1.According to the fundamental identity of national income accounting,

A.GDP = GNP = NFP

B.Y = C+I + G + NX

C.S = (Y + NFP - T - TR +INT),

D.Total production = total income = total expenditure

2.To avoid double counting in calculating GDP:

A. net export should be excluded

B. the value of intermediate goods and services should be excluded

C. the capital consumption allowance should be excluded

D. business investment should be excluded

3.Which of the following would increase GDP?

A. A burglar steals your CD player from your house

B. You win $10,000 playing cards in your room

C. You decide to work five (5) more hours each week working at the library

D. You sell your cell phone to your friend

Which of the following is a valid version of the expenditure-based national accounting identity?

(a) Y = C + I + G

(b) Y = C + I + G - NX

(c) Y = C + I + G + X

(d) Y + M = C + I + G +

Which of the following is a valid version of the expenditure-based national accounting identity?

(a) Y = C + I + G

(b) Y = C + I + G - NX

(c) Y = C + I + G + X

(d) Y + M = C + I + G +

4. Which of the following indicators is used more often to measure economic growth?

A. Real GDP

B. Nominal GDP

C. Population

D. Per capita real GDP

1. GDP is not a perfect measure of social welfare and the society's economic well-being because:

i. it does not say anything about the distribution of income

ii. GDP accounting rules do not adjust for production that causes negative externalities

iii. it does not include all economic activities in the economy

A. i only

B. i and ii

C. ii and iii

D. i, ii and iii

6. Gross National Product equals:

A.Net National Product adjusted for inflation

B.Gross Domestic Product adjusted for inflation

C.Gross Domestic Product plus net property income from abroad

D.Net National Product plus net property income from abroad

7.Production activity in the underground economy:

A. results in an overstatement of actual income and production in the national accounting system

B. consist of unrecorded customer transactions

C. is fully estimated and included in the national income accounting

D. poses no problems for the measurement of GDP

8. To adjust GDP from market prices to factor cost:

A.Add indirect taxes

B.Subtract subsidies

C.Deduct indirect taxes and deduct subsidies

D.Deduct indirect taxes and add subsidies

9. adjust from Net National Product to Gross National Product:

A.Add depreciation

B.Deduct indirect taxes

C.Add subsidies

D.Add inflation

10. Mr Lawrence just bought a new house built by the NHT. In the national income accounting, this transaction is considered as:

A.Fixed investment

B.Consumption on semi-durable goods

C.Inventory investment

D.Consumption on durable goods

11. Which of the following is not a government transfer?

A.Unemployment benefits

B.Public pension

C.Welfare payments

D.Government spending on education

12. Tom grows tomatoes for home consumption. This activity is:

A.excluded from GDP in order to avoid double counting.

B.excluded from GDP because an intermediate good is involved.

C.productive but is excluded from GDP because no market transaction occurs.

D.included in GDP because it reflects production.

13. From the table below what is the value of consumption?

In trillions of dollars

GDP

5.0

Government purchases

1.0

Transfer payments

0.2

Investment

0.8

Exports

0.4

Imports

0.5

Net foreign factor income

0.4

A.$3.1 trillion

B.$3.6 trillion

C.$3.9trillion

D.$4.1 trillion

14. Legalizing all forms of illegal activities would:

A. reduce measured GDP

B. reduce the size of the underground economy and increase measured GDP

C. reduce both the underground economy and measured GDP

D. increase the size of the underground economy and reduce measured GDP

15. GDP differs from NDP in that:

A.GDP is based on gross exports, while NDP is based on net exports.

B.GDP includes, but NDP excludes, indirect business taxes.

C.net investment is used in calculating GDP and gross investment is used in calculating NDP.

D.gross investment is used in calculating GDP and net investment is used in calculating NDP.