National Income Accounting Flashcards
7 cards from real GDP practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 National Income Accounting flashcards as text
Which of the following is NOT included in the expenditure approach to calculating GDP?
Answer: A family buying a used car
Used goods are excluded from GDP because they were counted when first produced; only new production is included.
In national income accounting, 'Net National Product' (NNP) is calculated as:
Answer: GNP minus depreciation
NNP equals GNP minus the capital consumption allowance (depreciation), representing the net output after accounting for worn-out capital.
Disposable personal income is best defined as:
Answer: Personal income minus personal taxes
Disposable personal income is personal income after subtracting personal taxes, representing what households can spend or save.
When the BEA measures GDP using the income approach, which component compensates workers for their labor?
Answer: Compensation of employees
Compensation of employees — wages, salaries, and fringe benefits — is the largest income component in the income approach to GDP.
A US citizen working in Canada generates income that counts toward:
Answer: US GNP and Canadian GDP
GDP is location-based (Canada), while GNP/GNI is ownership-based (US), so the income enters Canadian GDP and US GNP.
Which item would be classified as a 'transfer payment' and therefore excluded from GDP?
Answer: Social Security retirement benefits
Social Security benefits are transfer payments — money redistributed without a corresponding production of goods or services — so they are excluded from GDP.
If GDP equals $20 trillion and GNP equals $20.4 trillion, what can we infer about the US economy?
Answer: Americans earn more abroad than foreigners earn in the US
When GNP exceeds GDP, net factor income from abroad is positive, meaning Americans' overseas earnings exceed foreign residents' earnings inside the US.