CHAPTER 5: National Income Accounting

The GDP is

• C+I+G+(X-M)

• The sum of value added at every stage of the production process

• The total market value of final goods and services

• All of the above

Net exports of a country are the value of

• goods and services imported minus the goods and services exported

• goods and services exported minus goods and services imported

• goods exported minus goods imported

• goods imported minus goods exported

Manchester United, an England football team, hired Park JS, a South Korean footballer, to play for them in the England football league. Which of the following is true?

• Park JS’s services are part of England GDP.

• Park JS’s purchase of a secondhand car in England is part of England GDP.

• Park JS’s investment in South Korean bonds is part of South Korea’s GNP.

• Park JS’s salary is not a part of South Korea’s GNP.

An open economy GDP is given by

• Y=C+I+G

• Y=C+I+G+NX

• Y=C+I+G+T

• Y=C+I+G+S

Which of the following will be added in the calculation of GDP by using the income approach?

• Rental income

• Gross private domestic investment

• Government spending

• Net export

Which of the following is excluded in the calculation of GDP

• Value of the services of your mother who cook dinner for you.

• Value of the food that you buy from your university.

• Value of the goods that you buy for your sister to consume.

• Value of the services that repaired your air-conditioner.

Why GDP is different from GNP?

• GDP excludes net income earned by own factors of production located abroad.

• GDP excludes depreciation.

• GDP excludes gross private investment abroad.

• GDP excludes net export.

Net National Product equals

• Gross National Product minus depreciation.

• Gross Domestic Product plus net property income from abroad

• Gross National Product adjusted for inflation

• Gross Domestic Product adjusted for inflation

Spending on capital equipment, inventories, and structures is referred to as:

• Consumption expenditure (C).

• Investment expenditure (I).

• Government expenditure (G).

• Expenditure on net exports (X - M)

In using the expenditure approach to GDP, consumption

• Includes consumer durables, semi-durables, nondurable goods, but excludes services.

• Includes consumer spending on durable goods, and nondurable goods and services.

• Includes houses and services.

• Includes houses and all purchases by business firms.