Part 03_ Measuring National Income

Part 03_ Measuring National Income - Measuring Domestic...

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Measuring Domestic Output & National Income True or False: 1) The gross domestic product (GDP) is the market value of all goods and services produced by the economy in one year. 2) A product that was produced in 2000 and not sold until 2001 is counted as part of GDP in 2001. 3) Value added can be determined by adding the purchase of intermediate products to the value of the sales of final products. 4) The value of a sale of a share of stock is considered to be an investment in national income accounting. 5) Gross private domestic investment can be divided into replacement investment and net investment. 6) Changes in business inventories are excluded from the definition of investment in the national income accounts. 7) In an economy, the value of inventories rose from kd 275 million in 2000 to kd 300 million in 2001. In calculating total investment for 2001, national income accountants would increase it by kd 25 million. 8) Government purchases exclude spending by the government for resources such as labor. 9) Net exports are positive when exports are greater than imports. 10) Adding indirect business taxes to national income equals GDP. 11) Transfer payments such as social security or unemployment compensation are counted in the calculation of GDP. 12) GDP tends to understate economic welfare because it does not take into account increases in leisure. 13) The value of the personal labor time spent repairing a home is included in GDP.
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Multiple Choice: 1) Which is a primary use for national income accounting? A) to analyze the environmental cost of economic growth B) to assess the economic efficiency of specific industries in the economy C) to measure changes in the value of goods and services produced in the economy D) to determine whether there is a fair and equitable distribution of income in the economy 2) GDP is the market value of: 3) The monetary value of all final goods and services produced by the Kuwaiti economy during a year is:
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