Understanding National Accounts: Key Concepts and Calculations
001. National Product at market prices and domestic product at factor cost differ by the value of:
a. Indirect taxes.
b. Indirect taxes net of subsidies.
c. Direct taxes net of subsidies.
d. Net income earned by domestic factors of production.
002. An increase in indirect taxes:
a. Increases disposable income of households.
b. Increases Net National Product at market prices.
c. Increases National Income.
d. All of the above.
003. Which of the following statements is correct?
a. Planned investment cannot be negative.
b. Identical inventory investment is unplanned investment.
c. Net investment cannot be negative.
d. Gross investment cannot be negative.
004. If gross investment is less than depreciation, which of the following statements is correct?
a. Net investment is smaller than gross investment.
b. Gross investment is negative.
c. Net investment is negative.
d. The country’s capital stock is reduced.
005. In a closed economy with a public sector, which of the following statements is not true?
a. Public saving equals investment less private saving.
b. Private savings plus taxes equal investment plus government consumption.
c. Private savings equals investment plus the public sector deficit, plus the balance of trade balance.
d. Total saving equals total investment.
006. In a closed economy, the disposable income of households is equal to:
a. National Income (-) retained earnings (-) indirect taxes (+) transfer from the public sector.
b. National Income (-) retained earnings (-) household saving (-) direct taxes (+) transfer from the public sector.
c. National Income (-) earnings (-) direct taxes (+) transfer from the public sector.
d. National Income (-) retained earnings (-) direct taxes (-) public sector transfers.
007. In National Accounts, government saving is equal to:
a. The difference between government income and government consumption.
b. The difference between income and current transfers from the government.
c. The difference between government revenue and public expenditure.
d. Government investment.
008. In an economy where government purchases of goods and services remain constant, indicate which of the following statements is correct:
a. If the difference between national income and disposable income increases, the budget deficit increases.
b. If the difference between national income and disposable income increases, the budget deficit will decrease.
c. If the difference between national income and disposable income increases, the budget deficit will remain unchanged.
d. None of the above.
009. If the budget deficit increases, while public spending on purchases of goods and services remains constant, indicate which of the following statements is correct:
a. The difference between national income and disposable income increases.
b. The difference between national income and disposable income is reduced.
c. The difference between national income and disposable income is not altered.
d. None of the above.
010. If the budget deficit decreases, while public expenditure on the purchase of goods and services remains constant, indicate which of the following statements is correct:
a. The difference between national income and disposable income will decrease.
b. The difference between national income and disposable income will increase.
c. The difference between national income and disposable income is not altered.
d. None of the above.
011. Gross Domestic Product at market prices of a country is equal to Gross Domestic Product at factor cost of that country:
a. Minus net income earned by domestic factors of production abroad.
b. Plus indirect taxes net of subsidies.
c. Plus direct taxes.
d. Plus net income earned by foreign production factors in that country.
012. In an open economy, the Domestic Product is equal to National Product:
a. Plus the balance of trade balance.
b. Plus net income earned by domestic factors of production abroad.
c. Minus indirect taxes net of subsidies.
d. Minus net income earned by domestic factors of production abroad.
013. In a country where domestic product is higher than national product:
a. Net income earned by foreigners in this country is negative.
b. Indirect taxes less subsidies are positive.
c. Foreigners are earning more in this country than the country’s residents earn abroad.
d. The balance of trade balance is positive.
014. GDP at market prices (GDPmp) is higher than GDP at factor cost (GDPfc) if:
a. Taxes are higher than subsidies.
b. Direct taxes are higher than subsidies.
c. Indirect taxes are higher than subsidies.
d. None of the above.
015. If the amount of income received by domestic factors of production abroad is higher than those charged for foreign production factors, the country’s domestic product in question:
a. Will be higher than the national product.
b. Will be less than the national product.
c. Will be equal to national product plus the balance of trade balance.
d. None of the above.
016. Indicate which of the following accounting identities is correct:
a. Net National Product at factor cost (-) Consumption of fixed capital = Gross Domestic Product at market prices (-) Taxes linked to production and imports (+) grants (+) net factor income from abroad.
b. Net National Product at factor cost (+) net factor income from abroad = Gross Domestic Product at market prices (-) Taxes linked to production and imports (+) grants (-) Consumption of Fixed Capital.
c. Net National Product at factor cost (+) net factor income from abroad = Gross Domestic Product at market prices (-) Taxes linked to production and imports (+) grants (+) Consumption of Fixed Capital.
d. Net National Product at factor cost (+) Consumption of Fixed Capital = Gross Domestic Product at market prices (-) Taxes linked to production and imports (+) grants (+) net factor income from abroad.
017. Domestic Product is equal to:
a. Consumption (+) investment (+) public expenditure (+) Exports (-) imports.
b. Consumption (+) investment (+) public spending (+) exports (+) imports.
c. Consumption (+) investment (+) public expenditure (+) imports (-) exports.
d. Consumption (+) investment (+) public expenditure (+) exports (-) Imports (+) net transfers from abroad.
018. Gross Domestic Product is equal to the sum of consumption, investment, government spending, and:
a. The account balance of goods and services including annuities.
b. The balance of goods and services excluding rents.
c. The balance of trade balance.
d. The balance of the current account.
019. If in an open economy domestic demand is greater than GNP:
a. There is a deficit in the trade balance.
b. There is a deficit in the balance of goods and services.
c. There is a deficit in the current account.
d. The country is borrowing from the rest of the world.
020. Which of the following expressions corresponds to the savings-investment identity in an open economy with a public sector?
a. S = I + SBCC + (G – T)
b. S = I – SBCC + (G – T)
c. S = I + SBCC
d. S = I + (G – T)