Chapter 8 - GDP

In the US, GDP and GNP are close in value. Under what circumstances would GNP be much larger than GDP?

All of the above

Which of the following do we subtract from GDP to obtain national income?

Depreciation

If you were attempting to forecast the level of consumer spending by households, which measure of total production or income might be the most powerful?

Disposable personal income. (the only income people can spend:-)

When a significant fraction of domestic production takes place in foreign owned facilities, a country's difference between GDP and GNP is as follows

GDP will be much larger than GNP

US Gross National Product (GNP) differs from GDP in which of the following ways? In the US, the difference between GNP and GDP is... than that of many other countries

GNP considers production that occurs outside the US GNP is the value of final goods and services produced by residents of the USA SMALLER

All of the following are correct except...? Which component of gross domestic income is the largest?

Gross Domestic Income does not include health insurance benefits received by employees. wages

Indicate whether the following statement is correct or incorrect: "Corporate profits are much too high....

Incorrect. The largest component of gross domestic income is wages, which are about three times as large as profits

Disposable income is equal to..?

personal income minus personal tax payments

In 2012, the largest component of gross domestic income was..?

wages

Consider the following table a. National Income (NI) equals... b. Personal Income (PI) equals... c. (Disposable Personal Income (DPI) equals...

a. National Income (NI) = Gross National Product (GNP) - Depreciation - Indirect business tax 13100-1400-30=11670 b. Personal income = National Income - Corporate earnings + transfer payments or interest on Government bonds. 11670-1500+600=10770 c. Disposable income = Personal income - personal tax payments. 10770-1250=9520

Suppose the amount the federal government collects in personal income taxes decreases. while the level of GDP remains the same. What will happening to the value of national income, personal income and disposable income? a. National Income...? b. Personal Income..? c. Disposable Income...?

a. remain the same b. remain the same c. Increase

To calculate personal income from national income, which of the following must BEA do..?

add government transfer payments (Or subtract Corporate earnings)