GDP National Income Accounting 2

Question 1

Which of the following is NOT included in the expenditure approach to calculating GDP?

Accepted Answer

A family buying a used car

Answer

Used goods are excluded from GDP because they were counted when first produced; only new production is included.

Question 2

In national income accounting, 'Net National Product' (NNP) is calculated as:

Accepted Answer

GNP minus depreciation

Answer

NNP equals GNP minus the capital consumption allowance (depreciation), representing the net output after accounting for worn-out capital.

Question 3

Disposable personal income is best defined as:

Accepted Answer

Personal income minus personal taxes

Answer

Disposable personal income is personal income after subtracting personal taxes, representing what households can spend or save.

Question 4

When the BEA measures GDP using the income approach, which component compensates workers for their labor?

Accepted Answer

Compensation of employees

Answer

Compensation of employees — wages, salaries, and fringe benefits — is the largest income component in the income approach to GDP.

Question 5

A US citizen working in Canada generates income that counts toward:

Accepted Answer

US GNP and Canadian GDP

Answer

GDP is location-based (Canada), while GNP/GNI is ownership-based (US), so the income enters Canadian GDP and US GNP.

GDP - Gross Domestic Product Practice Test