1. What do we add to GDP to reach GNP?
a. Net income earned abroad by U.S. households
b. Personal income
c. Depreciation
d. Net exports
2. What is the largest component of national income?
a. Compensation of employees (wages and benefits)
b. Corporate profits
c. Rental income
d. Proprietors income (income of unincorporated business)
e. Net interest
3. Personal income and personal disposable income refer to payments ultimately flowing to __________ (households/firms).
4. The difference between gross national product and net national product is _____________.
5. Measuring Value Added for a Charity. The United Way is a nonprofit charity and does not sell products. Explain one way you could measure its value added.
6. Understanding Why GNP and GDP May Differ. If a country discovered vast amounts of oil, sold it abroad, and invested the proceeds throughout the world, how would its GDP and GNP compare?
7. Transfer Payments, National Income, and Personal Income. Taking into account the role of transfer payments, explain why national income could fall more than personal income during a recession.
8. Philippine Immigrants Abroad. Every year, the Philippines sends many workers abroad including nurses, health professionals, and oil workers. How do you think GNP and GDP in the Philippines compare?
9. Sales versus Value Added. Explain carefully why value added may be a better measure than total sales in comparing a country to a corporation.