Question 1

If Canada doubled its real GDP, it would be a much less liveable society than it is today.Explain this view.

Accepted Answer

Along with the economic growth would come congestion, waste, and pollution.In other words, such growth in production would be at the expense of the environment and perhaps leisure time.Those who believe in the philosophy "small is beautiful" would argue that we could improve living standards without any growth at all, let alone doubling the GDP.These people would argue that we could use our current resources much more efficiently and maintain the same or improved standard of living.

Question 2

What is the definition of GDP? How would the value of output produced at a Canadian-owned factory in Canada and a foreign-owned factory in Canada be treated in GDP accounting?

Accepted Answer

GDP is a measure of the total market value of all final goods and services produced within a country in a year period.The value of output produced at a Canadian-owned factory in Canada and a foreign-owned factory in Canada would both be treated as part of domestic output in GDP accounting.Thus, GDP represents all domestic production.

Question 3

The following is a list of figures for a given year in billions of dollars.Using this data, compute: (a) GDP by the Expenditure Method; (b) GDP by the Income Method; (c) Net exports; and (d) Net Investment.

Accepted Answer

(a) GDP by the Expenditure Method = $520 + $170 + $220 + $350 - $320 = $940;
(b) GDP by the Income Method = $500 + $140 + $120 + $40 + $50 + $90 = $940;
(c) Net exports = $30 (= $350 - $320);
(d) Net investment = $80 (= $170 - $90).

Question 4

Firms A-E are involved in the production of some good.What is the total value added by all the firms in the production of this good? What did each firm add separately in value and what does it total?

Accepted Answer

The value added by all firms is $7,600,

Question 5

Define the four categories of expenditures, which comprise GDP.

Accepted Answer

(1) Personal consumption expenditures in

Question 6

Define net exports.

Accepted Answer

The value of net exports equal

Question 7

How is a price index computed?

Accepted Answer

A price index is computed by comparing t

Question 8

What is the relationship between real GDP, nominal GDP, and the price index?

Accepted Answer

The price index is useful for calculatin

Question 9

Why do economists worry about "multiple counting" and calculate only the "value added" in the production process?

Accepted Answer

Only the value of final goods is include

Question 10

What adjustments need to be made to go from net domestic income at factor cost to GDP?

Accepted Answer

When we add up wages, salaries and suppl

Question 11

The following table shows the price of a specific stereo receiver for a five-year period.Using year 3 as the base year, calculate the price index for each year.

Accepted Answer

To get the price index numbers

Question 12

Explain the difference between final and intermediate goods, and give an example of each.

Accepted Answer

Goods are considered to be "final goods"

Question 13

Give the three categories, which comprise gross investment; and explain the difference between them.

Accepted Answer

Gross investment includes (1) final purc

Question 14

The following data show nominal GDP and the appropriate price index for several years.Compute real GDP for each year and indicate whether you have "inflated" or "deflated" nominal GDP in finding real GDP.All GDP are in billions.

Accepted Answer

To get the answers for real GDP, divide

Question 15

Identify at least four transactions and other variables, which are not included in the GDP.

Accepted Answer

(1) Nonmarket transactions such as do-it

Question 16

Discuss the pros and cons of GDP as a measure of the economy's output performance and as a measure of its standard of living.

Accepted Answer

GDP is a reasonably accurate measure of

Question 17

When would a fixed based price index cause GDP growth to be overstated?

Accepted Answer

Under a fixed based price index, prices

Question 18

The expanding "underground" economy creates problems for economic policy makers.Explain.

Accepted Answer

An expanding underground economy means t

Question 19

Which of the following are included and which are excluded in calculating this year's GDP? Explain in each instance.(a) A monthly scholarship cheque received by an economics student.(b) The purchase of a new corncrib by a farmer.(c) The purchase of a used tractor by a farmer.(d) The cashing in of a savings bond.(e) The services of a mechanic in fixing the radiator in his own car.(f) Canada Pension Plan cheques received by a retired person.(g) An increase in business inventories.(h) Government purchase of missiles.(i) A barber's income.(j) Income received from interest on a corporate bond.(k) Cash received from selling a corporate bond.

Accepted Answer

(a) Scholarships are viewed as transfer

Question 20

What are the components of net domestic income at factor cost? What is the relative share of GDP in 2011 going to: Wages, salaries and supplementary labour income; and to Profits of corporations and government enterprises before taxes?

Accepted Answer

When we add up wages, salaries and suppl

Exam 7: A: Measuring the Economys Output

If Canada doubled its real GDP, it would be a much less liveable society than it is today.Explain this view.

What is the definition of GDP? How would the value of output produced at a Canadian-owned factory in Canada and a foreign-owned factory in Canada be treated in GDP accounting?

The following is a list of figures for a given year in billions of dollars.Using this data, compute: (a) GDP by the Expenditure Method; (b) GDP by the Income Method; (c) Net exports; and (d) Net Investment.

Firms A-E are involved in the production of some good.What is the total value added by all the firms in the production of this good? What did each firm add separately in value and what does it total?

Define the four categories of expenditures, which comprise GDP.

Define net exports.

How is a price index computed?

What is the relationship between real GDP, nominal GDP, and the price index?

Why do economists worry about "multiple counting" and calculate only the "value added" in the production process?

What adjustments need to be made to go from net domestic income at factor cost to GDP?

The following table shows the price of a specific stereo receiver for a five-year period.Using year 3 as the base year, calculate the price index for each year.

Explain the difference between final and intermediate goods, and give an example of each.

Give the three categories, which comprise gross investment; and explain the difference between them.

The following data show nominal GDP and the appropriate price index for several years.Compute real GDP for each year and indicate whether you have "inflated" or "deflated" nominal GDP in finding real GDP.All GDP are in billions.

Identify at least four transactions and other variables, which are not included in the GDP.

Discuss the pros and cons of GDP as a measure of the economy's output performance and as a measure of its standard of living.

When would a fixed based price index cause GDP growth to be overstated?

The expanding "underground" economy creates problems for economic policy makers.Explain.

What are the components of net domestic income at factor cost? What is the relative share of GDP in 2011 going to: Wages, salaries and supplementary labour income; and to Profits of corporations and government enterprises before taxes?

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

B: 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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