Q: Disposable Personal Income is calculated as:

$$\text{Personal Income} - \text{taxes}$$

Question 1

Which of the following best describes the difference between Gross Domestic Product (GDP) and Gross National Product (GNP)?

Accepted Answer

GDP measures the total market value of goods and services produced within a country's borders, while GNP adds net income from abroad to GDP.

Question 2

A U.S. professor teaching in Turkey has their income counted in which of the following ways?

Accepted Answer

Included in Turkey's GDP and the U.S. GNP.

Question 3

Which formula correctly represents the calculation of National Income (NI)?

Accepted Answer

$$NI = GDP - depreciation$$

Question 4

If a country has a GDP of $$26$$ trillion and depreciation of $$2$$ trillion, what is its National Income (NI)?

Accepted Answer

$$NI = 26 - 2 = 24$$ trillion

Question 5

Which of the following is NOT included in the calculation of Gross Domestic Income (GDI)?

Accepted Answer

Transfer payments

Question 6

In 2022, real GDI fell while real GDP rose. What is a potential implication of this divergence?

Accepted Answer

It may signal a recession or economic slowdown.

Question 7

Disposable Personal Income is calculated as:

Accepted Answer

$$	ext{Personal Income} - 	ext{taxes}$$

Question 8

Which component accounted for the largest share of total income in the U.S. in 2022?

Accepted Answer

Wages

Question 9

If a country’s labor share of income drops from 60% to 52%, what is a likely macroeconomic consequence?

Accepted Answer

Increased share of output going to capital owners

Question 10

Which of the following best explains why GNP is greater than GDP for the United States?

Accepted Answer

The U.S. has substantial foreign direct investment and overseas earnings.

Question 11

Suppose a country’s GDP is $$30$$ trillion, net foreign factor income is $$-1$$ trillion, and depreciation is $$3$$ trillion. What is the country’s GNP?

Accepted Answer

$$GNP = 30 - 1 = 29$$ trillion

Question 12

Which of the following is a key insight from the declining labor share of income in recent decades?

Accepted Answer

It indicates rising income inequality.

Question 13

Which of the following equations correctly represents the calculation of Gross Domestic Income (GDI)?

Accepted Answer

$$GDI = wages + profits + rent + interest + taxes + depreciation$$

Question 14

If statistical discrepancy is positive, what does this imply about the relationship between GDP and GDI?

Accepted Answer

GDP is greater than GDI.

Question 15

Which of the following is most likely to be classified as a transfer payment?

Accepted Answer

Social Security benefits

Question 16

If personal income is $$21$$ trillion and taxes are $$2$$ trillion, what is disposable personal income?

Accepted Answer

$$21 - 2 = 19$$ trillion

Question 17

Which of the following statements about the relationship between real GDP and real GDI is correct?

Accepted Answer

They can diverge due to statistical discrepancies and measurement errors.

Question 18

In the U.S. income distribution for 2022, which group collectively represents a substantial share because of the sheer number of small businesses?

Accepted Answer

Sole-proprietor profits

Question 19

If a country’s GDI is $$22$$ trillion and its statistical discrepancy is $$0.2$$ trillion, what is the corresponding GDP?

Accepted Answer

$$22.2$$ trillion

Question 20

Which of the following best describes the trend in labor’s share of income in the U.S. from 1970 to 2021?

Accepted Answer

It declined from about 60% to 52%.

Macroeconomic Measures: GDP, GNP, National Income, and Income Distribution

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