stock variable, measured per unit if time