Macro Module 1 National Income Accounts practice exam questions
(The attached PDF file has better formatting.)
The two practice problems below have the same entries in the boxes; the first starts with Gross Domestic Product and derives other accounts, while the second starts with Disposable Personal Income and derives other accounts.
[The following scenario applies to the next four questions.]
The national income accounts for 20XX are
Income on Capital Owned by U.S. Residents but Located Abroad 3.25
Labor Income of U.S. Residents Working Abroad 1.75
Payments to Capital in the U.S. Owned by Foreigners 0.75
Payment to Foreigners Working in the U.S. 4.50
Depreciation of capital stock 12.50
Corporate profits, taxes on production, business transfers, and net interest 22.25
Personal transfer payments and personal income receipts on assets 18.50
Personal taxes 8.75
Gross Domestic Product is 100. The national accounts have no statistical discrepancies.
Question 1.1: Gross National Product
What is Gross National Product?
Answer 1.1: 100 + 3.25 + 1.75 – 0.75 – 4.50 = 99.75
Gross Domestic Product (GDP)
+ Income on Capital Owned by U.S. Residents but Located Abroad
+ Labor Income of U.S. Residents Working Abroad
– Payments to Capital in the U.S. Owned by Foreigners
– Payments to Foreigners Working in the U.S.
= Gross National Product (GNP)
Question 1.2: Net National Product
What is Net National Product?
Answer 1.2: 99.75 – 12.50 = 87.25
Gross National Product (GNP)
– Depreciation of capital stock
= Net national product (NNP) ( ∼ National income)
Question 1.3: Personal income
What is personal income?
Answer 1.3: 87.25 – 22.25 + 18.50 = 83.50
Net national product (NNP) ( ∼ National income)
– Corporate profits, taxes on production, business transfers, and net interest
+ Personal transfer payments and personal income receipts on assets
= Personal income
Question 1.4: Disposable personal income
What is disposable personal income?
Answer 1.4: 83.50 – 8.75 = 74.75
Personal income
– Personal taxes
= Disposable personal income
[The following scenario applies to the next four questions.]
The national income accounts for 20XX are
Income on Capital Owned by U.S. Residents but Located Abroad 3.25
Labor Income of U.S. Residents Working Abroad 1.75
Payments to Capital in the U.S. Owned by Foreigners 0.75
Payment to Foreigners Working in the U.S. 4.50
Depreciation of capital stock 12.50
Corporate profits, taxes on production, business transfers, and net interest 22.25
Personal transfer payments and personal income receipts on assets 18.50
Personal taxes 8.75
Disposable personal income is 100. The national accounts have no statistical discrepancies.
Question 1.5: Personal income
What is personal income?
Answer 1.5: 100 + 8.75 = 108.75
Personal income
– Personal taxes
= Disposable personal income
Question 1.6: Net national product (NNP)
What is net national product (NNP) ( ∼ National income)?
Answer 1.6: 108.75 + 22.25 – 18.50 = 112.50
Net national product (NNP) ( ∼ National income)
– Corporate profits, taxes on production, business transfers, and net interest
+ Personal transfer payments and personal income receipts on assets
= Personal income
Question 1.7: Gross National Product
What is Gross National Product?
Answer 1.7: 112.50 + 12.50 = 125.00
Gross National Product (GNP)
– Depreciation of capital stock
= Net national product (NNP) ( ∼ National income)
Question 1.8: Gross Domestic Product
What is Gross Domestic Product?
Answer 1.8: 125.00 – 3.25 – 1.75 + 0.75 + 4.50 = 125.25
Gross Domestic Product (GDP)
+ Income on Capital Owned by U.S. Residents but Located Abroad
+ Labor Income of U.S. Residents Working Abroad
– Payments to Capital in the U.S. Owned by Foreigners
– Payments to Foreigners Working in the U.S.
= Gross National Product (GNP)
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