CH 6 EC 202 Test

National Income accountants can avoid multiple counting by:

• Including transfers in their calculations

• Counting both intermediate and final goods

• Only counting final goods

• Only counting intermediate goods

GDP can be calculated by summing:

• Consumption, investment, government purchases, exports, and imports

• Investment, government purchases, consumption, and net exports

• Consumption, investment, wages, and rents

• Consumption, investment, government purchases, and imports

What is this nation's GDP?

All figures are in billions of dollars:

Gross Investment: 18

National Income: 100

Net Exports: 2

Personal Income: 85

Personal Consumption Expenditures: 70

Savings: 5

Government Purchases: 20

Net Domestic Product: 105

Statistical Discrepancy: 0

• $100

• $95

• $110

• $107

If the population of the nation above was 10, GDP was 110, GNP is 107, and the workforce is 5, what is the GDP per capita?

• 22

• 11

• 18

• 55

Real GDP refers to:

• The value of domestic output after adjustments have been made for environmental pollution and changes in the distribution of income

• GDP data that embody changes in price level, but not changes in physical output

• GDP data that reflects changes in both physical output and price level

• GDP data that have been adjusted for changes in the price level

Answer the next question based on the following information. Only three goods are produced in the economy in the following amounts A=10, B=30, C=5. The current year per unit prices are A=$2, B=$3, C=$1& Base year are A=$1 B=$1 C=$1

Refer to the information above. Nominal GDP for the current year is:

• $110

• $115

• $45

• $90

Answer the next question based on the following information. Only three goods are produced in the economy in the following amounts A=10, B=30, C=5. The current year per unit prices are A=$2, B=$3, C=$1 & Base year are A=$1 B=$1 C=$1

Refer to the information above. Real GDP for the current year is:

• $110

• $115

• $90

• $45

Tom Atoe grows tomatoes for home consumption. This activity is:

• Excluded from GDP to avoid double counting.

• Excluded from GDP because an intermediate good is involved.

• Productive, but is excluded from GDP because no market transaction occurs.

• Included in GDP because it reflects production.

A price index is:

• A comparison of the price of a market basket from a fixed point of reference.

• A comparison of real GDP in one period relative to another.

• The cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period.

• The ratio of real GDP to nominal GDP.

If nominal GDP is 150 and the GDP price index is 200, real GDP is 75.

• True

• False