Question

5. Suppose that California imposes a sales tax of 10 percent on all goods and services. A Californian named Ralph then goes into a home improvement store in the state capital of Sacramento and buys a leaf blower that is priced at $200. With the 10 per cent sales tax, his total comes to $220. How much of the $220 paid by Ralph will be counted in the national income and prod. uct accounts as private income (employee compensation, rents. interest, proprietor's income, and corporate profits)? L07.3 a. $220. c. S180. b. $200 d. None of the above. 6. Suppose GDP is Slo trillion, with SIO trillion coming from consumption, $2 trillion coming from gross investment $3.5 trillion coming from government expenditures, and $500 billion coming from net exports. Also suppose that across the whole economy, depreciation (consumption of fixed capital) Totals si trillion. From these figures, we see that net domestic product equals: L07.4 a. S17.0 trillion. c. SI5.5 trillion. b. S160 trillion. d. None of the above. Suppose GDP IS ST5 trillion, with S8 trillion coming from con sumption, S2.5 trillion coming from gross investment, S3.5 tril- lion coming from government expenditures, and st trillion coming from net exports. Also suppose that across the whole economy, personal income is ST2 trillion. If the government collects 51.5 trillion in personal taxes, then disposable income will be: L07.4 a. $13.5 trillion c. SI0.5 trillion. b. $12.0 trillion d. None of the above. 8. Suppose that this year's nominal GDP is S16 Inion count for the effects of inflation, we construct a price index in which an index value of 100 represents the price 5 years ago. Using that index, we find that this year's real is $15 trillion. Given those numbers, we can conclude that the current value of the index is: L07.5 a. Higher than 100. b. Lower than 100 c. Still 100. 9. Which of the following items will be included in official US. GDP statistics? LO7.6 Select one or more answers from the choices shown a. Revenue generated by illegal marijuana growers in Oregon b. Money spent to clean up a local toxic waste site in Ohio c. Revenue generated by legal medical marijuana sales in California, d. The dollar value of the annoyance felt by local citizens living near a noisy airport in Georgia. e. Robert paying Ted for a haircut in Chicago. 1. Emily and Rhonda trading an hour of dance lessons for a haircut in Dallas. 10. Suppose GDP is $5.0 trillion, resource extraction is $0.5 tril lion, production is $1.5 trillion, and distribution is $10 trillion L07.6 a. How big is GO? b. How big is GO minus GDP?

Answer 1

Answer 5 b. 200 because sales tax is a transfer payment and hence it is not included in national income.

Answer 6: d none of the above

It is 15 trillion

16-1 = 15 trillion

Answer 7 : c. 12 -1.5 = 10.5 (Personal income - personal taxes = Personal disposable income)

Answer 8: a. Higher than 100 because real GDP is less than nominal GDP

In fact, it can be estimated as well.

Price index = Nominal GDP/Real GDP*100

16/15*100

106.66%

Answer 9: a. Not included illegal activities

b. Included a part of Government expenditure

c. Included Economic activity

d. Not included non monetary aspect

e. Included Economic activity

f. Not included non monetary exchanges

Answer 10: a. 4.5 trillion

b. 0,5 trillion