University of Lethbridge – Department of Economics
ECON 1012 – Introduction to Macroeconomics
Instructor: Michael G. Lanyi
Additional Help
Chapter # 3 – National Income Accounting
Answer Sheet
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CHAPTER 6
National Income Accounting
POP QUIZ
1. GDP is:
a. the total market value of all final goods and services produced in an economy in a one- year
period.
b. out only measure of a nation’s social well being.
c. a measure of the economic activity of the citizens and businesses of a country; GNI
measures the economy activity that occurs within a nation’s borders.
d. equal to C + I + G + (IM – X).
2. GDP:
a. adjusted for inflation is call net GDP.
b. includes intermediate but not final goods.
c. plus net foreign factor income equals GNI.
d. includes second-hand sales.
3. In the national income accounts:
a. total government spending is the largest component of GDP.
b. personal consumption expenditures is the largest component of GDP.
c. investment spending represents the purchase of stocks and bonds.
d. net exports is defined as imports minus exports.
4. Which of the following would not cause Canada’s GDP to increase?
a. Japan buys more wheat from Canada.
b. The federal government spends more on ships for the armed forces.
c. Businesses spend more on capital.
d. Canadians buy more Mercedes cars from Germany.
5. In the national income accounts:
a. inventory is not included as part of investment expenditures.
b. GDP will increase if C, I, G, and/or X increases, and/or IM decreases.
c. GNI plus net foreign factor income equals GDP.
d. GDP is a balance sheet of an economy’s stock of assets and liabilities.
Page 6-1, Chapter 6: National Income Accounting
6. Regarding GDP:
a. per capita GDP is calculated by dividing population by GDP.
b. real GDP is adjusted for changes in the general level of prices (inflation and deflation).
c. real GDP is calculated by multiplying nominal GDP by the GDP price deflator.
d. nominal GDP can change only if there is a change in the general level of prices.
7. Which of the following statements is correct concerning the different income accounts?
a. National income is total income earned by citizens and businesses in a country.
b. The largest component of national income is profits.
c. The difference between personal income and disposable personal income is indirect
business taxes.
d. Disposable personal income is a measure of the income households has available to spend
before paying personal taxes.
Questions 8, 9, and 10 are based on the following information:
DATA ARE IN TRILLIONS OF DOLLARS
Persona l consumption expenditures
$3.0
Net private domestic investment
1.4
Depreciation
0.2
Government purchases of goods and services 2.0
Exports
0.5
Imports
0.3
Foreign factor income
0.1
8. The economy’s GDP is _________ trillion.
a. 6.6 b. 6.8 c. 7.2 d. 7.4.
9. The economy’s GNI is _________ trillion.
a. 6.6 b. 6.7 c. 6.9 d. 7.9.
10. The economy’s net exports are _________ trillion.
a. –0.4 b. 0.5 c. 0.3 d. 0.2.
Page 6-2, Chapter 6: National Income Accounting
ANSWERS TO POP QUIZ
Please solve it first.
1. b 2. c 3. b 4. d 5. b 6. b 7. b 8. b 9. c 10. d
Page 6-3, Chapter 6: National Income Accounting