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    Tutorial On National Income Accounting

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    JayChiAsh
    1. The illegal drug sale transaction will not be counted in GDP. 2. Additions to inventory are included in GDP as they are a component of net investment. 3. Using the data in Table 1, GDP can be calculated using both the expenditure and income approaches, then NDP is determined.

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    Tutorial On National Income Accounting

    Uploaded by

    JayChiAsh
    361 views3 pages
    1. The illegal drug sale transaction will not be counted in GDP. 2. Additions to inventory are included in GDP as they are a component of net investment. 3. Using the data in Table 1, GDP can be calculated using both the expenditure and income approaches, then NDP is determined.

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    Cape Unit 2 Economics Tutorial National Income Accounting

    Original Title

    Tutorial on National Income Accounting

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    1. The illegal drug sale transaction will not be counted in GDP. 2. Additions to inventory are included in GDP as they are a component of net investment. 3. Using the data in Table 1, GDP can be calculated using both the expenditure and income approaches, then NDP is determined.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    361 views3 pages

    Tutorial On National Income Accounting

    Uploaded by

    JayChiAsh
    1. The illegal drug sale transaction will not be counted in GDP. 2. Additions to inventory are included in GDP as they are a component of net investment. 3. Using the data in Table 1, GDP can be calculated using both the expenditure and income approaches, then NDP is determined.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 3

    Section B: Answer all questions

    1. State with reasons which of the transactions listed below will NOT be counted in GDP:
    A meat processing company builds a new plant
    A drug dealer sells $5000 worth of illegal drugs
    A student purchases a used text book
    Company A launches a hostile takeover of company B and purchases its stock
    A public utility company installs new turbines and cooling equipment
    [15]
    2. Why are additions to inventory a component of net investment [3]
    3. Use the data in Table 1 to determine Gross Domestic Product by both the expenditure and
    income approach. Then determine Net Domestic Product [8]




















    4. Discuss four reasons why Gross Domestic Product is not always a true measure of
    economic well-being. [12]

    5. Explain the difference between GDP and GNP. [3]

    TABLE 1
    Personal Consumption expenditures $245
    Net Foreign factor income 4
    Transfer payments 12
    Rents 14
    Consumption of fixed capital 27
    Social security contributions 20
    Interest 13
    Proprietor's Income 33
    Net exports 11
    Dividend 16
    Compensation of employees 223
    Indirect business taxes 18
    Undistributed corporate profits 21
    Personal taxes 26
    Corporate income taxes 19
    Corporate profits 56
    Government purchases 72
    Net private domestic investments 33
    Personal saving 20
    Section A: Multiple-Choice
    1. The term G in C+I+G+X-M includes all of the following except:
    a) Government purchases of new computers of new computers
    b) Pensions paid to retirees
    c) Salaries paid to public servants
    d) Government capital expenditures
    2. According to the circular flow of income, the consumers are:
    a) The owners of factors of production
    b) Consumers of goods and services
    c) Producers of goods and services
    d) Both the owners of factors of production and consumers of goods and services
    3. In calculating GDP:
    a) Both exports and imports are added
    b) Neither exports nor imports are added
    c) Exports are added and imports are subtracted
    d) Imports are added and exports are subtracted
    4. The method of calculating GDP by summing wages, interest, rent and profit is known as:
    a) Income method
    b) Expenditure method
    c) Output method
    d) GDP at factor cost
    5. An item that is excluded from GDP of T&T and included in GNP of T&T is the income
    earned by a:
    a) T&T investor who receives dividends from shares owned in a T&T company
    b) Jamaican investor who receives dividends from shares owned in a T&T company
    c) T&T investor who receives dividends from shares owned in a Jamaican company
    d) Jamaican investor who receives dividends from shares owned in a Jamaican
    company
    6. The value added of a firm is the:
    a) Value of the firms output after the cost of intermediate goods and services has
    been subtracted
    b) Profit margin of the firm
    c) Sum of all income: wages, profits, rents and interest that it generates
    d) Value of all its assets: plant and equipment that are used in production



    7. The table shows figures for a certain economy





    What is the net national product at factor cost?
    a) $98m
    b) $105m
    c) $106m
    d) $108
    8. Real GDP is not a good indicator of economic welfare because it:
    a) Does not take account of leisure time
    b) Does not measure the value of the black economy
    c) Does not include the external costs and benefits created by externalities
    d) All of the above
    9. Assume a bakery purchases $5,000 in flour per week and bakes $12,000 in bread. If it
    pays electricity, what is the firms weekly contribution to GDP?
    a) $12,000
    b) $7,000
    c) $5,000
    d) $3,500
    10. Which of the following would be included in GDP in a given year?
    a) The value of used textbooks sold
    b) The value of the printer used to print new textbooks printed for the book season
    during the year
    c) The value of new textbooks printed for the book season during the year
    d) The value of the paper used to print textbooks
    11. Which of the following is not a limitation of real national income statistics?
    a) Failure to take into account tax evasion and black markets
    b) Failure to include environmental degradation and other negative externalities
    c) Failure to consider the number of leisure and working hours
    d) Failure to include intermediate foods and services
    $m
    Consumption, investment and government expenditure 100
    exports 25
    imports 20
    Indirect taxes 12
    subsidies 14
    Net property income from abroad 1
    Capital consumption 10

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