Measuring National Income Quiz

What do leakages from the circular flow of income refer to?

• Money flowing into the economic system
• Money flowing out of the economic system
• Government spending, exports or investment
• Income generated in parallel markets

Which national income measurement approach uses the formula: GDP = C + I + G + (X-M)?

• The income approach
• The output method
• The expenditure approach
• The equilibrium GDP method

Which of the following statements best describes Gross National Income or GNI?

• The total value of all goods and services produced within a country per year
• The general and sustained rise in the level of prices in an economy
• The value of all goods and services produced by a nation’s factors of production per year
• Income from domestic factors of production located abroad, less income from foreign-owned factors of production situated domestically

If a country has a large proportion of its workforce working in foreign nations sending their earnings back home, its GNP or GNI will likely be _________ than its GDP.

• Lower
• Higher
• The same as
• At least less

_________ GDP is the total value of all production in one year measured at current prices. _________ GDP is the total value of all production in one year adjusted for inflation.

• Real, nominal
• Real, per capita
• Nominal, per capita
• Nominal, real

Which of the following cannot be inferred from a country’s per capita GDP figures?

• Income distribution
• Average incomes
• Production per person
• Standards of living

Which of the following is an incorrect statement?

• GDP includes harmful economic activities and the income spent in combating such activities
• GDP does not include environmental damage considerations or informal market activities
• GDP counts volunteer work in national income statistics
• GDP does not provide insight into income distribution

Utopialand: Total value of all production = $1.915 billion; earnings from Utopialand’s firms located in the rest of the world = $415 million, which is repatriated back to Utopialand; foreign-owned factors of production in Utopialand = $205 million and total capital consumption (depreciation) = $85 million.

How much is Utopialand’s Gross Domestic Product (GDP)?

• $1.915 billion
• $2.120 billion
• $2.125 billion
• $2.330 billion

Utopialand: Total value of all production = $1.915 billion; earnings from Utopialand’s firms located in the rest of the world = $415 million, which is repatriated back to Utopialand; foreign-owned factors of production in Utopialand = $205 million and total capital consumption (depreciation) = $85 million.

How much is Utopialand’s GNP or GNI)?

• $1.915 billion
• $2.120 billion
• $2.125 billion
• $2.330 billion

Under what condition is a recession declared?

• A decrease in real national output for two consecutive months
• A decrease in real national output for two consecutive quarters
• A decrease in real national output for two consecutive years
• A decrease in real national output during the year