Chapter 27: Measuring Domestic Output and
National Income Exam Questions with Answers
1. Interest is the price that borrowers pay to a lender so that they can
purchase goods and services today rather than in the future. correct
answer: T
2. Which of the following measures the economy's overall performance?
correct answer: National
income accounting
3. The primary measure of the
economy's performance is its annual total output of goods and services,
which is called its . correct answer: aggregate output
4. In national income accounts, what does value added refer to? correct answer:
The ditterence in the
market value and cost of inputs purchased from other firms
5. Gross domestic product calculations count only final goods
and services because . correct answer: counting all intermediate goods and services
would lead to double-counting of many activities
6. _ is the price that is paid for the use of borrowed money. correct answer:
interest
7. Social Security payments, welfare payments, and veterans'
payments that the government makes directly to households are
called government pub- lic payments correct answer: transfer
8. national accounting measures the overall performance of
the economy.-
correct answer: income
9. In order to determine GDP using the expenditures approach, all
spending on
goods and services, not intermediate goods, is added up. correct
answer: final
10. Aggregat
e output is the primary measure of the economy's . correct
answer: total output of goods and services
11. The market value of a firm's output
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7
, minus the value of the inputs the firm has bought from others is called
. correct answer: value added
Reason correct answer:
Total profit is a firm's total revenues minus its total costs of production.
12. The term that covers all expenditures by households on
goods and services is known as expenditures. correct answer: personal
consumption
13. Depreciation of capital is . correct answer: the
annual amount allocated to wear and tear on private investment
14. Which approach to GDP adds up all the spending on final goods
and services that has taken place throughout the year? correct answer:
Expenditures approach
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National Income Exam Questions with Answers
1. Interest is the price that borrowers pay to a lender so that they can
purchase goods and services today rather than in the future. correct
answer: T
2. Which of the following measures the economy's overall performance?
correct answer: National
income accounting
3. The primary measure of the
economy's performance is its annual total output of goods and services,
which is called its . correct answer: aggregate output
4. In national income accounts, what does value added refer to? correct answer:
The ditterence in the
market value and cost of inputs purchased from other firms
5. Gross domestic product calculations count only final goods
and services because . correct answer: counting all intermediate goods and services
would lead to double-counting of many activities
6. _ is the price that is paid for the use of borrowed money. correct answer:
interest
7. Social Security payments, welfare payments, and veterans'
payments that the government makes directly to households are
called government pub- lic payments correct answer: transfer
8. national accounting measures the overall performance of
the economy.-
correct answer: income
9. In order to determine GDP using the expenditures approach, all
spending on
goods and services, not intermediate goods, is added up. correct
answer: final
10. Aggregat
e output is the primary measure of the economy's . correct
answer: total output of goods and services
11. The market value of a firm's output
1/
7
, minus the value of the inputs the firm has bought from others is called
. correct answer: value added
Reason correct answer:
Total profit is a firm's total revenues minus its total costs of production.
12. The term that covers all expenditures by households on
goods and services is known as expenditures. correct answer: personal
consumption
13. Depreciation of capital is . correct answer: the
annual amount allocated to wear and tear on private investment
14. Which approach to GDP adds up all the spending on final goods
and services that has taken place throughout the year? correct answer:
Expenditures approach
2/
7
