Question 1

Choose the correct statement.

Accepted Answer

A) When nominal GDP increases, real GDP decreases. 
B) Nominal GDP is just a more precise name for real GDP. 
C) We measure the change in production by comparing nominal GDP in one year with real GDP in the previous year. 
D) Nominal GDP is just a more precise name for GDP. 
E) Nominal GDP and real GDP both increase when the average level of prices increase. 
A) When nominal GDP increases, real GDP decreases. 
B) Nominal GDP is just a more precise name for real GDP. 
C) We measure the change in production by comparing nominal GDP in one year with real GDP in the previous year. 
D) Nominal GDP is just a more precise name for GDP. 
E) Nominal GDP and real GDP both increase when the average level of prices increase.

Question 2

Of the following items,which one would be considered as investment in the National Income and Expenditure Accounts?

Accepted Answer

A) The purchase of a new van by a potter who packs it with his wares and travels to art shows on weekends. 
B) The purchase of 100 shares of Bell Canada stock on the Toronto Stock Exchange. 
C) The purchase of a 100-year-old house that was put on the protected historic sites list. 
D) The purchase of a Canadian government bond. 
E) All of the above. 
A) The purchase of a new van by a potter who packs it with his wares and travels to art shows on weekends. 
B) The purchase of 100 shares of Bell Canada stock on the Toronto Stock Exchange. 
C) The purchase of a 100-year-old house that was put on the protected historic sites list. 
D) The purchase of a Canadian government bond. 
E) All of the above.

Question 3

In any year,real GDP

Accepted Answer

A) must always be less than potential GDP. 
B) might be greater than, less than, or equal to potential GDP. 
C) will always be greater than potential GDP because of the tendency of nations to incur inflation. 
D) always equals potential GDP. 
E) increases if potential GDP increases, and decreases if potential GDP decreases. 
A) must always be less than potential GDP. 
B) might be greater than, less than, or equal to potential GDP. 
C) will always be greater than potential GDP because of the tendency of nations to incur inflation. 
D) always equals potential GDP. 
E) increases if potential GDP increases, and decreases if potential GDP decreases.

Question 4

The purchase of a new home is categorized as ________.

Accepted Answer

A) consumption expenditure 
B) consumption expenditure and investment 
C) investment only if the home owners take out a mortgage 
D) investment 
E) consumption expenditure only if the home owners do not take out a mortgage 
A) consumption expenditure 
B) consumption expenditure and investment 
C) investment only if the home owners take out a mortgage 
D) investment 
E) consumption expenditure only if the home owners do not take out a mortgage

Question 5

Which approach to measuring GDP is being used when Statistics Canada sums spending on goods and services for consumer goods,government,business investments and exports,net of imports?

Accepted Answer

A) value added 
B) income 
C) factor cost 
D) expenditure 
E) opportunity cost 
A) value added 
B) income 
C) factor cost 
D) expenditure 
E) opportunity cost

Question 6

Suppose in current dollar terms,GDP increased by approximately 7 percent between one period and the next,but real GDP fell by 2 percent.Which one of the following explanations is most likely?

Accepted Answer

A) Prices fell by 9 percent. 
B) Prices fell by 2 percent. 
C) Output rose by 2 percent. 
D) Prices increased by 7 percent. 
E) Prices increased by 9 percent. 
A) Prices fell by 9 percent. 
B) Prices fell by 2 percent. 
C) Output rose by 2 percent. 
D) Prices increased by 7 percent. 
E) Prices increased by 9 percent.

Question 7

Stock and bond sales are not included in GDP because they

Accepted Answer

A) do not occur in the year in which the production represented by them takes place. 
B) represent corporate production. 
C) represent indebtedness. 
D) are not goods and services. 
E) are not sold in the country in which they are produced. 
A) do not occur in the year in which the production represented by them takes place. 
B) represent corporate production. 
C) represent indebtedness. 
D) are not goods and services. 
E) are not sold in the country in which they are produced.

Question 8

Use the figure below to answer the following questions.
   
Figure 20.3.1
-Refer to Figure 20.3.1.In the figure,the distance between points T and U represents

Accepted Answer

A) an expansion. 
B) a trough. 
C) a peak. 
D) a recession. 
E) a business cycle. 
A) an expansion. 
B) a trough. 
C) a peak. 
D) a recession. 
E) a business cycle.

Question 9

From the following list,choose the item that would be included in a current measure of GDP.

Accepted Answer

A) the purchase of a previously owned house that was built last year 
B) a social security cheque for $500 
C) the purchase of 10 litres of gasoline for your car 
D) a $2,000 cheque from your Aunt Grace 
E) income from the sale of your Canadian Snowfun stocks 
A) the purchase of a previously owned house that was built last year 
B) a social security cheque for $500 
C) the purchase of 10 litres of gasoline for your car 
D) a $2,000 cheque from your Aunt Grace 
E) income from the sale of your Canadian Snowfun stocks

Question 10

The existence of which one of the following is a reason for the fact that GDP gives an underestimated value of total output in the economy?

Accepted Answer

A) pollution 
B) market activities 
C) underground economy 
D) depreciation 
E) environmental problems 
A) pollution 
B) market activities 
C) underground economy 
D) depreciation 
E) environmental problems

Question 11

Wages,salaries,and supplementary labour income are components of which approach to measuring GDP?

Accepted Answer

A) income approach 
B) expenditure approach 
C) injections approach 
D) output approach 
E) value-added approach 
A) income approach 
B) expenditure approach 
C) injections approach 
D) output approach 
E) value-added approach

Question 12

SaskWidget produces plastic parts.At the beginning of the year,they held $24 million worth of capital.At the end of the year,they held $20 million worth of capital.One can conclude that

Accepted Answer

A) net investment increased by $4 million. 
B) gross investment decreased by $4 million. 
C) gross investment increased by $4 million. 
D) depreciation exceeded gross investment by $4 million. 
E) depreciation equals $4 million. 
A) net investment increased by $4 million. 
B) gross investment decreased by $4 million. 
C) gross investment increased by $4 million. 
D) depreciation exceeded gross investment by $4 million. 
E) depreciation equals $4 million.

Question 13

Use the table below to answer the following questions.
Table 20.2.1
Data From Eastland
  
-Refer to Table 20.2.1.From the information given in the table,the value of gross domestic product is

Accepted Answer

A) $1,280. 
B) $1,290. 
C) $1,360. 
D) $1,120. 
E) $1,100. 
A) $1,280. 
B) $1,290. 
C) $1,360. 
D) $1,120. 
E) $1,100.

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 aggregate expenditure?

Accepted Answer

A) $50 
B) $75 
C) $90 
D) $100 
E) None of the above 
A) $50 
B) $75 
C) $90 
D) $100 
E) None of the above

Question 15

Use the table below to answer the following questions.
Table 20.2.5
Data From Southton
  
-Refer to Table 20.2.5.From the data in the table,compute Southton's nominal GDP in the current year.

Accepted Answer

A) $197 
B) $208 
C) $209 
D) $226 
E) It cannot be calculated given the data. 
A) $197 
B) $208 
C) $209 
D) $226 
E) It cannot be calculated given the data.

Question 16

Suppose Angela falls in love with and subsequently marries her regularly employed housekeeper,Tony.What effect would this action have on GDP?

Accepted Answer

A) It would stay the same. 
B) It would fall. 
C) It would rise. 
D) It would fall but then increase after the honeymoon was over. 
E) It depends on whether he starts to work in the house free of charge or whether she still pays him. 
A) It would stay the same. 
B) It would fall. 
C) It would rise. 
D) It would fall but then increase after the honeymoon was over. 
E) It depends on whether he starts to work in the house free of charge or whether she still pays him.

Question 17

Use the figure below to answer the following questions.
   
Figure 20.3.2
-Refer to Figure 20.3.2.In the figure,a trough is at point ________ and a peak is at point ________.

Accepted Answer

A) A;B 
B) B;C 
C) B;A 
D) D;C 
E) C;D 
A) A;B 
B) B;C 
C) B;A 
D) D;C 
E) C;D

Question 18

Government expenditure on goods and services ________.

Accepted Answer

A) includes transfer payments 
B) includes expenditure by all levels of government on goods and services 
C) is always greater than consumption expenditure 
D) plus consumption expenditure equals aggregate expenditure 
E) plus consumption expenditure plus investment equals aggregate expenditure 
A) includes transfer payments 
B) includes expenditure by all levels of government on goods and services 
C) is always greater than consumption expenditure 
D) plus consumption expenditure equals aggregate expenditure 
E) plus consumption expenditure plus investment equals aggregate expenditure

Question 19

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 nominal GDP?

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 20

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 gross investment in 2012 is

Accepted Answer

A) $2,800. 
B) $3,800. 
C) $1,800. 
D) $7,800. 
E) $5,800. 
A) $2,800. 
B) $3,800. 
C) $1,800. 
D) $7,800. 
E) $5,800.

Exam 20: Measuring GDP and Economic Growth

Choose the correct statement.

Of the following items,which one would be considered as investment in the National Income and Expenditure Accounts?

In any year,real GDP

The purchase of a new home is categorized as ________.

Which approach to measuring GDP is being used when Statistics Canada sums spending on goods and services for consumer goods,government,business investments and exports,net of imports?

Suppose in current dollar terms,GDP increased by approximately 7 percent between one period and the next,but real GDP fell by 2 percent.Which one of the following explanations is most likely?

Stock and bond sales are not included in GDP because they

Use the figure below to answer the following questions. Figure 20.3.1 -Refer to Figure 20.3.1.In the figure,the distance between points T and U represents

From the following list,choose the item that would be included in a current measure of GDP.

The existence of which one of the following is a reason for the fact that GDP gives an underestimated value of total output in the economy?

Wages,salaries,and supplementary labour income are components of which approach to measuring GDP?

SaskWidget produces plastic parts.At the beginning of the year,they held $24 million worth of capital.At the end of the year,they held $20 million worth of capital.One can conclude that

Use the table below to answer the following questions. Table 20.2.1 Data From Eastland -Refer to Table 20.2.1.From the information given in the table,the value of gross domestic product is

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 aggregate expenditure?

Use the table below to answer the following questions. Table 20.2.5 Data From Southton -Refer to Table 20.2.5.From the data in the table,compute Southton's nominal GDP in the current year.

Suppose Angela falls in love with and subsequently marries her regularly employed housekeeper,Tony.What effect would this action have on GDP?

Use the figure below to answer the following questions. Figure 20.3.2 -Refer to Figure 20.3.2.In the figure,a trough is at point ________ and a peak is at point ________.

Government expenditure on goods and services ________.

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 nominal GDP?

What Is Economics?

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Externalities

Public Goods and Common Resources

Markets for Factors of Production

Economic Inequality

Monitoring Jobs and Inflation

Economic Growth

Finance, Saving, and Investment

Money, the Price Level, and Inflation

The Exchange Rate and the Balance of Payments

Aggregate Supply and Aggregate Demand

Expenditure Multipliers: The Keynesian Model

Canadian Inflation, Unemployment, and Business Cycle

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Use the figure below to answer the following questions. Figure 20.3.2 -Refer to Figure 20.3.2.In the figure,a trough is at point and a peak is at point .