Multiple Choice Questions:
1. Which of the following will be counted as part of this year’s U.S. GDP?
a. Goods produced last year but not sold until this year.
b. Goods produced this year by an American working in Paris.
c. Purchases of Cisco Systems stock (not issued this year) that take place this March.
d. Sales of used lawn mowers that take place this year.
e. None of the above.
2. In the income approach to measuring GDP, factor payments do not include?
a. Wages and salaries for the use of labor services.
b. Rent for land.
c. Interest payments for the use of capital goods.
d. Profits for entrepreneurs.
e. All of the above are included as factor payments.
3. Which of the following is not considered a factor payment?
a. Wages.
b. Interest.
c. Rent.
d. Profit.
e. Transfer payments.
4. What is not subtracted from GDP to get national income?
a. The net income of foreigners.
b. Depreciation.
c. Indirect business taxes.
d. Personal income taxes.
e. All of the above are subtracted from GDP to get national income.
5. Disposable income is?
a. A measure of the market value of total output.
b. A measure of the income households have to spend before paying taxes.
c. A measure of the income households have to spend after paying taxes.
d. A measure of household income from investment income, such as dividends and capital gains.
6. Disposable personal income will increase when?
a. Taxes rise and transfer payments rise.
b. Taxes rise and transfer payments fall.
c. Taxes fall and transfer payments rise.
d. Taxes fall and transfer payments fall.
7. Nominal GDP is?
a. The base year market value of all final goods and services produced domestically during a given period.
b. The current year market value of all final goods and services produced domestically during a given period.
c. Usually less than real GDP.
d. The current year market value of domestic production of intermediate goods.
e. None of the above.
8. Nominal GDP differs from real GDP in that?
a. Nominal GDP tends to increase when total production of output in the economy increases, while real GDP does not.
b. Nominal GDP is measured in base year prices, while real GDP is measured in current year prices.
c. Nominal GDP is measured in current year prices, while real GDP is measured in base year prices.
d. Real GDP excludes taxes paid to the government, while nominal GDP does not.