GDP National Income Accounting 4

Question 1

Which of the following would cause GDP to be overstated if it were included?

Accepted Answer

Intermediate goods sold to manufacturers

Answer

Including intermediate goods alongside the final goods that incorporate them would count the same value multiple times, overstating total output.

Question 2

The 'statistical discrepancy' that sometimes appears in GDP accounts arises because:

Accepted Answer

The expenditure approach and income approach are measured independently and rarely match perfectly

Answer

The expenditure and income approaches to GDP use different data sources, so measurement errors produce a small statistical discrepancy between them.

Question 3

Which best explains why household production (e.g., a parent cooking meals at home) is excluded from US GDP?

Accepted Answer

It is not sold in a market, so it lacks a market price for measurement

Answer

GDP measures market transactions; non-market household services have no observable price, so they are excluded despite their real economic value.

Question 4

Corporate income taxes in national income accounting flow from:

Accepted Answer

National Income to Personal Income, reducing PI

Answer

Corporate taxes are subtracted from National Income's corporate profits component when calculating Personal Income, along with retained earnings and social insurance taxes.

Question 5

An economy has: C = $12T, I = $3T, G = $4T, X = $2T, M = $2.5T. What is GDP?

Accepted Answer

$18.5T

Answer

GDP = C + I + G + (X − M) = 12 + 3 + 4 + (2 − 2.5) = 12 + 3 + 4 − 0.5 = $18.5T.

GDP - Gross Domestic Product Practice Test

GDP - Gross Domestic Product Practice Test

GDP National Income Accounting 4