Question 1

To derive net domestic income at market prices from gross domestic product,we

Accepted Answer

A) subtract gross investment from GDP. 
B) subtract the statistical discrepancy from GDP. 
C) add the statistical discrepancy to GDP. 
D) subtract depreciation from GDP. 
E) add depreciation to GDP. 
A) subtract gross investment from GDP. 
B) subtract the statistical discrepancy from GDP. 
C) add the statistical discrepancy to GDP. 
D) subtract depreciation from GDP. 
E) add depreciation to GDP.

Question 2

Use the table below to answer the following questions.
Table 20.2.6
There are only two goods in this economy.
  
-Refer to Table 20.2.6.Consider the data in this table.What is current real GDP in terms of base-year prices?

Accepted Answer

A) $189,900 
B) $192,000 
C) $95,000 
D) $93,000 
E) None of the above 
A) $189,900 
B) $192,000 
C) $95,000 
D) $93,000 
E) None of the above

Question 3

Business cycles are

Accepted Answer

A) irregular, with some having two recessions and no expansion. 
B) predictable, with a recession following a trough. 
C) unpredictable, but always have two phases and two turning points. 
D) unpredictable, and don't always have two phases and two turning points. 
E) predictable with an expansion following a trough. 
A) irregular, with some having two recessions and no expansion. 
B) predictable, with a recession following a trough. 
C) unpredictable, but always have two phases and two turning points. 
D) unpredictable, and don't always have two phases and two turning points. 
E) predictable with an expansion following a trough.

Question 4

Which of the following items would be included in a current measure of GDP?

Accepted Answer

A) Your labour in fixing a leaky pipe under your sink. 
B) The value of safety on the streets of your community. 
C) A professional gardener who regularly cuts your lawn. 
D) The illegal sale of a bag of marijuana. 
E) All of the above. 
A) Your labour in fixing a leaky pipe under your sink. 
B) The value of safety on the streets of your community. 
C) A professional gardener who regularly cuts your lawn. 
D) The illegal sale of a bag of marijuana. 
E) All of the above.

Question 5

Real GDP ________.

Accepted Answer

A) fluctuates from year to year but is always below potential GDP 
B) grows at a constant 3 percent per year 
C) fluctuates around potential GDP 
D) equals potential GDP when the price level is constant 
E) equals potential GDP in the base year 
A) fluctuates from year to year but is always below potential GDP 
B) grows at a constant 3 percent per year 
C) fluctuates around potential GDP 
D) equals potential GDP when the price level is constant 
E) equals potential GDP in the base year

Question 6

Use the table below to answer the following question.
Table 20.4.3
  
-Refer to Table 20.4.3.An economy produces only cell phones,pens,and pizza.
The table gives the quantities produced and prices in 2010 and 2011.
The base year is 2010.
The chained-dollar real GDP in 2011 is

Accepted Answer

A) $13. 
B) $21. 
C) $125. 
D) $88. 
E) $19. 
A) $13. 
B) $21. 
C) $125. 
D) $88. 
E) $19.

Question 7

In calculating GDP,all of the following are excluded except

Accepted Answer

A) the value of intermediate goods. 
B) the value of all homes built in the year in question. 
C) the value of used goods. 
D) purchases of stocks and bonds. 
E) subsidies from the government. 
A) the value of intermediate goods. 
B) the value of all homes built in the year in question. 
C) the value of used goods. 
D) purchases of stocks and bonds. 
E) subsidies from the government.

Question 8

Given that pollution is a by-product of some production processes,

Accepted Answer

A) GDP accountants adjust GDP downward. 
B) GDP accountants adjust GDP upward. 
C) GDP accountants do not adjust GDP unless pollution is a serious problem. 
D) GDP tends to overstate economic well-being. 
E) GDP tends to understate economic well-being. 
A) GDP accountants adjust GDP downward. 
B) GDP accountants adjust GDP upward. 
C) GDP accountants do not adjust GDP unless pollution is a serious problem. 
D) GDP tends to overstate economic well-being. 
E) GDP tends to understate economic well-being.

Question 9

In the circular flow diagram,aggregate expenditure includes ________.

Accepted Answer

A) consumption expenditure, saving, investment and government expenditure 
B) saving, investment, and taxes 
C) consumption expenditure, investment, government expenditure, and exports 
D) consumption expenditure, investment, government expenditure and net exports 
E) government expenditure, transfer payments, and taxes 
A) consumption expenditure, saving, investment and government expenditure 
B) saving, investment, and taxes 
C) consumption expenditure, investment, government expenditure, and exports 
D) consumption expenditure, investment, government expenditure and net exports 
E) government expenditure, transfer payments, and taxes

Question 10

Nominal GDP will increase

Accepted Answer

A) only if the average level of prices rises. 
B) only if the quantity of goods and services produced increases. 
C) only if the unemployment rate rises. 
D) only if both the average level of prices rises and the quantity of goods and services produced increases. 
E) if either the average level of prices rises or the quantity of goods and services produced increases. 
A) only if the average level of prices rises. 
B) only if the quantity of goods and services produced increases. 
C) only if the unemployment rate rises. 
D) only if both the average level of prices rises and the quantity of goods and services produced increases. 
E) if either the average level of prices rises or the quantity of goods and services produced increases.

Question 11

Net domestic income at market prices equals

Accepted Answer

A) consumption expenditure plus government expenditure plus net exports plus investment. 
B) consumption expenditure plus government expenditure plus exports plus personal taxes. 
C) indirect business taxes plus personal income plus net exports. 
D) all incomes plus indirect taxes minus subsidies. 
E) all incomes minus depreciation. 
A) consumption expenditure plus government expenditure plus net exports plus investment. 
B) consumption expenditure plus government expenditure plus exports plus personal taxes. 
C) indirect business taxes plus personal income plus net exports. 
D) all incomes plus indirect taxes minus subsidies. 
E) all incomes minus depreciation.

Question 12

Net domestic income at market prices can be derived by which one of the following? GDP (income approach)minus

Accepted Answer

A) taxes. 
B) corporate profits. 
C) subsidies. 
D) consumption expenditure. 
E) depreciation. 
A) taxes. 
B) corporate profits. 
C) subsidies. 
D) consumption expenditure. 
E) depreciation.

Question 13

Use the table below to answer the following questions.
Table 20.4.1
  
-Refer to Table 20.4.1.Calculating chained-dollar real GDP,real GDP in 2012 increased by

Accepted Answer

A) 56 percent. 
B) 55.25 percent. 
C) 54.5 percent. 
D) 30 percent. 
E) 75 percent. 
A) 56 percent. 
B) 55.25 percent. 
C) 54.5 percent. 
D) 30 percent. 
E) 75 percent.

Question 14

Use the figure below to answer the following questions.
   
Figure 20.1.1
-Refer to Figure 20.1.1,which shows the circular flow of expenditure and income for Venus.During 2012,A was $100,B was $50,C was $30 and D was $10.How much is net exports?

Accepted Answer

A) $10 
B) $25 
C) $30 
D) $50 
E) None of the above 
A) $10 
B) $25 
C) $30 
D) $50 
E) None of the above

Question 15

The expenditure approach measures GDP by adding together

Accepted Answer

A) wages, salaries and supplementary labour income, and other factor incomes. 
B) wages, salaries and supplementary labour income, other factor income, subsidies paid by the government, indirect taxes paid, and income of nonfarm unincorporated businesses. 
C) compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and capital consumption expenditures, and by subtracting subsidies paid by the government. 
D) the total expenditures of consumers, firms, net exporters, and by governments at all levels. 
E) the total expenditures of consumers and firms. 
A) wages, salaries and supplementary labour income, and other factor incomes. 
B) wages, salaries and supplementary labour income, other factor income, subsidies paid by the government, indirect taxes paid, and income of nonfarm unincorporated businesses. 
C) compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes paid, and capital consumption expenditures, and by subtracting subsidies paid by the government. 
D) the total expenditures of consumers, firms, net exporters, and by governments at all levels. 
E) the total expenditures of consumers and firms.

Question 16

Capital in year 2012 equals capital in year 2011

Accepted Answer

A) minus depreciation. 
B) plus net investment plus depreciation. 
C) plus gross investment. 
D) plus net investment. 
E) plus net investment minus depreciation. 
A) minus depreciation. 
B) plus net investment plus depreciation. 
C) plus gross investment. 
D) plus net investment. 
E) plus net investment minus depreciation.

Question 17

Use the information below to answer the following questions.
Fact 20.1.1
At the beginning of 2012, Peter's Perfectly Prickly Piercing Parlour had $5,000 worth of bellybutton and eyebrow rings on hand, 2 computers (each worth $1,000), 1 cash register worth $100, electrical equipment worth $500, and one piercing needle worth $500.At the end of 2012, they had $5,000 worth of bellybutton and eyebrow rings, a new high speed computer worth $3,000 (they had to throw out the old ones), the same cash register, which was now worthless, electrical equipment worth $600, and they had upgraded the needle at a cost of $700 which was valued at $1,000.
-Refer to Fact 20.1.1.Peter's capital at the end of 2012 is

Accepted Answer

A) $7,000. 
B) $9,600. 
C) $4,400. 
D) $7,600. 
E) $4,000. 
A) $7,000. 
B) $9,600. 
C) $4,400. 
D) $7,600. 
E) $4,000.

Question 18

Which one of the following would not be counted as part of this year's GDP?

Accepted Answer

A) The lumber you purchase when building bookshelves for your room. 
B) The government bond you buy for your newborn niece. 
C) The purchase of a new personal computer that was produced in the current year. 
D) The purchase of wheat that was produced in the current year by a Saskatchewan farmer. 
E) The purchase of a house that was produced in the current year. 
A) The lumber you purchase when building bookshelves for your room. 
B) The government bond you buy for your newborn niece. 
C) The purchase of a new personal computer that was produced in the current year. 
D) The purchase of wheat that was produced in the current year by a Saskatchewan farmer. 
E) The purchase of a house that was produced in the current year.

Question 19

A bakery uses flour to produce bread.
When calculating GDP,we include ________,because when we add the value of the flour to the value of the loaf of bread to calculate GDP,the result is ________.

Accepted Answer

A) only the value of the bread sold in a store;double counting 
B) only the value of the flour used to produce the bread;double counting 
C) both the value of the bread sold in a store and the value of the flour used to produce the bread;double counting 
D) both the value of the bread sold in a store and the value of the flour used to produce the bread;the true value of the economy's output 
E) none of the above 
A) only the value of the bread sold in a store;double counting 
B) only the value of the flour used to produce the bread;double counting 
C) both the value of the bread sold in a store and the value of the flour used to produce the bread;double counting 
D) both the value of the bread sold in a store and the value of the flour used to produce the bread;the true value of the economy's output 
E) none of the above

Question 20

The circular flow diagram illustrates the expenditures made by

Accepted Answer

A) households only. 
B) households and firms only. 
C) households and investors only. 
D) firms, households, and governments only. 
E) households, firms, governments, and the rest of the world. 
A) households only. 
B) households and firms only. 
C) households and investors only. 
D) firms, households, and governments only. 
E) households, firms, governments, and the rest of the world.

Exam 20: Measuring GDP and Economic Growth

To derive net domestic income at market prices from gross domestic product,we

Use the table below to answer the following questions. Table 20.2.6 There are only two goods in this economy. -Refer to Table 20.2.6.Consider the data in this table.What is current real GDP in terms of base-year prices?

Business cycles are

Which of the following items would be included in a current measure of GDP?

Real GDP ________.

Use the table below to answer the following question. Table 20.4.3 -Refer to Table 20.4.3.An economy produces only cell phones,pens,and pizza. The table gives the quantities produced and prices in 2010 and 2011. The base year is 2010. The chained-dollar real GDP in 2011 is

In calculating GDP,all of the following are excluded except

Given that pollution is a by-product of some production processes,

In the circular flow diagram,aggregate expenditure includes ________.

Nominal GDP will increase

Net domestic income at market prices equals

Net domestic income at market prices can be derived by which one of the following? GDP (income approach)minus

Use the table below to answer the following questions. Table 20.4.1 -Refer to Table 20.4.1.Calculating chained-dollar real GDP,real GDP in 2012 increased by

Use the figure below to answer the following questions. Figure 20.1.1 -Refer to Figure 20.1.1,which shows the circular flow of expenditure and income for Venus.During 2012,A was $100,B was $50,C was $30 and D was $10.How much is net exports?

The expenditure approach measures GDP by adding together

Capital in year 2012 equals capital in year 2011

Which one of the following would not be counted as part of this year's GDP?

A bakery uses flour to produce bread. When calculating GDP,we include ________,because when we add the value of the flour to the value of the loaf of bread to calculate GDP,the result is ________.

The circular flow diagram illustrates the expenditures made by

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A bakery uses flour to produce bread. When calculating GDP,we include ,because when we add the value of the flour to the value of the loaf of bread to calculate GDP,the result is .