Gross Domestic Product (GDP) is the total market value of all final goods and services produced in a country over a stated period. Financial transactions and transfers of income are not included. GDP only counts those goods and services produced within the geographic boundaries of the country. Gross National Income (GNI) is a measure of the total goods and services produced by the citizens of a country. It differs from GDP in that it includes the incomes earned by all of the residents of the country, regardless of where the assets are located. Net National Income (NNI) is equal to GNI less depreciation. In practice, depreciation is difficult to measure by actual usage. Therefore, it is measured by various accounting conventions. Estimates of depreciation may vary greatly from the actual usage of the asset. GDP + net property income from abroad = GNI GNI − depreciation = NNI
Which of the following would NOT be included in the calculation of Gross Domestic Product (GDP) for the United States? A) Profits of a factory in located in California that is owned by a Japanese corporation. B) Profits from a customer service center located in India that is owned by a U.S. corporation. C) Rental income from apartment buildings located in Texas. When considering the effect of depreciation on the measurement of a country’s economic activity, most economists believe it: A) must be included in the calculation in order to provide the most accurate assessment of the country’s economic position. B) is difficult to accurately quantify and is generally excluded from the calculation. C) may or may not be included in the calculation as long the calculation is clearly identified as a “gross” or “net” number. Gross Domestic Product (GDP) typically understates a country’s productivity because it does not fully account for: A) depreciation / depletion of assets. B) any productive assets physically located in other countries. C) the country’s shadow economy.
Which of the following would NOT be included in the calculation of Gross Domestic Product (GDP) for the United States? A) Profits of a factory in located in California that is owned by a Japanese corporation. B) Profits from a customer service center located in India that is owned by a U.S. corporation. C) Rental income from apartment buildings located in Texas. Ans B When considering the effect of depreciation on the measurement of a country’s economic activity, most economists believe it: A) must be included in the calculation in order to provide the most accurate assessment of the country’s economic position. B) is difficult to accurately quantify and is generally excluded from the calculation. C) may or may not be included in the calculation as long the calculation is clearly identified as a “gross” or “net” number. B again Gross Domestic Product (GDP) typically understates a country’s productivity because it does not fully account for: A) depreciation / depletion of assets. B) any productive assets physically located in other countries. C) the country’s shadow economy. C
Your answer: B was correct! The GDP calculation includes only counts those goods and services produced within the geographic boundaries of the country. Your answer: B was correct! Depreciation is an estimate of an asset’s usage based on accounting conventions and not the actual amount consumed. Because it is difficult to reliably calculate, depreciation is generally excluded from productivity measures. Your answer: C was correct! Transactions that are intentionally hidden from authorities (for whatever reason) cannot be included in a measure of productivity, thus resulting in an understatement of a country’s productivity.
Which of the following statements regarding the reporting of Gross Domestic Product (GDP) components is TRUE? The three components of GDP are: A) collected in current prices and reported in constant prices. B) collected and reported using three different methods. C) collected and reported using the same methods.
I will go with B B B or C
This I believe is B again… Not sure though.
1.B? 2.B? 3.C? 4.B?
Wow, what section are these from: I go with B
- Your answer: B was correct! Output data is collected in both current and constant prices, while expenditure and income data is collected in current prices. All are restated in constant prices using an index or deflator. Calculate the nominal Gross Domestic Product (GDP) for a country that has a 6% rate of inflation and a 2.5% real GDP. A) 2.4%. B) 3.5%. C) 8.5%.
The most common form of ownership structure for private equity funds is the limited partnership where limited partners (LPs) provide funding and have limited liability. The general partner (GP) manages the investment fund. The economic terms in a private equity prospectus address the following issues: management fees; transaction fees; carried interest; ratchet; hurdle rate; target fund size; vintage year; and term of the fund. The corporate governance terms in the prospectus address the following issues: key man clause; performance disclosure and confidentiality; clawback; distribution waterfall; tag-along, drag-along clauses; removal for cause; no-fault divorce; investment restrictions; and co-investment. Valuations are difficult for private equity funds because there is no ready secondary market for their investments. Investors should conduct due diligence before investing in a private equity fund due to the persistence in returns in private equity fund returns, the return discrepancies between outperformers and underperformers, and their illiquidity. Which of the following is the least likely disadvantage in calculating the net asset value (NAV) for a private equity fund? A) Only capital commitments already drawn down are included in the NAV calculation. B) NAV may be difficult to calculate since firm values are not known with certainty prior to exit. C) The limited partners use a third party to calculate the NAV of a private equity fund.
~ inflation rate + real GDP = 8.5 % C…
8.65%?
Which of the following is the least likely disadvantage in calculating the net asset value (NAV) for a private equity fund? A) Only capital commitments already drawn down are included in the NAV calculation. B) NAV may be difficult to calculate since firm values are not known with certainty prior to exit. C) The limited partners use a third party to calculate the NAV of a private equity fund. C?
Isn’t real the inflation adjusted amount…damn it is A.
C? That looks like an advantage to the investors in PE firm. Since a 3rd party is doing the NPV calculation
Yup, 8.5 is right! Your answer: C was correct! NAV is usually calculated by the fund’s general partner, which could result in a subjective and inflated NAV. Limited partners, however, often use third party valuations to arrive at an objective and up-to-date NAV. This scenario thus describes a countermeasure to an issue in calculating NAV rather than a disadvantage itself. The other two answers are both disadvantages in calculating NAV. Private equity values have declined significantly over the last year. Which of the following risk factors is the least likely reason for the decline? A) Investment-specific risk. B) Market risk. C) Tax risk.
Private equity values have declined significantly over the last year. Which of the following risk factors is the least likely reason for the decline? A) Investment-specific risk. B) Market risk. C) Tax risk. C?
Your answer: B was incorrect. The correct answer was C) Tax risk. Market risk is the risk of long-term changes in interest rates, exchange rates and economic risk. Certainly all of these have been factors in the less than spectacular private equity returns recently. Investment-specific risk is probably the most important source of risk in recent times, as many private equity investments suffered significant losses as a result of the subprime mortgage and real estate meltdown. Tax risk is the risk of tax changes over time, which has not been a significant factor in private equity valuations recently The most relevant market risk to a private equity investor is: A) long-term macro changes only. B) short-term macro changes only. C) both short-term and long-term macro changes.
C?