39383 dec5028 tutorial 2-question
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DEC5028 MACROECONOMICS TRI2 2015/16
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TUTORIAL 2 – NATIONAL INCOME ACCOUNTING
SECTION A: MULTIPLE CHOICES QUESTION
1. Gross Domestic Product is equal to the market value of all the final goods and services
____________ in a given period of time.
A) consumed within a country
B) produced within a country
C) produced by the citizens of a country
D. produced and consume within a country
2. Double counting (counting the same thing twice) in GDP accounting is avoided by not
including
A) net exports.
B) intermediate good
C) illegal activities
D) depreciation
3. Which of the following is an example of a final good or service?
A) wheat a bakery purchases to make bread.
B) coffee beans Starbucks purchases to make coffee.
C) lumber purchased by a construction company to used in building houses.
D) a computer purchased by Federal Express to track shipments.
4. The expenditure approach measures GDP by adding
A) compensation of employees, rental income, corporate profits, net interest, and
proprietorsʹ income.
B) compensation of employees, rental income, corporate profits, net interest, proprietorsʹ
income, subsidies paid by the government, indirect taxes paid, and depreciation.
C) compensation of employees, rental income, corporate profits, net interest, proprietorsʹ
income, indirect taxes paid, and depreciation and subtracting subsidies paid by the
government.
D) consumption expenditure, gross private domestic investment, net exports of goods and
services, and government expenditure on goods and services.
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5. If Nike, an American corporation, produces sneakers in Thailand this would
A) count as part of U.S. GDP since it is a U.S. corporation.
B) count for both Thailandʹs GDP and U.S. GDP.
C) add to Thailandʹs GDP but not to U.S. GDP.
D) add to neither U.S. GDP nor Thailandʹs GDP.
6. In calculating GDP, governmental transfer payments, such as social security or
unemployment compensation, are:
A) not counted.
B) counted as investment spending.
C) counted as government spending.
D) counted as consumption spending.
7. In national income accounting, government purchases include:
A) purchases by Federal, state, and local governments.
B) purchases by the Federal government only.
C) government transfer payments.
D) purchases of goods for consumption, but not public capital goods.
8. Which of the following is NOT counted in the GNP of the United States?
A) The wage of a U.S. citizen who works in a foreign country for a foreign firm.
B) The interest earned by a U.S. bank on loans to a business firm located in Brazil.
C) The profit earned by a restaurant located in the United States but owned by a Mexican
company.
D) The value of services that are produced by state and local governments in the United
States.
9. Profits earned in the United States by foreign-owned companies are included in
A) the U.S. GDP but not GNP.
B) neither the U.S. GDP nor GNP.
C) the U.S. GNP but not GDP.
D) both the U.S. GDP and GNP.
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DEC5028 MACROECONOMICS TRI2 2015/16
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Table 1
10. Refer to Table 1, Personal consumption expenditures in billions of dollars are
A) 900.
B) 1,100.
C) 1,400.
D) 1,600.
11. Refer to Table 1. The value for gross private domestic investment in billions of dollars is
A) 740.
B) 810.
C) 850.
D) 890.
12. Refer to Table 1. The value for net exports in billions of dollars is
A) -200.
B) -150.
C) 50.
D) 250.
13) Refer to Table 1. The value for gross domestic product in billions of dollars is
A) 2,900.
B) 3,140.
C) 3,440.
D) 3,650.
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DEC5028 MACROECONOMICS TRI2 2015/16
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14) Refer to Table 1. The value of government spending in billions of dollars is
A) 200.
B) 600.
C) 800.
D) 1,000.
15. Which of the following is subtracted from national income to get to personal income?
A) retained earnings
B) personal interest income
C) depreciation
D) personal Taxes
16. If personal income is $925 billion and personal income taxes are $70 billion, the value of
disposable personal income is
A) $835 billion.
B) $855 billion.
C) $890 billion.
D) $995 billion.
17. Nominal GDP measures the value of all goods and services
A) in constant dollars.
B) in current dollars.
C) in fixed dollars.
D) without inflation.
18. Gross domestic product measured in terms of the prices of a fixed, or base, year is
A) current GDP.
B) base GDP.
C) real GDP.
D) nominal GDP.
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19. The GDP deflator is the
A) difference between real GDP and nominal GDP multiplied by 100.
B) difference between nominal GDP and real GDP multiplied by 100.
C) ratio of nominal GDP to real GDP multiplied by 100.
D) ratio of real GDP to nominal GDP multiplied by 100.
20. If real GDP in a particular year is $80 billion and nominal GDP is $240 billion, the GDP
price index for that year is:
A) 100.
B) 200.
C) 240.
D) 300.
Use the following table for a hypothetical single-product economy.
21. Refer to the above data. Nominal GDP in year 3 is:
A) $100.
B) $450.
C) $225.
D) $150.
22. Refer to the above data. Real GDP in year 3 is:
A) $100.
B) $450.
C) $225.
D) $150.
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SECTION B: STRUCTURED QUESTION
QUESTION 1
1. Below table show a list of domestic output and national income figures for a Year 2008.
Items RM (million)
Wages 500
Interest 34
Personal Consumption 1,200
Export 380
Government Purchase 247
Income earned from the rest of the world 150
Indirect Business Taxes 36
Inventory Investment 80
Income earned by the rest of the world 200
Residential Investment 80
Corporate Taxes 180
Personal Income Taxes 60
Import 238
Statistical Adjustment 10
Retained Earnings 248
Rents 15
Corporate Profit 68
Depreciation 220
a) Using the above data, determine Gross Domestic Product using the expenditure method.
b) Determine National Income
c) With the answer that you obtained from b), now determine Personal Income by making the
required adjustments.
d) Make necessary adjustments of Personal Income from part b) in deriving Disposable Income.
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QUESTION 2
Table 2 show a list of domestic output and national income figures for a Year 2011.
Items RM (billion)
Wages and salaries 650
Personal Consumption 1,250
Export 150
Government Purchase 140
Income earned from the rest of the world 150
Indirect Business Taxes 36
Interest receive on loans 64
Inventory Investment 100
Income earned by the rest of the world 200
Interest paid on borrowings 30
Residential Investment 100
Corporate Taxes 100
Proprietors’ income 45
Pension Payment 60
Import 580
Retained Earnings 248
Rents 15
Corporate Profit 68
Capital Consumption 220
Table 2
a) Using the above data, compute:
i) National Income for year 2011.
ii) GDP by making three (3) adjustments from total of National Income.
iii) Gross National Product(GNP) by making two adjustments from total GDP.
iv) Personal Income
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Question 3
(i) A country produces only watch and MP4, in year 2012, price for watch was RM88 each,
and quantities produced were 10 pcs. Price for MP4 was RM 200 and quantities produced
were 5 units. On second year, the country produced 20 watches at RM 99 each and 8
units MP4 at RM 188 each.
2012 2013
Qty Price Qty Price
Watch 10 RM 88 20 RM 99
MP4 5 RM 200 8 RM 188
a) Calculate Nominal GDP on year 2012
b) Calculate Nominal GDP on year 2013
c) Calculate Real GDP on year 2012 ( base year 2012)
d) Calculate GDP Deflator 2013
Question 4
List and discuss various types of goods and services omitted from measured GDP.