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1. The difference between personal income (PI) and disposable personal income (DPI) is
a)
b)
c)
d)
e)
3. Refer to the table above. What is the chain-type real GDP growth rate from 1995 to 2003?
a)
b)
c)
d)
e)
75%
125%
76%
100%
0 (zero)
4. Which of the following economic activities should not be counted as part of GDP?
a)
b)
c)
d)
e)
the increase in the value of a product that occurs at each stage of production.
the amount paid in the final sale of a product or service.
the amount subtracted from the value of resources because of depreciation.
the amount subtracted from the value of goods because of inflation.
the total value of all intermediate goods used in the production of the final good.
7. In the United States, consumption accounts for approximately ______ percent of GDP in terms
of total expenditures.
a)
b)
c)
d)
e)
10
14
18
29
68
$71.50.
$38.
$13.50.
$7.75.
$24.50.
9. For the economy described in the table above, disposable personal income is
a)
b)
c)
d)
e)
$1,440.
$1,540.
$1,550.
$1,610.
$1,870.
11. Refer to the table above. What is the price index for the third year?
a)
b)
c)
d)
e)
118
155
183
100
181
Scenario 2
Suppose that personal income is $250 billion. Furthermore, assume that retained corporate
earnings are $2 billion, social security taxes are $15 billion, social security benefit checks equal
$16 billion, the capital consumption allowance is $32 billion, and corporate profit taxes amount to
$40 billion.
13. Refer to Scenario 2. Gross national product equals
a)
b)
c)
d)
e)
$177.
$259.
$291.
$322.
$323.
14. Using the table above, what is the nominal GDP growth from 1995 to 2003?
a)
b)
c)
d)
e)
11.0%
73.3%
11.4%
13.6%
55.5%
15. Which of the following national income accounts would be the smallest in any year?
a)
b)
c)
d)
e)
NNP
GNP
PI
NI
DPI
18. A soft-drink bottling company supplies six-packs of orange soda to retailers for a price of $2
each. If the components in each six-pack cost the bottling company $1.50, the value added to
each six-pack by the bottling company is
a)
b)
c)
d)
e)
$2.00.
$1.50.
$1.25.
$1.00.
$0.50.
20. Which of the following would not be included as part of personal income?
a)
b)
c)
d)
e)
Essay Questions
1. Economists would argue that the consumer price index is a quite imprecise measure of
changes in the cost of living. State at least two reasons for the CPI to be downward- or upwardbiased.
2. How is the official GDP statistic affected in the following situations: (a) An addict engages in
illegal drug sales. (b) A college professor gets married and becomes a homemaker. (c) An
autoworker becomes unemployed and collects welfare payments.