Question 1

Which of the following is a shortcoming(s) of GDP as a measure of total output?

Accepted Answer

A) GDP does not include unpaid work. 
B) GDP does not include activities in the underground economy. 
C) GDP does not capture the full value of improvements in product quality. 
D) All the answer choices are correct. 
A) GDP does not include unpaid work. 
B) GDP does not include activities in the underground economy. 
C) GDP does not capture the full value of improvements in product quality. 
D) All the answer choices are correct.

Question 2

A nation's gross domestic product (GDP):

Accepted Answer

A) is the dollar value of the total output produced within the borders of the nation. 
B) is the dollar value of the total output produced by its citizens, regardless of where they are living. 
C) can be found by summing C + In+ S + Xn. 
D) is always some amount less than its C + Ig+ G + Xn. 
A) is the dollar value of the total output produced within the borders of the nation. 
B) is the dollar value of the total output produced by its citizens, regardless of where they are living. 
C) can be found by summing C + In+ S + Xn. 
D) is always some amount less than its C + Ig+ G + Xn.

Question 3

An increase in inventories during 2022:

Accepted Answer

A) will result in gross investment being higher than net investment by the amount of the inventory increase. 
B) should be ignored while calculating GDP for 2022. 
C) should be subtracted from GDP calculated for 2022. 
D) should be included in GDP calculated for 2022. 
A) will result in gross investment being higher than net investment by the amount of the inventory increase. 
B) should be ignored while calculating GDP for 2022. 
C) should be subtracted from GDP calculated for 2022. 
D) should be included in GDP calculated for 2022.

Question 4

If real GDP rises and the GDP price index has increased:

Accepted Answer

A) the percentage increase in nominal GDP must have been less than the percentage increase in the price level. 
B) nominal GDP may have either increased or decreased. 
C) nominal GDP must have increased. 
D) nominal GDP must have fallen. 
A) the percentage increase in nominal GDP must have been less than the percentage increase in the price level. 
B) nominal GDP may have either increased or decreased. 
C) nominal GDP must have increased. 
D) nominal GDP must have fallen.

Question 5

Following is data for a hypothetical economy.The base year is 2002 (Price index = 100).   Refer to the above data.Real GDP in 2006 was approximately:

Accepted Answer

A) $3,433 billion. 
B) $3,743 billion. 
C) $4,023 billion. 
D) $4,031 billion. 
A) $3,433 billion. 
B) $3,743 billion. 
C) $4,023 billion. 
D) $4,031 billion.

Question 6

Tom Atoe grows tomatoes for home consumption.This activity is:

Accepted Answer

A) excluded from GDP in order to avoid double counting. 
B) excluded from GDP because an intermediate good is involved. 
C) productive but is excluded from GDP because no market transaction occurs. 
D) included in GDP because it reflects production. 
A) excluded from GDP in order to avoid double counting. 
B) excluded from GDP because an intermediate good is involved. 
C) productive but is excluded from GDP because no market transaction occurs. 
D) included in GDP because it reflects production.

Question 7

Using the income approach for calculating GDP, which of the following was the largest contributor to Canada's national income in 2017?

Accepted Answer

A) Employee compensation 
B) Gross operating surplus 
C) Gross mixed income 
D) Taxes 
A) Employee compensation 
B) Gross operating surplus 
C) Gross mixed income 
D) Taxes

Question 8

The amount of after-tax income received by households is measured by:

Accepted Answer

A) discretionary income. 
B) net domestic income. 
C) disposable income. 
D) personal income. 
A) discretionary income. 
B) net domestic income. 
C) disposable income. 
D) personal income.

Question 9

The table below indicates the price and output data over a five-year period for an economy that produces only one good.   Refer to the above data.The nominal GDP for year 4:

Accepted Answer

A) is $90. 
B) is $55. 
C) is $40. 
D) is $35. 
A) is $90. 
B) is $55. 
C) is $40. 
D) is $35.

Question 10

The GDP price index:

Accepted Answer

A) includes fewer goods and services than the consumer price index. 
B) is identical to the consumer price index. 
C) is another term for the producer price index. 
D) includes all goods comprising the nation's domestic output. 
A) includes fewer goods and services than the consumer price index. 
B) is identical to the consumer price index. 
C) is another term for the producer price index. 
D) includes all goods comprising the nation's domestic output.

Question 11

The purchase of Wal-Mart stock is a part of gross, but not of net, private domestic investment.

Accepted Answer

A) True 
 B)False

Question 12

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion.In year 2, the total expenditure for the same market basket of goods was $5,500 billion.What was the GDP price index for the economy in year 2?

Accepted Answer

A) 100 
B) 110 
C) 115 
D) 120 
A) 100 
B) 110 
C) 115 
D) 120

Question 13

In determining real GDP economists adjust the nominal GDP by using the:

Accepted Answer

A) national productivity index. 
B) wholesale (producer) price index. 
C) GDP price index. 
D) consumer price index. 
A) national productivity index. 
B) wholesale (producer) price index. 
C) GDP price index. 
D) consumer price index.

Question 14

Following is data for a hypothetical economy.The base year is 2002 (Price index = 100).   Refer to the above data.From 2003 to 2006, prices rose by:

Accepted Answer

A) 3 percent. 
B) 7 percent. 
C) 9 percent. 
D) 10.7 percent. 
A) 3 percent. 
B) 7 percent. 
C) 9 percent. 
D) 10.7 percent.

Question 15

Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the lowest percentage?

Accepted Answer

A) Sweden 
B) Germany 
C) Canada 
D) Japan 
A) Sweden 
B) Germany 
C) Canada 
D) Japan

Question 16

Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the highest percentage?

Accepted Answer

A) Mexico 
B) South Korea 
C) India 
D) Italy 
A) Mexico 
B) South Korea 
C) India 
D) Italy

Question 17

Nominal GDP is less than real GDP in an economy in year 1 and year 2.In year 3, nominal GDP is equal to real GDP.In year 4, nominal GDP is slightly greater than real GDP.In year 5, nominal GDP is significantly greater than real GDP.Which year is most likely to be the base year being used to calculate the price index for this economy?

Accepted Answer

A) 2 
B) 3 
C) 4 
D) 5 
A) 2 
B) 3 
C) 4 
D) 5

Question 18

Gordon James is a person who sells narcotics "on the street." This type of illegal activity:

Accepted Answer

A) would be considered double counting in calculating GDP. 
B) is estimated and included in GDP figures. 
C) is excluded from GDP figures. 
D) causes GDP to be overstated. 
A) would be considered double counting in calculating GDP. 
B) is estimated and included in GDP figures. 
C) is excluded from GDP figures. 
D) causes GDP to be overstated.

Question 19

Net exports are:

Accepted Answer

A) that portion of consumption and investment goods sent to other countries. 
B) exports plus imports. 
C) exports less imports. 
D) imports less exports. 
A) that portion of consumption and investment goods sent to other countries. 
B) exports plus imports. 
C) exports less imports. 
D) imports less exports.

Question 20

Which of the following is the smallest in terms of dollar amount in Canada?

Accepted Answer

A) disposable income 
B) personal income 
C) gross domestic product 
D) gross national product 
A) disposable income 
B) personal income 
C) gross domestic product 
D) gross national product

Exam 7: B: Measuring the Economys Output

Which of the following is a shortcoming(s) of GDP as a measure of total output?

A nation's gross domestic product (GDP):

An increase in inventories during 2022:

If real GDP rises and the GDP price index has increased:

Following is data for a hypothetical economy.The base year is 2002 (Price index = 100). Refer to the above data.Real GDP in 2006 was approximately:

Tom Atoe grows tomatoes for home consumption.This activity is:

Using the income approach for calculating GDP, which of the following was the largest contributor to Canada's national income in 2017?

The amount of after-tax income received by households is measured by:

The table below indicates the price and output data over a five-year period for an economy that produces only one good. Refer to the above data.The nominal GDP for year 4:

The GDP price index:

The purchase of Wal-Mart stock is a part of gross, but not of net, private domestic investment.

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion.In year 2, the total expenditure for the same market basket of goods was $5,500 billion.What was the GDP price index for the economy in year 2?

In determining real GDP economists adjust the nominal GDP by using the:

Following is data for a hypothetical economy.The base year is 2002 (Price index = 100). Refer to the above data.From 2003 to 2006, prices rose by:

Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the lowest percentage?

Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the highest percentage?

Gordon James is a person who sells narcotics "on the street." This type of illegal activity:

Net exports are:

Which of the following is the smallest in terms of dollar amount in Canada?

B: Limits, Alternatives, and Choices

A: - Limits, Alternatives, and Choices

B: The Market System and the Circular Flow

A: - The Market System and the Circular Flow

B: Demand, Supply, and Market Equilibrium

A: - Demand, Supply, and Market Equilibrium

B: Market Failures: Public Goods and Externalities

A: - Market Failures: Public Goods and Externalities

B: Governments Role and Government Failure

A: Governments Role and Government Failure

B: an Introduction to Macroeconomics

A: an Introduction to Macroeconomics

A: Measuring the Economys Output

B: Economic Growth

A: Economic Growth

B: Business Cycles, Unemployment, and Inflation

A: Business Cycles, Unemployment, and Inflation

B: Basic Macroeconomic Relationships

A: Basic Macroeconomic Relationships

B: The Aggregate Expenditures Model

A: The Aggregate Expenditures Model

B: Aggregate Demand and Aggregate Supply

A: Aggregate Demand and Aggregate Supply

B: Fiscal Policy, Deficits, Surpluses, and Debt

A: Fiscal Policy, Deficits, Surpluses, and Debt

B: Money, Banking, and Money Creation

A: Money, Banking, and Money Creation

B: Interest Rates and Monetary Policy

A: Interest Rates and Monetary Policy

C: Financial Economics

A: Long-Run Macroeconomic Adjustments

B: Long-Run Macroeconomic Adjustments

A: International Trade

B: International Trade

A: The Balance of Payments and Exchange Rates

B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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