ECON211 - Ch7
Government transfer payments include all of the following except: - direct payments to veterans - wage payments to police officers - direct welfare payments to low-income households - payments to elderly from Social Security
wage payments to police officers
National income accountants subdivide corporate profits into which categories? (Select all that apply) - Interest on savings - Corporate income taxes - Undistributed corporate profits - Dividends - Rents
- Corporate income taxes - Undistributed corporate profits - Dividends
Which of the following are components of government purchases in GDP? (Select all that apply) - Expenditures for intermediate goods - Expenditures for publicly owned capital - Expenditures for goods and services that the government consumes in providing public services - Expenditures and government receipts that consist of transfer payments to households
- Expenditures for publicly owned capital - Expenditures for goods and services that the government consumes in providing public services
Which of the following are components of the expenditure approach to measuring GDP? (Select all that apply) - Personal and Business Savings - Government Purchases - Personal Consumption Expenditures - Gross Private Domestic Investment
- Government purchases - Personal Consumption Expenditures - Gross Private Domestic Investment
Which of the following are included in compensation of employees? (Select all that apply) - Payments by employers into private pension plans for employees - Wages and salaries - Payments by employees into private pension plans - Payments by employers into social insurance for employees
- Payments by employers into private pension plans for employees - Wages and salaries - Payments by employers into social insurance for employees
According to the International Monetary Fund, which three countries had the highest GDPs? (Select all that apply) - Japan - China - United States - Canada - United Kingdom - Germany
- United States - China - Japan
Gross private domestic investment consists of: (Select all that apply) - any changes in inventories - durable goods and nondurable goods - spending on new plant and equipment during the year - newly produced housing - services
- any changes in inventories - spending on new plant and equpiment during the year - newly produced housing
For the purpose of GDP accounting, government purchases include ___ (Select all that apply) - the purchase of new military equipment - unemployment insurance payments - spending on highway construction - Social Security payments
- the purchase of new military equipment - spending on highway construction
Using the expenditure approach, which of the following most closely defines the composition of GDP? - C + I_n + G + X - C + I_n + G + X_n - C + I_g + G + M - C + I_g + G + X - M
C + I_g + G + X - M
If C represents consumption expenditure, I_g represents gross investment, I_n represents net investment, G represents government expenditure, X_n represents net exports, and X_g represents gross exports, GDP is: - C + I_g + G + X_n - C + I_g + G + X_g - C + I_g + P + X_n - C + I_n + G + X_n
C + I_g + G + X_n
Which of the following is the largest component of national income? - Corporate profits - Interest - Compensation of employees by firms - Rental income received by households and businesses
Compensation of employees by firms
True or false: The transfer of claims to existing capital goods creates new capital.
False
___ goods are included in the calculation of GDP while ___ goods are not included - Hard; soft - Durable; non-durable - Intermediate; final - Final; Intermediate
Final; intermediate
Which of the following is equal to net investment? - Gross investment minus final sales - Depreciation plus GDP - Gross investment minus depreciation - GDP minus final sales
Gross investment minus depreciation
Foreign goods or ___ purchased by consumers, firms, or the government should be subtracted from GDP because the goods were not produced in the United States
Imports
___ income consists of the money paid by private businesses to the suppliers of loans used to purchase capital
Interest
What happens to the size of the capital stock when gross investment and depreciation are equal? - It increases - It stays the same - It decreases
It stays the same
Income earned through the use of American-owned resources for services and production is called ___ income
National
___ enable economists to track the long-run course of the economy - Personal Income Accounting - National Income Accounting - Government tax policies - Personal Consumption
National Income Accounting
___ is the income received by households and businesses that supply property resources.
Rent
Which of the following is counted as gross private domestic investment? - Spending on legal services - Investing in stocks and bonds - Spending on automobiles - Residential construction
Residential construction
True or false: GDP only counts final goods and services to avoid multiple counting of goods.
True
An intermediate good is: - a good directly consumed by individuals - counted as part of GDP - a good used only in the production of other products
a good used only in the production of other products
Aggregate output is the primary measure of the economy's - annual total output of goods and services - annual total output of goods and services expressed in real terms - annual marginal output of goods and services - annual total output of goods and services adjusted for inflation
annual total output of goods and services
National income is the sum of compensation of employees, rents, interest, proprietors' income, taxes on production and imports, and: - taxes on exports - dividends - capital appreciation - corporate profits
corporate profits
Gross domestic product calculations count only final goods and services because: - it is difficult to measure the prices of intermediate goods produced - one cannot calculate the quantities of intermediate goods produced - counting all intermediate goods and services would lead to double-counting of many activities - these are the only goods and services that are purchased in an economy
counting all intermediate goods and services would lead to double-counting of many activities
Transfer payments are not included in GDP because they do not generate ___ - financial transactions - intermediate goods - current output - finished goods
current output
If net investment is negative, the capital stock has ___. If net investment is positive, the capital stock has ___ - increased; increased - increased; decreased - decreased; increased - decreased; decreased
decreased; increased
Consumption of fixed capital is the ___ charge made against private and publicly owned capital each year.
depreciation
All the final purchases of machinery, equipment, and tools by business enterprises, including construction, and changes in inventories make up gross private ___ investment
domestic
Consumption goods, capital goods and services purchased by their ultimate users are called ___ goods - intermediate - substitute - final - investment
final
Gross private domestic investment includes: - final purchases of machinery, equipment, and tools by business enterprises, and all nondurable goods and services - final purchases of machinery, equipment, and tools by enterprises, all construction, and changes in inventories - final purchases of machinery, equipment, and tools by business enterprises, consumer durables and changes in inventories
final purchases on machinery, equipment, and tools by enterprises, all construction, and changes in inventories
The market value of all final goods and services produced within the borders of a given country during a given period of time is the definition of: - gross private domestic investment - national income - gross domestic product - gross national product
gross domestic product
Net exports is exports minus ___
imports
Taxes on production and ___ are part of national income "to account for expenditures that are diverted to the ___"
imports; government
Goods and services that are used up in the production of final goods are called ___ goods.
intermediate
The three types of gross private domestic investment include all final purchases of machinery, equipment, and tools by business enterprises; all construction; and changes in ___
inventories
Residential construction is considered a(n) ___ rather than consumption
investment
When gross investment is less than depreciation, net investment is ___ - rising - zero - negative - positive
negative
In calculating gross private domestic investment, a ___ change in ___ must be subtracted from the total investment for that particular year. - positive; inventories - negative; the balance of payments - negative; inventories - negative; demand
negative; inventories
When dealing with international trade, economists include ___ as a component of GDP. - totals imports - net exports - total exports - net imports
net exports
The difference between the income Americans earn abroad and the income they earn in the United States is called ___ ___ factor income.
net, foreign
Transfer payments are excluded from government puchases in GDP accounting because - they are difficult to measure - they are already included as part of investment - they are a reward to individuals who have been productive their entire lives - nothing is being produced in return for the payment
nothing is being produced in return for the payment
A country's exports are included in GDP when the goods and services are: - produced outside the borders of said country - available for purchase by citizens of the producing nation - produced within the borders of said country - available for purchase by citizens of all countries, including the producing nation
produced within the borders of said country
Government ___, officially labeled "government consumption expenditures and gross investment," include all federal, state, and local government outlays on final goods.
purchases
A nation's gross domestic product (GDP): - reflects the aggregate output of intermediate goods produced within an economy in a given year - reflects the aggregate output of final and intermediate goods produced within an economy in a given year - reflects the total market value of all final goods and services produced within an economy in a given year - reflects the total market value of all goods and services, final and intermediate, produced by a country's resource in a year
reflects the total market value of all final goods and services produced within an economy in a given year
The sales of secondhand goods are excluded from the calculation of GDP because: - these goods do not add to the well-being of an economy - these goods do not involve the income of current year - the market value of seceondhand goods is less than the market value of new goods - secondhand sales do not contribute to current production
secondhand sales do not contribute to current production
The amount accountants add to national income to make the income approach match the outcome of the expenditure approach is called the ___ discrepancy
statistical
Depreciation of capital is ___: - the total amount of new private investment purchases - what is left over from total new private investment after use for a year - the annual amount allocated to wear and tear on private investment - the total amount of private investment purchases, whether new or previously existing
the annual amount allocated to wear and tear on private investment
In national income accounts, value added refers to: - the difference in the market value and the cost of inputs purchased from other firms - the cost of inputs at the first stage of production - the value added only by labor to the production process - the value of all the inputs used by th efinal producer
the difference in the market value and the cost of inputs purchased from other firms
The view of GDP as the sum of money spent on purchases is called - the income approach - the expenditure approach - the buying approach - the capital approach
the expenditure approach
Viewing GDP in terms of earnings derived or created by produciing something is called - the income approach - the output approach - the expenditure approach - the circular flow
the income approach
National income accountants add indirect business taxes to wages, rent, interest, and profits in order: - to keep track of expenditures that are diverted to the government - to keep trace of inclusions to the balance of payments - to keep track of deductibles from GDP calculations - to record these in the current account of the balance of payments
to keep track of expenditures that are diverted to the government
The sale of ___ is excluded from the calculation of GDP because they contribute nothing to current production. - new goods - used goods - intermediate goods
used goods
The market value of a firm's output minus the value of the inputs the firm has bought from others is called - value added - total profit - multiple counting - depreciation
value added
Net private domestic investment is: - the wear and tear on private investment - the total amount of private investment purchases, whether new or previously existing - the total amount of new private investment purchases - what is left over from total new private investment after depreciation
what is left over from total new private investment after depreciation