Question

1. Which of the following is deducted from National Income to get Personal Income: A. personal...

1. Which of the following is deducted from National Income to get Personal Income:
A. personal taxes
B. transfer payments
C. indirect business taxes
D. income currently earned, but not yet received
E. income received, but not currently earned

2. What is deducted from Gross Investment to get Net Investment:
A. income taxes
B. depreciation expenditure
C. the purchase of all existing shares of stock
D. foreign direct investment (i.e. investment from other countries in our country)
E. none of the above

3. Higher GDP does not necessarily mean we're better off because:
A. higher real GDP could be the result of an increase in the price level, not output
B. higher real GDP could be the result of an increase in the underground economy
C. higher real GDP could be the result of our replacing infrastructure damaged in natural disasters
D. higher real GDP could be the result of companies selling more used goods
E. higher real GDP (e.g. in the U.S.) could be the result of greater U.S. investment in other countries

4. Which of the following would be the best example of frictional unemployment?
A. when the workers quit their jobs to search for a higher paying job
B. when the workers who produced Ford Explorers are laid off as the economy enters recession
C. when the employees at a store selling Christmas decorations are laid off after the holiday
D. when the workers are laid off due to an increase in the minimum wage
E. none of the above

5. Which of the following would be the best example of cyclical unemployment?
A. when the workers quit their jobs to search for a higher paying job
B. when the workers who produced Ford Explorers are laid off as economy enters a recession
C. when the employees at a store selling Christmas decorations are laid off after the holiday
D. when the workers are laid off due to an increase in the minimum wage
E. none of the above

Use the following information for questions 6-8
The economy Country ex has the following individuals (assume no overlap across categories)
-Number of people out of work, who are actively seeking a job: 50
-Number of people who are retired: 120
-Number of people who are institutionalized: 100
-Number of people who are employed with a full-time job: 600
-Number of people who are employed with a part-time job: 150
-Number of people who are discouraged workers: 100

6. What is the size of this economys labor force?
A. 50
B. 750
C. 800
D. 900
E. 1020

7. What is this economys current unemployment rate?
A. 6.25%
B. 6.67%
C. 5.56%
D. 16.67%
E. 20.00%

8. What is this economys current participation rate?
A. 73.53%
B. 88.89%
C. 71.43%
D. 78.43%
E. 88.24%

Homework Answers

Answer #1

1) Solution: income currently earned, but not yet received

Explanation: To compute the personal income from national income we have to add the income received but not earned and subtract the income earned but not received

2) Solution: depreciation expenditure

Explanation: when depreciation is deducted from gross investment we will get the net investment.

3) Solution: higher real GDP could be the result of an increase in the underground economy

Explanation: A rise in real GDP means an increase in output however an increase in the underground economy does not depict the true picture

4) Solution: when the workers quit their jobs to search for a higher paying job

Explanation: When workers voluntarily leave their jobs for a higher paying job it add to frictional unemployment

AS per polic we have to answer first four questions

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