Real and nominal gross domestic product (GDP) are different because real gross

domestic product (GDP)

• includes the effects of employment changes in the economy.

• has been adjusted for changes in the price level.

• includes the effects of trade deficits.

• excludes exports and indirect taxes.

Which of the following is not a payment made to household in exchange for goods and services?

• Rent

• Taxes

• Wages

• Interest

The total value of income earned by Malaysian is equal to

• gross domestic product at market price.

• gross domestic product at factor cost.

• personal disposable income.

• gross national product at factor cost.

For an economy, expenditure is equal to income because

• by law, firms must pay out all their revenue as income to someone.

• for every sale there is a buyer and a seller.

• prices of individual goods and services change, but the average price level

  stays the same.

• none of the above is correct; expenditure is not always equal to income for an

  economy.

Adding both the value of the flour and the bread in the national income accounting would result in

• value added.

• double counting.

• underestimating GNP.

• the calculation of nominal not real GNP.

Which of the following statements is not true?

• The product produced by Malaysians working abroad is counted in Malaysia's GNP.

• The income of foreigners working in Malaysia is counted in Malaysia's GNP.

• Profits earned abroad by Malaysian companies are counted in Malaysia's GNP.

• Profits earned in Malaysia by foreign-owned companies are not counted in Malaysia's GNP.

Transfer payments are

• included in both national income and personal income.

• excluded from both national income and personal income.

• included in national income but not personal income.

• excluded from national income but included in personal income.

The problem of double counting in measuring GDP can be avoided by

• including the values of the intermediate and final goods produced.

• deducting indirect taxes and adding subsidies to the value of output.

• deducting the value of goods imported from the value of goods exported.

• including the value of all final goods and services produced.

To obtain the value of gross domestic product from the value of gross national product, we must

• deduct subsidy and add indirect tax.

• add factor income from abroad and minus factor payment to abroad.

• minus indirect tax and add subsidy.

• minus factor income from abroad and add factor payment to abroad.

Harris decides to mow his own lawn himself, instead of hiring people to do the job. As a result of this decision,

• GDP will rise.

• GDP will decrease.

• GDP could increase or decrease.

• GDP will be unaffected because the same service would be performed.