Question 1

Which of the following are equal to one another?
I.aggregate production
II.aggregate expenditure
III.aggregate income

Accepted Answer

A) I equals II, but I does not equal III. 
B) I equals III, but I does not equal II. 
C) II equals III, but II does not equal I. 
D) III equals II, but III does not equal I 
E) I equals II equals III. 
A) I equals II, but I does not equal III. 
B) I equals III, but I does not equal II. 
C) II equals III, but II does not equal I. 
D) III equals II, but III does not equal I 
E) I equals II equals III.

Question 2

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 GDP?

Accepted Answer

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

Question 3

All of the following statements are true except

Accepted Answer

A) the Lucas wedge is the dollar value of the accumulated gap between what real GDP per person would have been if the 1960s growth rate had persisted and what real GDP per person turned out to be. 
B) the Lucas wedge accumulated to $400,000 per person by 2010. 
C) the Lucas wedge equals real GDP minus potential GDP. 
D) the Lucas wedge arises from the slowdown of productivity growth that began during the 1970s. 
E) real GDP per person was $30,700 per year lower in 2010 than it would have been with no growth slowdown. 
A) the Lucas wedge is the dollar value of the accumulated gap between what real GDP per person would have been if the 1960s growth rate had persisted and what real GDP per person turned out to be. 
B) the Lucas wedge accumulated to $400,000 per person by 2010. 
C) the Lucas wedge equals real GDP minus potential GDP. 
D) the Lucas wedge arises from the slowdown of productivity growth that began during the 1970s. 
E) real GDP per person was $30,700 per year lower in 2010 than it would have been with no growth slowdown.

Question 4

Use the table below to answer the following questions.
Table 20.4.1
  
-Refer to Table 20.4.1.In this table,at 2012 prices,the value of production from 2011 to 2012 has increased by

Accepted Answer

A) 56 percent. 
B) 91.7 percent. 
C) 10.8 percent. 
D) 54.5 percent. 
E) 77.3 percent. 
A) 56 percent. 
B) 91.7 percent. 
C) 10.8 percent. 
D) 54.5 percent. 
E) 77.3 percent.

Question 5

One of the reasons why real GDP grows is that

Accepted Answer

A) prices increase. 
B) governments collect more taxes. 
C) capital grows as a result of investment. 
D) imports increase. 
E) people have more income. 
A) prices increase. 
B) governments collect more taxes. 
C) capital grows as a result of investment. 
D) imports increase. 
E) people have more income.

Question 6

The value of intermediate goods is not counted in GDP

Accepted Answer

A) to keep from including goods that reduce society's welfare. 
B) because of the tremendous difficulty in keeping track of all the intermediate goods produced in an economy as large as that of Canada. 
C) because they are only sold in factor markets. 
D) to avoid counting their value twice and overstating the value of GDP. 
E) because they are not consumed in the current year. 
A) to keep from including goods that reduce society's welfare. 
B) because of the tremendous difficulty in keeping track of all the intermediate goods produced in an economy as large as that of Canada. 
C) because they are only sold in factor markets. 
D) to avoid counting their value twice and overstating the value of GDP. 
E) because they are not consumed in the current year.

Question 7

To obtain the factor cost of a good from its market price

Accepted Answer

A) add indirect taxes and subtract subsidies. 
B) subtract indirect taxes and add subsidies. 
C) subtract both indirect taxes and subsidies. 
D) add both indirect taxes and subsidies. 
E) subtract depreciation. 
A) add indirect taxes and subtract subsidies. 
B) subtract indirect taxes and add subsidies. 
C) subtract both indirect taxes and subsidies. 
D) add both indirect taxes and subsidies. 
E) subtract depreciation.

Question 8

The business cycle is defined as the

Accepted Answer

A) regular growth rate of the real GDP. 
B) regular fluctuations of real GDP below potential GDP. 
C) irregular fluctuations of prices around real GDP. 
D) periodic but irregular up-and-down movement of total production and other measures of economic activity. 
E) periodic and regular up-and-down movement of total production. 
A) regular growth rate of the real GDP. 
B) regular fluctuations of real GDP below potential GDP. 
C) irregular fluctuations of prices around real GDP. 
D) periodic but irregular up-and-down movement of total production and other measures of economic activity. 
E) periodic and regular up-and-down movement of total production.

Question 9

Use the figure below to answer the following questions.
   
Figure 20.3.2
-Refer to Figure 20.3.2.In the figure,a recession begins at point ________ and an expansion begins 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 10

For the aggregate economy,income equals

Accepted Answer

A) expenditure, but these are not generally equal to GDP. 
B) GDP, but expenditure is generally less than these. 
C) expenditure equals GDP. 
D) expenditure equals GDP only if there is no government or foreign sectors. 
E) expenditure equals GDP only if there is no depreciation. 
A) expenditure, but these are not generally equal to GDP. 
B) GDP, but expenditure is generally less than these. 
C) expenditure equals GDP. 
D) expenditure equals GDP only if there is no government or foreign sectors. 
E) expenditure equals GDP only if there is no depreciation.

Question 11

Complete the following sentence.Net exports equals

Accepted Answer

A) exports divided by imports. 
B) exports plus imports. 
C) exports minus imports. 
D) imports minus exports. 
E) foreign borrowing by residents of Canada minus domestic borrowing by nonresidents of Canada. 
A) exports divided by imports. 
B) exports plus imports. 
C) exports minus imports. 
D) imports minus exports. 
E) foreign borrowing by residents of Canada minus domestic borrowing by nonresidents of Canada.

Question 12

Which one of the following flows from firms to households?

Accepted Answer

A) goods and services 
B) factor services 
C) payments for goods and services 
D) payments for loans 
E) loans 
A) goods and services 
B) factor services 
C) payments for goods and services 
D) payments for loans 
E) loans

Question 13

Which one of the following is an income flow from firms to households?

Accepted Answer

A) goods and services 
B) factor services 
C) payments for goods and services 
D) payments for factor services 
E) loans 
A) goods and services 
B) factor services 
C) payments for goods and services 
D) payments for factor services 
E) loans

Question 14

Consumption expenditure includes only ________.

Accepted Answer

A) expenditure by Canadian households on goods and services produced in Canada 
B) expenditure by Canadian households and firms on goods and services produced in Canada 
C) expenditure by Canadian households, firms, and governments on goods and services produced in Canada 
D) expenditure by Canadian households on goods and services produced in Canada and in the rest of the world 
E) expenditure by Canadian households and foreigners on goods and services produced in Canada 
A) expenditure by Canadian households on goods and services produced in Canada 
B) expenditure by Canadian households and firms on goods and services produced in Canada 
C) expenditure by Canadian households, firms, and governments on goods and services produced in Canada 
D) expenditure by Canadian households on goods and services produced in Canada and in the rest of the world 
E) expenditure by Canadian households and foreigners on goods and services produced in Canada

Question 15

In the Canadian economy,market prices and factor costs would be the same except for

Accepted Answer

A) depreciation. 
B) exports. 
C) personal taxes. 
D) indirect taxes and subsidies. 
E) capital consumption. 
A) depreciation. 
B) exports. 
C) personal taxes. 
D) indirect taxes and subsidies. 
E) capital consumption.

Question 16

Since non-market exchanges are excluded from measures of GDP,the GDP measure tends to

Accepted Answer

A) underestimate the total production of an economy. 
B) overestimate the total production of an economy. 
C) be of little significance in determining the total production of an economy. 
D) be of little use to anyone but market economists. 
E) place too much value on market transactions. 
A) underestimate the total production of an economy. 
B) overestimate the total production of an economy. 
C) be of little significance in determining the total production of an economy. 
D) be of little use to anyone but market economists. 
E) place too much value on market transactions.

Question 17

Suppose the economy's capital increases over the year.It must be true that

Accepted Answer

A) net investment was greater than gross investment. 
B) net investment was positive. 
C) depreciation was greater than net investment. 
D) depreciation was greater than gross investment. 
E) depreciation is less than zero. 
A) net investment was greater than gross investment. 
B) net investment was positive. 
C) depreciation was greater than net investment. 
D) depreciation was greater than gross investment. 
E) depreciation is less than zero.

Question 18

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 beginning of 2012 is

Accepted Answer

A) $8,100. 
B) $7,000. 
C) $3,100. 
D) $7,600. 
E) $5,000. 
A) $8,100. 
B) $7,000. 
C) $3,100. 
D) $7,600. 
E) $5,000.

Question 19

Use the table below to answer the following questions.
Table 20.2.2
  
-Refer to Table 20.2.2.Net domestic income at market prices equals

Accepted Answer

A) $3,050. 
B) $3,150. 
C) $3,400. 
D) $4,650. 
E) $2,650. 
A) $3,050. 
B) $3,150. 
C) $3,400. 
D) $4,650. 
E) $2,650.

Question 20

The maximum level of real GDP that can be produced while avoiding shortages of labour,capital,land,and entrepreneurial ability that would bring rising inflation is

Accepted Answer

A) real GDP. 
B) nominal GDP. 
C) actual GDP. 
D) potential GDP. 
E) productive GDP. 
A) real GDP. 
B) nominal GDP. 
C) actual GDP. 
D) potential GDP. 
E) productive GDP.

Exam 20: Measuring GDP and Economic Growth

Which of the following are equal to one another? I.aggregate production II.aggregate expenditure III.aggregate income

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 GDP?

All of the following statements are true except

Use the table below to answer the following questions. Table 20.4.1 -Refer to Table 20.4.1.In this table,at 2012 prices,the value of production from 2011 to 2012 has increased by

One of the reasons why real GDP grows is that

The value of intermediate goods is not counted in GDP

To obtain the factor cost of a good from its market price

The business cycle is defined as the

Use the figure below to answer the following questions. Figure 20.3.2 -Refer to Figure 20.3.2.In the figure,a recession begins at point ________ and an expansion begins at point ________.

For the aggregate economy,income equals

Complete the following sentence.Net exports equals

Which one of the following flows from firms to households?

Which one of the following is an income flow from firms to households?

Consumption expenditure includes only ________.

In the Canadian economy,market prices and factor costs would be the same except for

Since non-market exchanges are excluded from measures of GDP,the GDP measure tends to

Suppose the economy's capital increases over the year.It must be true that

Use the table below to answer the following questions. Table 20.2.2 -Refer to Table 20.2.2.Net domestic income at market prices equals

The maximum level of real GDP that can be produced while avoiding shortages of labour,capital,land,and entrepreneurial ability that would bring rising inflation is

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 recession begins at point and an expansion begins at point .