GDP and National Income Quiz

A nation's gross domestic product (GDP):

• can be found by summing C + I + G + Xn.

• is the dollar value of the total output produced by its citizens, regardless of where they are living.

• can be found by summing C + S + G + Xg.

• is always some amount less than its NDP.

Because every transaction has a buyer and a seller, GDP is more closely associated with an economy's income than it is with an economy's expenditure.

• every transaction contributes equally to an economy's income and to its expenditure.

• the number of firms must be equal to the number of households in a simple circular-flow diagram.

• firms' profits are necessarily zero in a simple circular-flow diagram.

The GDP is the:

• monetary value of all final goods and services produced within a nation in a particular year.

• national income minus all nonincome charges against output.

• monetary value of all economic resources used in producing a year's output.

• monetary value of all goods and services, final and intermediate, produced in a specific year.

If intermediate goods and services were included in GDP:

• the GDP would then have to be deflated for changes in the price level.

• nominal GDP would exceed real GDP.

• the GDP would be overstated.

• the GDP would be understated.

Which of the following is a final good or service?

• a haircut

• fertilizer purchased by a farm supplier

• diesel fuel bought for a delivery truck

• Chevrolet windows purchased by a General Motors assembly plant.

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

• excluded from GDP in order 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

In national income accounting, consumption expenditures include:

• purchases of both new and used consumer goods.

• consumer durable goods and consumer nondurable goods, but not services.

• consumer durable goods, consumer nondurable goods, and services.

• changes in business inventories.

In calculating GDP, governmental transfer payments, such as social security or unemployment compensation, are:

• not counted.

• counted as investment spending.

• counted as government spending.

• counted as consumption spending.

GDP is a:

• stock because it measures income for the entire country.

• stock because it measures wealth at a distinct point in time.

• flow because dollar values are used.

• flow because it measures income over a period of time.

In the treatment of U.S. exports and imports, national income accountants:

• subtract exports, but add imports, in calculating GDP.

• subtract both exports and imports in calculating GDP.

• add both exports and imports in calculating GDP.

• add exports, but subtract imports, in calculating GDP.