1 All of the following are included in gross private domestic investment expenditure EXCEPT a businesss purchase of a fleet of cars households purchase of a new house businesss purchase of another.
1 All of the following are included in gross private domestic investment expenditure EXCEPT a business's purchase of a fleet of cars household's purchase of a new house business's purchase of another company's stock a retail store's purchase of shoes to add to its inventory In the national income accounts, government expenditure on goods and services refer to those purchases made by federal and state governments only the federal government only state and local governments only all levels of government In the national income accounts, government expenditure on goods and services exclude transfer payments state and local government purchases local government purchases but include state government purchases spending on national defense Which of the following is included in the government expenditure component of the expenditure approach to GDP? state government expenditure on local schools transfer payments changes in inventories taxes Which one of the following transactions in a particular year is included in gross domestic product for that year? Social Security payments to retirees The government pays a computer services company that assisted in the delivery of Social Security payments to retirees A car is produced in the previous year and remains in inventory for the entire year under consideration A stay-a t-home parent performs housework that the family would otherwise have paid a maid $20,000 a year to perform 6 Which of the following is included in government expenditures when measuring GDP? Social Security payments unemployment compensation payments pension payment made to past presidents the current president's salary Transfer payments are included in the government expenditure category in gross domestic product refer to all payments made to households by governments refer to payments made by the government that are not made to purchase a good or service are made by households to firms in exchange for goods and services In the computation of GDP, social security payments count as transfer payments and are included in GDP transfer payments and are not included in GDP government expenditure on goods and services and are included in GDP government expenditure on goods and services and are not included in GDP Which of the following items is NOT part of government expenditure on goods and services in the GDP accounts? gasoline purchases for government car pools Social Security expenditures new computer hardware for use by the IRS drapes to brighten up the president's office 10 Transfer payments are not included in GDP because their market value cannot be accurately determined they not generate additional income they are not purchases of goods or services their value is included in government expenditure 11 Which of the following transfer payments is included in GDP? Social Security payments welfare payments veteran's benefits none of the above 12 Which of the following is NOT part of GDP calculated using the expenditure approach? General Motors' purchases of new capital equipment expenditures by the federal government for national defense social security payments made to the elderly the purchase of new homes by consumers 13 Transfer payments are not part of government expenditure on goods and services because transfer payments are not predictable given the nature of their appropriation and allocation not represent the purchase of a final good or service are not always spent on goods produced in the U.S The premise of the question is incorrect because transfer payments are part of government purchases of goods and services 14 Government expenditures included in the expenditure approach to GDP include social security and education net exports buying a new bomber Both answers A and C are correct Net exports of goods and services equal the 15 exports of goods and services divided by the imports of goods and services exports of goods and services plus the imports of goods and services exports of goods and services minus the imports of goods and services imports of goods and services minus the exports of goods and services Net exports is negative if 16 the value of exports exceeds the value of imports the value of imports exceeds the value of exports the tariff payments are included in the value of imported and exported items too much production occurs in the exporting country during the year 17 In 2010, net exports in the United States were zero positive negative greater than personal consumption expenditures 18 To calculate GDP using the expenditure approach, in part it is necessary to add imports and exports add imports and subtract exports add exports and subtract imports subtract both exports and imports 19 An increase in exports of goods or services with no change in imports of goods or services decreases GDP increases GDP may increase or decrease GDP depending on whether it is the export of goods or the export of services that increased has no effect on GDP By itself, an increase in exports 20 increases GDP decreases GDP means imports decrease by the same amount can either increase or decrease GDP, depending on whether the exports are durable or nondurable 21 If Ford sells 200 Explorers for a total of $400,000 to Germany, while the United States imports 100 BMWs for a total of $500,000 from Germany U.S GDP increases because it sells more Explorers U.S GDP decreases because net exports are negative Germany's GDP decreases U.S net exports is positive 22 An U.S firm buys a new industrial sewing machine from a company located in France Which of the following is true? I U.S net exports decrease II U.S investment increases only I only II both I and II neither I nor II 23 If an American firm produces goods that are sold to a German household, then German GDP increases but not U.S GDP U.S GDP increases the transaction is considered an export in the German GDP accounts net exports in the United States will not change because an export immediately generates an offsetting import 24 In the calculation of GDP by the expenditure approach, exports from the United States must be subtracted because they are included in the consumption of a foreign country ignored because they are not bought by U.S citizens subtracted if they are bought by foreign firms for investment purposes added 25 Using the information in the table above, calculate the value of GDP $185 million $145 million $195 million $140 million 26 Use the information in the table above to calculate the value of net exports $10 million $0 -$10 million $30 million 27 Last year in the country of Nerf imports equaled exports Nerf's GDP was $500 million, its consumer expenditure was $380 million, and its investment was $20 million Nerf's government expenditure on goods and services were $100 million $900 million $500 million zero 28 The above table shows some (but not all) national income accounting data for a hypothetical country According to these data, the value of GDP is billion $2100 $1850 $2000 $2050 29 Based on the data in the above table, gross domestic product equals $2,190 $2,840 $2,465 $2,750 30 The above table shows data from the GDP accounts of Hypothetica Hypothetica's GDP is billion $270 $210 $190 $160 31 If imports are $100 million less than exports, government expenditures are $500 million, consumer expenditures are $1 billion, and gross investment spending is $500 million, then GDP is $1 billion $1.9 billion $2 billion $2.1 billion 32 If consumption expenditures are $500 million, net investment is $100 million, depreciation equals $5 million, imports are $50 million, exports are $55 million, government expenditure on goods and services is $220 million, and government transfer payments are $20 million, then GDP is $790 million $800 million $830 million $850 million 33 Using the data in the table above, what is the value of GDP? $13,516 billion $10,679 billion $9,541 billion $8,403 billion 34 Using the data in the above table, what is the value of net exports? -$181 billion $181 billion $957 billion -$957 billion 35 Using the data in the above table, what is the value of national saving? $1,202 billion $2,837 billion $1,053 billion -$85 billion 36 Using the information in the table above, calculate gross domestic product $118 $108 $86 $78 37 Using the information in the table above, calculate the government's budget deficit or surplus $2 -$4 -$10 $4 38 Using the information in the table above, calculate gross domestic product $5,130 billion $5,320 billion $4,760 billion $4,690 billion 39 Using the information in the table above, net exports equals $1,370 billion $650 billion $20 billion -$70 billion 40 Using the information in the table above, depreciation equals -$90 billion $90 billion -$70 billion some amount that cannot be determined 41 From the data in the above table, GDP equals $1,120 $1,280 $1,290 $1,360 42 The approach to GDP that sums compensation of employees, rental income, corporate profits, net interest, proprietors' income, depreciation, and indirect taxes and subtracts subsidies is the opportunity cost approach expenditure approach added cost approach income approach 43 The income approach to measuring GDP sums together compensation of employees, rental income, corporate profits, net interest, proprietors' income, subsidies paid by the government, indirect taxes paid, and depreciation compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and depreciation and subtracts subsidies paid by the government the sales of each firm in the economy the costs of each firm in the economy and then subtracts indirect business taxes and depreciation 44 Proprietors' income is a component of which approach to measuring GDP? incomes approach expenditure approach cost approach output approach The income approach to measuring GDP 45 determines the cost of production, then adjusts it to equal the market value of production sums all incomes earned in the United States and makes no other adjustments because other adjustments are not necessary measures the cost of producing GDP rather than the market value sums the value at each stage of production plus the value of depreciation 46 The five categories of income used in the income approach to the measurement of GDP are consumption, saving, rental income, corporate profits, and investment employee compensation, net interest, rental income, corporate profits, and proprietor's income employee compensation, consumption, rental income, corporate profits, and proprietor's income employee compensation, saving, rental income, corporate profits, and investment 47 Which of the following expressions equals GDP? compensation of employees + consumption + depreciation + net investment compensation of employees + net interest + rental income + depreciation + corporate profits + proprietors' income + indirect taxes - subsidies compensation of employees + net exports + depreciation + corporate profits compensation of employees + gross investment + rental income + depreciation + corporate profits + indirect taxes – subsidies 48 Which of the following is a component of the incomes approach to GDP? consumption expenditure wages and salaries investment government expenditure on goods and services 49 The income approach measures GDP by adding together compensation of employees, proprietors' income, net investment, saving, and farmers' income net interest, rental income, and corporate profits net investment, rental income, and corporate profits net saving, investment income, and profits 50 Which of the following items is NOT a component of the income approach to measuring U.S GDP? interest earned on savings deposits profits made by businesses income earned by businesses that export goods investment