Question : 11) Which of the following statements about national-income accounting correct? A) : 1384353

11) Which of the following statements about national-income accounting is correct?

A) The total value added in the economy is equal to the sum of all components in the circular flow of expenditure and income.

B) The value of the expenditure on a nation’s output is equal to the total income claims generated by producing that output.

C) GDP on the expenditure side is calculated by adding up all the income claims generated by the act of production.

D) GDP on the income side is calculated by adding up total expenditure for each of the main components of final output.

E) GDP from the expenditure side and GDP from the income side differ by the amount of investment in the economy.

12) A farmer raises free-range chickens, which he sells to a company for $1000. That company sells the “processed” chickens to a grocery store for $1600, which in turn produces roasted chickens which are sold to the public for $2400. Based on this information, the value of total output is equal to

A) $1400

B) $1600

C) $2400

D) $4000

E) $5000

13) When adding up the value of all goods produced in the economy, double counting can be avoided if only the ________ is included.

A) value of final good and services

B) value of intermediate goods and services

C) cost of intermediate goods and services

D) revenue of all goods and services

E) revenue of intermediate goods and services

14) In Lumberville, the lumberjack cuts trees and sells them to the local mill for $500. The local mill processes these trees into wood planks and sells them to the carpenter for $800. Finally, the carpenter uses these wood planks to make tables which he sells for $1400 to Lumberville’s residents. If we allowed double counting, the total value of Lumberville’s output would be calculated as ________. But if we correctly compute the total value added, the value of the total output in Lumberville would be ________.

A) $1400; $1400

B) $2200; $2700

C) $2200; $4200

D) $2700; $1400

E) $4200; $2700

15) The “value added” for an individual firm can be calculated by

A) adding the cost of the intermediate goods used by the firm.

B) subtracting the payments made to the factors of production used by the firm from the firm’s revenue.

C) calculating the revenue generated by the firm.

D) calculating the profit generated by the firm.

E) adding up the payments made to the factors of production used by the firm.

16) Jodie’s Bakery generates a yearly revenue of $6000. Throughout the year Jodie spends $1500 on flour, $1000 on fruit, $500 on sugar & spices, $1500 on butter, and employs an assistant whom she pays $1000. Calculate the value of the annual output produced by Jodie’s Bakery using the value added method.

A) $1000

B) $1500

C) $4500

D) $5000

E) $6000

17) Consider the circular flow of expenditure and income in the Canadian economy. Which of the following is an injection into the circular flow?

A) imports

B) taxes

C) saving

D) consumption

E) investment

18) Consider the circular flow of expenditure and income in the Canadian economy. Which of the following is an injection into the circular flow?

A) Bombardier imports machine parts from Germany.

B) Bombardier exports subway cars to Mexico.

C) Safeway pays corporate income tax to the federal government.

D) You put $500 into your TFSA (tax-free savings account).

E) You make an online purchase from a U.S. retailer.

19) Consider the circular flow of income and expenditure in the Canadian economy. Which of the following is a withdrawal from the circular flow?

A) investment

B) consumption

C) saving

D) exports

E) government purchases

20) Consider the circular flow of income and expenditure in the Canadian economy. Which of the following is a withdrawal from the circular flow?

A) Your family buys weekly groceries.

B) Bombardier exports subway cars to Mexico.

C) You put $500 into your TFSA (tax-free savings account).

D) The B.C. provincial government builds a new hospital.

E) Canadian farmers sell wheat to China.