Question 1

As defined in national income accounting, investment includes:

Accepted Answer

A) business expenditures on machinery and equipment. 
B) all consumption. 
C) imports, but not exports. 
D) all nonfood items. 
A) business expenditures on machinery and equipment. 
B) all consumption. 
C) imports, but not exports. 
D) all nonfood items.

Question 2

Real GDP is:

Accepted Answer

A) the nominal value of all goods and services produced in the economy. 
B) the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation. 
C) that aggregate output which is produced when the economy is operating at full employment. 
D) always greater than nominal GDP. 
A) the nominal value of all goods and services produced in the economy. 
B) the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation. 
C) that aggregate output which is produced when the economy is operating at full employment. 
D) always greater than nominal GDP.

Question 3

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($940); personal consumption expenditures ($4,920); imports ($170); exports ($133); gross investment ($640).What is GDP in this economy?

Accepted Answer

A) $6,463 billion 
B) $6,500 billion 
C) $6,537 billion 
D) $6,633 billion 
A) $6,463 billion 
B) $6,500 billion 
C) $6,537 billion 
D) $6,633 billion

Question 4

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Accepted Answer

A) True 
 B)False

Question 5

A business buys $5,000 worth of resources to produce a product.The business makes 100 units of the product and each of them sells for $65.The value added by the business to these products is:

Accepted Answer

A) $5,000 
B) $6,500 
C) $1,000 
D) $1,500 
A) $5,000 
B) $6,500 
C) $1,000 
D) $1,500

Question 6

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 plant 
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 plant

Question 7

The gross domestic product of Canada measures aggregate output produced:

Accepted Answer

A) within Canada's borders. 
B) by all Canadian companies. 
C) by all Canadian citizens only. 
D) by Canadian companies and citizens only. 
A) within Canada's borders. 
B) by all Canadian companies. 
C) by all Canadian citizens only. 
D) by Canadian companies and citizens only.

Question 8

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 9

An economy is enlarging its stock of capital goods:

Accepted Answer

A) when net investment exceeds gross investment. 
B) when gross investment exceeds replacement investment. 
C) whenever gross investment is positive. 
D) when replacement investment exceeds gross investment. 
A) when net investment exceeds gross investment. 
B) when gross investment exceeds replacement investment. 
C) whenever gross investment is positive. 
D) when replacement investment exceeds gross investment.

Question 10

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

Question 11

From an economist's perspective, which is not considered to be an investment?

Accepted Answer

A) construction of a new factory 
B) purchase of shares of company stock 
C) the building of an apartment complex 
D) additions to inventories at steel plants 
A) construction of a new factory 
B) purchase of shares of company stock 
C) the building of an apartment complex 
D) additions to inventories at steel plants

Question 12

The GDP is the:

Accepted Answer

A) monetary value of all final goods and services produced within a nation in a particular year. 
B) national income minus all non-income charges against output. 
C) monetary value of all economic resources used in producing a year's output. 
D) monetary value of all goods and services, final and intermediate, produced in a specific year. 
A) monetary value of all final goods and services produced within a nation in a particular year. 
B) national income minus all non-income charges against output. 
C) monetary value of all economic resources used in producing a year's output. 
D) monetary value of all goods and services, final and intermediate, produced in a specific year.

Question 13

Net investment refers to:

Accepted Answer

A) the amount of machinery and equipment used up in producing GDP in a specific year. 
B) the difference between the market value and book value of outstanding capital stock. 
C) gross domestic investment less net exports. 
D) gross investment less consumption of fixed capital. 
A) the amount of machinery and equipment used up in producing GDP in a specific year. 
B) the difference between the market value and book value of outstanding capital stock. 
C) gross domestic investment less net exports. 
D) gross investment less consumption of fixed capital.

Question 14

Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.

Accepted Answer

A) True 
 B)False

Question 15

The value added by firms A-E from the production of the product described below is:

Accepted Answer

A) $3,000 
B) $3,800 
C) $6,500 
D) $10,300 
A) $3,000 
B) $3,800 
C) $6,500 
D) $10,300

Question 16

Which would be considered an investment according to economists?

Accepted Answer

A) the buying of shares of Janus mutual funds 
B) the purchase of a new machinery by Ford 
C) the purchase of stock of MacDonald's 
D) the selling of IBM corporate bonds 
A) the buying of shares of Janus mutual funds 
B) the purchase of a new machinery by Ford 
C) the purchase of stock of MacDonald's 
D) the selling of IBM corporate bonds

Question 17

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. 
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.

Question 18

Value added refers to:

Accepted Answer

A) any increase in GDP which has been adjusted for adverse environmental effects. 
B) the excess of gross investment over net investment. 
C) the difference between the value of a firm's output and the value of the inputs it has purchased from others. 
D) the portion of any increase in GDP which is caused by inflation as opposed to an increase in real output. 
A) any increase in GDP which has been adjusted for adverse environmental effects. 
B) the excess of gross investment over net investment. 
C) the difference between the value of a firm's output and the value of the inputs it has purchased from others. 
D) the portion of any increase in GDP which is caused by inflation as opposed to an increase in real output.

Question 19

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.If year 3 is chosen as the base year, the price index for year 1:

Accepted Answer

A) is 140. 
B) is 40. 
C) is 167. 
D) is 50. 
A) is 140. 
B) is 40. 
C) is 167. 
D) is 50.

Question 20

GDP tends to underestimate the productive activity in the economy because it excludes:

Accepted Answer

A) spending by the government on military goods. 
B) spending by businesses to reduce the level of pollution. 
C) the work done by construction companies to remodel homes. 
D) the personal labour time homeowners spend on home repairs. 
A) spending by the government on military goods. 
B) spending by businesses to reduce the level of pollution. 
C) the work done by construction companies to remodel homes. 
D) the personal labour time homeowners spend on home repairs.

Exam 7: B: Measuring the Economys Output

As defined in national income accounting, investment includes:

Real GDP is:

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($940); personal consumption expenditures ($4,920); imports ($170); exports ($133); gross investment ($640).What is GDP in this economy?

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

A business buys $5,000 worth of resources to produce a product.The business makes 100 units of the product and each of them sells for $65.The value added by the business to these products is:

Which of the following is a final good or service?

The gross domestic product of Canada measures aggregate output produced:

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.

An economy is enlarging its stock of capital goods:

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

From an economist's perspective, which is not considered to be an investment?

The GDP is the:

Net investment refers to:

Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.

The value added by firms A-E from the production of the product described below is:

Which would be considered an investment according to economists?

The GDP tends to:

Value added refers to:

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.If year 3 is chosen as the base year, the price index for year 1:

GDP tends to underestimate the productive activity in the economy because it excludes:

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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