is the dollar value of the total output produced within the borders of the nation.
Suppose the total market value of all final goods and services produced in a particular country in 2004 is $500 billion and the total market value of final goods and services sold is $450 billion. We can conclude that:
GDP in 2004 is $500 billion.
National income accountants can avoid multiple counting by:
only counting final goods.
By summing the dollar value of all market transactions in the economy we would:
obtain a sum substantially larger than the GDP
Which of the following is an intermediate good?
the purchase of baseball uniforms by a professional baseball team.
In national income accounting, consumption expenditures include purchases of:
automobiles for personal use, but not houses.
In national income accounting, consumption expenditures include:
consumer durable goods, consumer nondurable goods, and services.
Net exports are:
exports less imports.
Gross investment refers to:
net investment plus replacement investment.
Net exports are negative when:
a nation's imports exceed its exports.
Which of the following is not economic investment?
the purchase of 100 shares of AT&T by a retired business executive
National income accountants define investment to include:
any increase in business inventories.
As defined in national income accounting, investment includes
business expenditures on machinery and equipment.
Suppose that inventories were $40 billion in 2003 and $50 billion in 2004. In 2004, accountants would:
add$10 billion to other elements of investment in calculating total investment.
Suppose that inventories were $80 billion in 2003 and $70 billion in 2004. In 2004, accountants would
subtract $10 billion from other elements of investments in calculating total investment
Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories increased by $10 billion. GDP in year 2 is:
Suppose that GDP was $200 billion in year 1 and that all other components of expenditures remained the same in year 2 except that business inventories fell by $10 billion. GDP in year 2 is:
If the economy adds to its inventory of goods during some year:
this amount should be included in calculating that year's GDP.
The smallest component of aggregate spending in the United States is:
Government purchases include government spending on:
government consumption goods and public capital goods.
In national income accounting, government purchases include:
purchases by Federal, state, and local governments.
Transfer payments are:
excluded when calculating GDP because they do not reflect current production.
The value of U.S. imports is:
subtracted from exports when calculating GDP because imports do not constitute production in the United States.
In the treatment of U.S. exports and imports, national income accountants:
add exports, but subtract imports,in calculating GDP.
In calculating the GDP national income accountants:
add increases in inventories or subtract decreases in inventories.
The ZZZ Corporation issued $25 million in new common stock in 2004. It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans. As a result, investment:
of $18 million has occurred.
In 2003 Trailblazer Bicycle Company produced a mountain bike that was delivered to a retail outlet in November of 2003. The bicycle was sold to E.Z. Ryder in March of 2004. This bicycle is counted as:
investment in 2003 and as disinvestment in 2004.
GDP differs from NDP in that:
gross investment isused in calculating GDP and net investment isused in calculating NDP.
If depreciation exceeds gross investment:
the economy's stock of capital is shrinking.
The concept of net domestic investment refers to:
total investment less the amount of investment goods used up in producing the year's output.
If depreciation (consumption of fixed capital) exceeds domestic investment, we can conclude that:
net investment is negative.
When an economy's production capacity is expanding:
domestic investment exceeds depreciation.
In 1933 net private domestic investment was a minus $6.0 billion. This means that:
the production of 1933's GDP used up more capital goods than were produced in that year.
An economy is enlarging its stock of capital goods:
when gross investment exceeds replacement investment.
A nation's stock of capital goods will decline when:
depreciation exceeds gross investment.
In an economy experiencing a declining production capacity:
depreciation exceeds gross investment.
If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock:
increased by $65 billion.
Consumption of fixed capital (depreciation) can be determined by:
subtracting NDP from GDP.
If net foreign factor income earned in the U.S. is zero, the sum of national income, indirect business taxes, and the consumption of fixed capital equals:
NI plus net foreign factor income earned in the U.S. plus indirect business taxes.
Which of the following best defines national income?
all incomes earned by U.S. resource suppliers for their current contributions to production
The total amount of income earned by U.S. resource suppliers in a year is measured by:
The largest component of national income is:
compensation of employees.
National income measures:
the market value or cost of the resources used in the production of the national output.
Personal income is most likely to exceed national income:
during a period of recession or depression.
If personal income exceeds national income in a particular year, we can conclude that: