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Exam 12: Gdp: Measuring Total Production and Income

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Question 141

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The sum of the value added of every firm involved in producing all final goods and services ________ gross domestic product.

A) equals
B) is greater than
C) is less than
D) is sometimes greater than and other times less than

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Question 142

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The circular flow of income shows that GDP can be measured as the sum of wages,interest,rent,and profits received by households or total expenditures on goods and services by households,firms,government,and the rest of the world.

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Question 143

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Table 12-27 $\begin{array} { | l | r | } \hline \text { National income } & \$ 1,000 \\\hline \text { Retained earnings not paid as dividends } & 50 \\\hline \text { Transfer payments } & 40 \\\hline \text { Interest on government bonds } & 20 \\\hline \text { Personal taxes } & 30 \\\hline\end{array}$ The components of national income for an economy are represented in Table 12-27 above.All values are in billions of dollars. -Refer to Table 12-27.What is the level of disposable personal income for this economy?

Give two reasons why GDP does not reflect total production in an economy.

How can a firm have a negative valued added,as supposedly some state-owned businesses did in the former Soviet Union? What has to be true for value added to be negative?

In a small economy,gross investment in 2013 is $1,500,consumption spending is $6,000,net investment is $200,government spending is $1,500,exports are $2,000 and imports are $1,000.What is GDP for this economy in 2013?