Chapter 1 - Concepts

Which of the following statements correctly distinguishes between a stock variable and a flow variable in economic activity?

• A) Stock variables represent changes over time, such as annual income or monthly savings, while flow variables represent a specific situation at a particular moment, like a person's wealth.

• Flow variables represent a situation at a specific moment in time, such as the total wealth a country holds, while stock variables track changes over a period of time, such as annual taxes.

• Stock variables represent a specific situation at a moment in time, like the wealth a person owns, while flow variables represent changes over time, like monthly income or annual taxes.

• Flow variables include financial assets like homes or deposits, while stock variables include income and salaries, which fluctuate over time.

What is the main purpose of the European System of Accounts (ESA 2010)?

• To regulate the fiscal policies of EU member states

• To ensure common procedures for measuring economic activity across EU countries

• To provide a framework for managing national debt

• To monitor inflation rates in the Eurozone

What does Gross Capital Formation represent in the context of economic activity?

• The value of goods and services used as means of production over several periods and changes in inventories

• The value of goods and services intended for final consumption

• The value of inputs used in the production process that are consumed immediately

• The total value of imports and exports in a given period

What does secondary distribution refer to in the context of distribution operations?

• Payments made by employers to employees for their work

• The allocation of profits, rent, and interest from company operations

• The transfer of savings to financial intermediaries or other agents

• The redistribution of income through transfers, subsidies, and direct taxes

What is Gross Operating Surplus (GOS) in the context of production?

• The total value of all goods and services generated by an economic unit

• The payments made to employees in the form of wages and social contributions

• The residual part of value added after employee compensation, representing the remuneration of capital

• The difference between total production and intermediate consumption

What does Gross Domestic Product (GDP) represent in an economy

• The total value of goods and services produced, including intermediate goods

• The total value of final goods and services generated by an economy, avoiding double counting

• The total value of all goods and services consumed within an economy

• The total value of imports and exports in an economy

What is Net Domestic Product (NDP)?

• Gross National Income minus Capital Formation

• Gross Domestic Product minus Compensation of Employees

• Gross National Disposable Income minus Consumption of Fixed Capital

• Gross Domestic Product minus Consumption of Fixed Capital

What is the difference between GDP and GNP based on the territory and residency criteria?

• GDP counts all goods and services produced by residents of a country, while GNP counts only the output within the country's borders

• GDP considers the output within a country's borders, while GNP includes the output produced by residents of the country, regardless of location

• GNP focuses on the production of goods and services within the country, while GDP counts production by residents both domestically and abroad

• GNP and GDP are identical as they both measure output within a country's borders

What is Net Primary Income in the context of national accounts?

• The income received by residents from abroad minus payments made to foreign residents

• The total income generated from domestic production within a country

• The income from government subsidies and transfers

• The total amount of income generated by exports minus imports

Taxes on imports (tariffs):

• A tax imposed on goods and services consumed within a country.

• A government subsidy given to domestic producers to encourage local production.

• Value-added taxes (VAT)

• A tax levied on imported goods, used to regulate trade.