GDP - Gross Domestic Product National Income Accounting Questions and Answers

Question 1

An economist is calculating a country's Net Domestic Product (NDP). Which of the following formulas should be used?

Accepted Answer

GDP - Depreciation

Answer

GDP + Net Factor Income from Abroad

Answer

GDP + Subsidies - Indirect Taxes

Answer

Nominal GDP / GDP Deflator

Question 2

Which of the following is a primary component of the income approach to calculating GDP?

Accepted Answer

Compensation of Employees

Answer

Personal Consumption Expenditures

Answer

Gross Private Domestic Investment

Answer

Government Purchases

Question 3

A steel manufacturer sells steel to an automobile factory for $5,000. The automobile factory uses the steel to produce a car, which it sells to a dealership for $20,000. The dealership then sells the car to a consumer for $25,000. Using the value-added approach, what is the total contribution to GDP from these transactions?

Accepted Answer

$25,000

Answer

$50,000

Answer

$30,000

Answer

$20,000

Question 4

If an economy's Gross Domestic Product (GDP) is $10 trillion and the depreciation (or capital consumption allowance) is $1.5 trillion, what is the Net Domestic Product (NDP)?

Accepted Answer

$8.5 trillion

Answer

$11.5 trillion

Answer

$10 trillion

Answer

$1.5 trillion

Question 5

Which of the following measures represents the total income that households and non-corporate businesses have left after paying taxes, which they can either spend or save?

Accepted Answer

Disposable Personal Income

Answer

National Income

Answer

Personal Income

Answer

Net National Product

Question 6

To calculate National Income (NI) from Net National Product (NNP) at market prices, what adjustment must be made?

Accepted Answer

Subtract indirect business taxes and add subsidies

Answer

Add depreciation

Answer

Subtract net foreign factor income

Answer

Add transfer payments