Which of the following best defines national income?
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Incomes earned by U.S. resource suppliers plus taxes on production and imports.
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GDP is the:
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monetary value of all final goods and services produced within the borders of a nation in a particular year.
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If intermediate goods and services were included in GDP:
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the GDP would be overstated.
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Answer the question on the basis of the following data. All figures are in billions of dollars.
Proprietor's Income $20
Compensation of Employees 300
Consumption of Fixed Capital 15
Gross Investment 80
Rents 10
Interest 20
Exports 30
Imports 50
Corporate Profits 25
Taxes on Production and Imports 5
Net Foreign Factor Income 0
Statistical Discrepancy 0
Refer to the data. Gross domestic product is
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395
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Real GDP measures:
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current output at base year prices.
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National income measures:
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the total of all sources of private income plus government revenue from taxes on production and imports.
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Economy A: gross investment equals depreciation
Economy B: depreciation exceeds gross investment
Economy C: gross investment exceeds depreciation
Refer to the information. Positive net investment is occurring in:
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economy C only.
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A large underground economy results in an:
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understated GDP.
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Assume that the size of the underground economy increases both absolutely and relatively over time. As a result:
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GDP will tend to increasingly understate the level of output through time.
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If depreciation (consumption of fixed capital) exceeds gross domestic investment, we can conclude that:
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net investment is negative.
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Nominal GDP is adjusted for price changes through the use of:
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the GDP price index.
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