Question 1

In calculating GDP by the income approach,we should sum up:

Accepted Answer

A)   wages,consumption,investment and rent.
B)   wages,rent,interest and profit income.
C)   wages,interest,investment,and exports.
D)   wages,profit income,investment,and consumption.E) None of the above
F) B) and C)

Question 2

Which of the following is a final good or service?

Accepted Answer

A)   diesel fuel bought for a delivery truck
B)   fertilizer purchased by a farm supplier
C)   a haircut
D)   Chevrolet windows purchased by a General Motors assembly plantE) All of the above
F) B) and D)

Question 3

Some of the production of an economy creates pollution.As a result:

Accepted Answer

A)   nominal GDP is greater than real GDP.
B)   real GDP is greater than nominal GDP.
C)   GDP tends to understate social welfare.
D)   GDP tends to overstate social welfare.E) B) and C)
F) A) and D)

Question 4

Refer to the information below.Net investment:
All figures are in billions.

Accepted Answer

A)   cannot be determined from the data given.
B)   is $45.
C)   is $53.
D)   is $72.E) A) and B)
F) A) and C)

Question 5

In calculating GDP by the expenditure approach,we sum up:

Accepted Answer

A)   consumption,investment,government purchases,exports,and imports.
B)   investment,government purchases,consumption,and net exports.
C)   consumption,investment,wages,and rents.
D)   consumption,investment,government purchases,and imports.E) B) and D)
F) A) and C)

Question 6

The value of Canadian imports is:

Accepted Answer

A)   added to exports when calculating GDP because imports reflect spending by Canadians.
B)   subtracted from exports when calculating GDP because imports do not entail spending by Canadians.
C)   subtracted from exports when calculating GDP because imports do not entail production in Canada.
D)   added when calculating GDP because imports do not entail production in Canada.E) A) and B)
F) A) and C)

Question 7

GDP excludes most non-market transactions.Therefore,GDP tends to:

Accepted Answer

A)   underestimate the rate of inflation in the economy.
B)   overestimate the rate of inflation in the economy.
C)   overestimate the amount of production of the economy.
D)   underestimate the amount of production in the economy.E) A) and B)
F) A) and D)

Question 8

The GDP figure by the income approach will be identical to the GDP by the expenditure approach if we add to the Net Domestic income:

Accepted Answer

A)   the capital consumption allowances and the investment income.
B)   the capital consumption allowances and the interest payments to the owners of capital.
C)   the indirect taxes and the capital consumption allowances.
D)   profits of the corporations and the capital consumption allowances.E) A) and D)
F) A) and C)

Question 9

The term "real GDP" refers to:

Accepted Answer

A)   the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income.
B)   GDP data which embody changes in the price level,but not changes in physical output.
C)   GDP data which reflect changes in both physical output and the price level.
D)   GDP data which have been adjusted for changes in the price level.E) B) and C)
F) A) and D)

Question 10

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:

Accepted Answer

A)   $110
B)   $30
C)   $40
D)   $70E) A) and B)
F) A) and C)

Question 11

Assume that the size of the underground economy increases both absolutely and relatively over time.As a result:

Accepted Answer

A)   real GDP will rise more rapidly than nominal GDP.
B)   GDP will tend to increasingly understate the level of output through time.
C)   GDP will tend to increasingly overstate the level of output through time.
D)   the accuracy of GDP will be unaffected through time.E) B) and D)
F) All of the above

Question 12

Gross domestic product (GDP) is equal to personal consumption expenditures:

Accepted Answer

A)   plus gross investment,minus government spending,and plus net exports.
B)   plus gross investment,plus government spending,and minus net exports.
C)   minus gross investment,plus government spending,and plus net exports.
D)   plus gross investment,plus government spending,and plus net exports.E) B) and C)
F) A) and D)

Question 13

In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

Accepted Answer

A)   of changes in our trade deficits and surpluses.
B)   the length of the workweek has declined historically.
C)   the price level may change over time.
D)   depreciation may be greater or smaller than gross investment.E) A) and D)
F) None of the above

Question 14

In calculating GDP,governmental transfer payments,such as welfare payments,are:

Accepted Answer

A)   not counted.
B)   counted as investment spending.
C)   counted as government spending.
D)   counted as consumption spending.E) A) and D)
F) A) and B)

Question 15

Assume an economy which is producing only one product.Output and price data for a three-year period are as follows.
 
-Refer to the above data.If year 2 is chosen as the base year,real GDP for year 1 is:

Accepted Answer

A)   $25
B)   $100
C)   $50
D)   $80E) B) and C)
F) A) and B)

Question 16

The GDP tends to:

Accepted Answer

A)   overstate economic welfare because it does not include certain non-market activities such as the productive work of housewives.
B)   understate economic welfare because it includes expenditures undertaken to offset or correct pollution.
C)   understate economic welfare because it does not take into account increases in leisure.
D)   overstate economic welfare because it does not reflect improvements in product quality.E) B) and C)
F) None of the above

Question 17

If we add up the figures for wages,rent,interest and profit:

Accepted Answer

A)   the figure is not equal to the GDP by the expenditure approach because it does not include the amount of investment.
B)   the figure is not equal to the GDP by the expenditure approach because the Canadian national accounts do not reflect each of these four factors of income and also because a few adjustments are necessary.
C)   we obtain a figure which is equal to the GDP by the expenditure approach.
D)   it does not reflect the actual figure for the GDP by the expenditure approach because it does not include the amount of consumption.E) None of the above
F) A) and B)

Question 18

All expenditures on new construction are included as investment in calculating GDP.

Accepted Answer

A) True 
 B)False

Question 19

The current GDP price index used by Statistics Canada is referred to as the chain-weighted index,because by using both the previous year prices and current prices it links each year to the prior year.

Accepted Answer

A) True 
 B)False

Question 20

Refer to the information below.The gross domestic product is: All figures are in billions of dollars.

Accepted Answer

A)   $326
B)   $282
C)   $309
D)   $300E) C) and D)
F) B) and C)

Exam 7: Measuring the Economys Output

If we add up the figures for wages,rent,interest and profit:

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In calculating GDP by the income approach,we should sum up:

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In calculating GDP,governmental transfer payments,such as welfare payments,are:

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Assume that the size of the underground economy increases both absolutely and relatively over time.As a result:

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Refer to the information below.Net investment: All figures are in billions.

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The current GDP price index used by Statistics Canada is referred to as the chain-weighted index,because by using both the previous year prices and current prices it links each year to the prior year.

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Gross domestic product (GDP) is equal to personal consumption expenditures:

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All expenditures on new construction are included as investment in calculating GDP.

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The value of Canadian imports is:

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The GDP figure by the income approach will be identical to the GDP by the expenditure approach if we add to the Net Domestic income:

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In calculating GDP by the expenditure approach,we sum up:

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The GDP tends to:

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The term "real GDP" refers to:

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Refer to the information below.The gross domestic product is: All figures are in billions of dollars.

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In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

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Assume an economy which is producing only one product.Output and price data for a three-year period are as follows. -Refer to the above data.If year 2 is chosen as the base year,real GDP for year 1 is:

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GDP excludes most non-market transactions.Therefore,GDP tends to:

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Some of the production of an economy creates pollution.As a result:

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Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:

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Which of the following is a final good or service?

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