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2. Transfer Payments are: A. excluded when calculating GDP because they are adjusted for inflation. B. excluded when calculating GDP because they do not reflect current production. C. included when calculating GDP because they are a category of investment spending. D. included when calculating GDP because they increase the spending of recipients. 3. TRUE or FALSE Volunteer services, such as an accountant offering to help you with your taxes, are excluded when calculating GDP. As a result, GDP is understated. 4. The total amount of income earned by U.S. economic resources in a year, plus taxes on production and imports, is measured by: A. GDP. B. National Income. C. Personal Income. D. Disposable Income. 5. TRUE or FALSE Generally speaking, local governments finance their spending on K-12 education through personal income taxes. 6. In comparing GDP data over a period of years, a difference between nominal and real GDP may arise because: A. of changes in trade deficits and surpluses. B. the length of the workweek has declined historically. C. the price level may change over time. D. depreciation may be greater or smaller than gross investment. 7. Which of the following is excluded from GDP? A. gasoline purchased for a car B. services performed by city law enforcement officials C. steel sold to a refrigerator manufacturer D. goods and services sold to other countries8. TRUE or FALSE GDP adequately reflects both allocationefficiency and changes in the quality of the goods produced such as telephones, making it an accurate measure of an economy's well-being. 9. Gross Domestic Product (GDP) is (most precisely) defined as A. value of the total final output produced by economic resources supplied by U.S. Americans, whether these resources are located in the U.S. or abroad. B. value of all stocks and bonds sold within the country within one year, adjusted for inflation. C. the sum of the value-added products produced over a period of time within the country. D. value of all final goods and services produced by economic resources within the boundaries of the U.S. whether by U.S. Americans or foreign-supplied resources. 3 10. In order to calculate Personal Income, one would begin with National Income and subtract income not received by households and then: A. subtract income received by households, in the form of transfer payments. B. add income received by households, in the form of transfer payments. C. take a percentage of the transfer payments received by households and add it. D. add personal taxes. 11. The vegetables grown and eaten by farmers on their farms in Cuba are included in: A. Cuban GDP B. Cuban GNP C. Cuban PI D. None of the above
