Chap002

# Chap002 - Chapter 02 National Income Accounting Chapter 02...

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Chapter 02 - National Income Accounting Chapter 02 National Income Accounting Multiple Choice Questions 1. In calculating this year's GDP, national income accountants a. Include any increase in stock values b. Include an estimate for income from illegal activities C . Exclude Social Security payments to retirees d. Exclude the value of any repairs made on existing property e. Exclude the value of new pollution control equipment that is being installed Difficulty: Easy 2. Assume you built a new house, bought a used car, and bought some government bonds. Which of the following is true? a. Consumption and government purchases went up since you bought a used car and government bonds b. Consumption and investment went up since you bought a used car and government bonds c. Investment and government purchases went up since you built a new house and bought government bonds D . Investment went up since you built a new house e. Consumption went up since you built a new house Difficulty: Medium 3. Which of the following is FALSE? a. U.S. GDP underestimates actual economic activity because it does not include underground activity b. An increase in the ratio of currency holdings to bank deposits may be seen as evidence for an increase in underground activity c. If the underground economy grows rapidly, then the rate of economic growth will be underestimated D . If the underground economy grows rapidly, then the standard of living will decline sharply e. Underground activity includes income from services produced at home but not reported, such as typing someone else's term paper Difficulty: Medium 2-1

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Chapter 02 - National Income Accounting 4. Which of the following statements is true? a. NDP is greater than GDP if prices are falling b. NDP is greater than GDP if prices are rising c. NDP can be greater than GDP but only if the economy is growing D . NDP cannot be greater than GDP e. NDP must always be greater than GDP Difficulty: Easy 5. Increases in unwanted business inventories are counted as a. A decrease in the capital stock b. An increase in consumption C . An increase in investment d. An increase in depreciation e. None of the above Difficulty: Easy 6. The difference between gross domestic investment and net domestic investment is equal to a. Unwanted inventory changes b. The difference between NDP and national income c. The addition to the capital stock D . The difference between GDP and NDP e. None of the above Difficulty: Easy 7. Assume you deplete your savings to buy a new sofa and some government bonds and then take a vacation in a foreign country. Which of the following is true? A . Consumption will increase b. Net exports will increase c. Government purchases will increase d. Investment will increase e. All of the above Difficulty: Easy 2-2
Chapter 02 - National Income Accounting 8. Assume nominal GDP increased by 4.2% in the U.S. but by only 3.4% in Germany. We can definitely conclude that a. The standard of living of the people in the U.S. went up more than the standard of living of

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Chap002 - Chapter 02 National Income Accounting Chapter 02...

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