National Income Accounting Quiz

Personal income is not a component of national income; it includes only individual earnings.

GDP stands for Gross Domestic Product, representing the total value of goods and services produced within a country's borders.

GDP measures income generated within a country, whereas GNP includes income earned both domestically and abroad by the country's residents.

GNP incorporates income earned abroad by a country's residents, while GDP focuses solely on domestic production.

The circular flow of income illustrates the ongoing exchange of money and goods between households and businesses, sustaining economic activity.

Net foreign income is included in GNP calculation, accounting for income earned abroad by domestic residents.

Disposable income is the amount remaining after deducting taxes and mandatory deductions from total income.

The expenditure approach to GDP calculation sums up consumption, investment, government spending, and net exports (exports minus imports).

NNP accounts for depreciation, representing the total value of a nation's output after deducting the depreciation of capital goods.

The sale of a used car, even by a private individual, contributes to GDP as it represents economic activity.

Real GDP accounts for changes in price levels, providing an inflation-adjusted measure of economic output.

One limitation of GDP is that it excludes non-market transactions, such as household work or volunteer activities.

The income approach to GDP calculation sums up compensation, operating surplus, mixed income, and adjusts for taxes and subsidies.

National income encompasses the total earnings of a nation's residents, irrespective of where they earn it.

Intermediate goods, like steel for manufacturing, are used in the production of final goods and are not sold directly to consumers.