According to Table 5-4, net domestic product is
62) If households pay $100 in interest payments and receive $120 in interest, wages equal $400, rental receipts on land are $100 and royalties are $100, profits are $150, depreciation is $50, and indirect business taxes are $50, then gross domestic income is
63) Because of improved productivity, wages increase 10 percent. As a result, gross domestic income increases. What happens to gross domestic product?
A) Gross domestic product also increases since consumption expenditures would increase.
B) Gross domestic product decreases as people pay more taxes on their higher incomes.
C) Gross domestic product would not change since consumption expenditures would rise but investment spending would fall.
D) Gross domestic product would decrease because businesses are spending more on wages.
64) In calculating wages for gross domestic income
A) social security taxes paid by the employee are also included, but not the portion of the tax paid by the employer.
B) social security taxes paid by the employer are also included, but not the portion of the tax paid by the employee.
C) social security taxes paid by the employee are subtracted from the social security taxes paid by the employer and the net figure is included.
D) social security taxes paid by both the employer and the employee are included.
65) If households receive $100 in interest payments and pay out $110, wages equal $500, rental receipts are $200, royalties are $100, profits are $200, depreciation is $50, and indirect business taxes are $50, then gross domestic income is
66) Because of terrible winter storms, gross domestic product for the first quarter of the calendar year falls by 10 percent. As a result, gross domestic income
A) falls by less than 10 percent.
B) also falls by 10 percent because they always have to be equal.
C) falls by more than 10 percent because incomes always vary more than GDP.
D) would not change since the time span is less than a year.
67) An indirect business tax
A) is levied on the corporate profits.
B) is excluded from gross domestic income.
C) includes all business taxes except taxes on corporate profits.
D) lowers the market price of goods.
68) GDP exceeds net domestic product by an amount equal to
A) indirect business taxes.
B) corporate profits plus personal taxes.
C) the capital consumption allowance (depreciation).
D) transfer payments minus personal taxes.
69) Depreciation is
A) added to GDP to reach NDP.
B) the reduction in the value of capital goods due to physical wear and tear.
C) not included in GDP from the income side.
D) always higher than the capital consumption allowance.
70) Net domestic product (NDP) is
A) GDP minus depreciation.
B) GDP minus private investment.
C) GDP minus the foreign sector.
D) GDP minus government transfers.
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