Measuring National Output and National Income . $50,000 $100,000.
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$50,000 $100,000 1. A shepherd shears sheep, and sells the raw wool to a yarn spinner for $50,000. The spinner sells the yarn to a knitting mill for $100,000. The knitting mill makes sweaters, which sell for a total of $500,000. How much of the above counts in GDP? C. $500,000 D. $650,000
All the output of the plant is included in U.S. GDP but only part of it is included in U.S. GNP All the output of the plant is included in U.S. GNP but only part of it is included in U.S. GDP All the output of the plant is included in U.S. GDP All the output of the plant is included in U.S. GNP 2. Honda, a Japanese automobile firm, owns and operates a factory in Marysville, Ohio. Which of the following is true?
Income approach 3. GDP can be calculated using the: B. Expenditure approach C. Both A and B
4. The largest part of GDP consists of: C. Government consumption and investment D. Exports minus imports • Personal consumption expenditures • Gross private domestic investment by businesses
5. Gross private domestic investment includes inventories. • TRUE B. FALSE
6. When we calculate GDP using the income approach, we: • Add depreciation to national income B. Subtract depreciation from national income
National income Personal income 7. The amount that households have to spend or save is called: C. Disposable personal income D. All of the above
8. As a result of inflation: • Nominal GDP can rise while real GDP stays the same • Real GDP can rise while nominal GDP stays the same • Both nominal and real GDP will increase • Both nominal and real GDP will decrease
9. GDP does not take into account: C. Losses or social ills D. All of the above • Increases in leisure time • Nonmarket and domestic activities
Understated 10. As a result of the underground economy, the reported value of GDP is: B. Overstated