Question 1

The chain-weighted output index

Accepted Answer

A)  uses only the current year's prices to calculate growth in real GDP. 
B)  uses prices for the current year and the previous year to calculate growth in real GDP. 
C)  must be calculated only every other year. 
D)  is an inaccurate way to measure growth in real GDP and so has been replaced by the "nominal-to-real" index. 
A)  uses only the current year's prices to calculate growth in real GDP. 
B)  uses prices for the current year and the previous year to calculate growth in real GDP. 
C)  must be calculated only every other year. 
D)  is an inaccurate way to measure growth in real GDP and so has been replaced by the "nominal-to-real" index.

Question 2

A time series graph can show both the level of a variable and the speed with which the variable changes over time.

Accepted Answer

A) True 
 B)False

Question 3

The circular flow diagram shows only the aggregate expenditures measure of GDP.

Accepted Answer

A) True 
 B)False

Question 4

What is the relationship between gross investment, net investment, and depreciation? Which measures the change in the capital stock?

Accepted Answer

Gross investment minus depreciation equa

Question 5

"As the credit crisis unfolded over the past year, one of the few certainties in the global economy seemed to be China's ability to plough on regardless of double-digit growth rates...The ...crisis has also focused ...on the need to update a growth model that...is still dependent on assembling goods for export without adding much value and on heavy industries that create pollution. Chinese companies have continued to find new foreign markets for their products...several other factors point to a slowing property market...production of steel, cement and air conditioners was down... Retail sales have risen by 23 per cent in each of the last two months".
Beijing's Burden, www.FT.com, by Geoff Dyer, Sept. 23, 2008
-According to the article, ________ is expected to increase and add to China's ________ component of GDP.

Accepted Answer

A)  retail sales; consumption 
B)  retail sales; investment 
C)  rental income; investment 
D)  rental income; exports 
A)  retail sales; consumption 
B)  retail sales; investment 
C)  rental income; investment 
D)  rental income; exports

Question 6

Canada's economy expanded by...0.1 percent in the second quarter...further evidence that the economy has stalled...following a first quarter slip in gross domestic product. The second quarter figures fell well below forecasts of a 0.7 per cent growth in real GDP. Exports....fell for the fourth consecutive quarter. The accumulating gloom is increasingly discouraging business investment. Consumer spending remains strong and corporate profits were at their highest since 2004. "The sources of strength in the second quarter are clearly unsustainable," said Sal Gautieri, senior economist at BMO capital markets.
Canada Avoids Fall into Recession, www.FT.com, by Christopher Mason, August 30, 2008
-According to the article, the best description of Canada's position in the business cycle is

Accepted Answer

A)  at a peak. 
B)  at a trough. 
C)  in an expansion. 
D)  in a recession. 
A)  at a peak. 
B)  at a trough. 
C)  in an expansion. 
D)  in a recession.

Question 7

If depreciation is less than gross investment, then net investment is

Accepted Answer

A)  positive. 
B)  negative. 
C)  zero. 
D)  This situation could never occur because it is impossible for depreciation to be less than gross investment. 
A)  positive. 
B)  negative. 
C)  zero. 
D)  This situation could never occur because it is impossible for depreciation to be less than gross investment.

Question 8

-The above table shows data from the GDP accounts of Hypothetica. Hypothetica's GDP is ________ billion.

Accepted Answer

A)  $270 
B)  $210 
C)  $190 
D)  $160 
A)  $270 
B)  $210 
C)  $190 
D)  $160

Question 9

To measure economic welfare, one needs only to measure real GDP.

Accepted Answer

A) True 
 B)False

Question 10

Trend refers to

Accepted Answer

A)  the scale used on the x- and y-coordinates. 
B)  increases but not decreases of a variable. 
C)  decreases but not increases of a variable. 
D)  a general tendency for a variable to rise or fall. 
A)  the scale used on the x- and y-coordinates. 
B)  increases but not decreases of a variable. 
C)  decreases but not increases of a variable. 
D)  a general tendency for a variable to rise or fall.

Question 11

The underground economy means that GDP will overstate the actual level of economic welfare.

Accepted Answer

A) True 
 B)False

Question 12

In the circular flow model of an economy, households

Accepted Answer

A)  receive income from buyers of goods and services. 
B)  receive income from the sale of factors in the goods markets. 
C)  pay firms for the use of their factors. 
D)  receive income from producers for the use of factors in the factor markets. 
A)  receive income from buyers of goods and services. 
B)  receive income from the sale of factors in the goods markets. 
C)  pay firms for the use of their factors. 
D)  receive income from producers for the use of factors in the factor markets.

Question 13

-The above table shows some (but not all) national income accounting data for a hypothetical country. According to these data, the value of GDP is ________ billion.

Accepted Answer

A)  $2,100 
B)  $1,850 
C)  $2,000 
D)  $2,050 
A)  $2,100 
B)  $1,850 
C)  $2,000 
D)  $2,050

Question 14

-In the above figure, flow B represents

Accepted Answer

A)  household purchases of goods and services. 
B)  household borrowing. 
C)  household income. 
D)  firms' payments for labor services. 
A)  household purchases of goods and services. 
B)  household borrowing. 
C)  household income. 
D)  firms' payments for labor services.

Question 15

________ gross domestic product is the value of ________ linked back to the prices of a single year.

Accepted Answer

A)  Real; total production 
B)  Real; production possibilities 
C)  Productivity; the consumer price index 
D)  Nominal; total production 
A)  Real; total production 
B)  Real; production possibilities 
C)  Productivity; the consumer price index 
D)  Nominal; total production

Question 16

-The figure above shows a

Accepted Answer

A)  two-variable time-series graph. 
B)  time-series graph. 
C)  scatter diagram. 
D)  regression. 
A)  two-variable time-series graph. 
B)  time-series graph. 
C)  scatter diagram. 
D)  regression.

Question 17

The presence of ________ creates a difference in the value between the market price and the factor cost of a product.

Accepted Answer

A)  indirect taxes and consumption 
B)  subsidies and direct taxes 
C)  corporate profits and subsidies 
D)  indirect taxes and subsidies 
A)  indirect taxes and consumption 
B)  subsidies and direct taxes 
C)  corporate profits and subsidies 
D)  indirect taxes and subsidies

Question 18

Real GDP measures the

Accepted Answer

A)  total profits earned by all businesses valued using prices from a single year. 
B)  changes in the prices of output measured in dollars. 
C)  general upward drift in prices. 
D)  value of total production linked to prices of a single year. 
A)  total profits earned by all businesses valued using prices from a single year. 
B)  changes in the prices of output measured in dollars. 
C)  general upward drift in prices. 
D)  value of total production linked to prices of a single year.

Question 19

Real GDP decreases during

Accepted Answer

A)  the movement from trough to peak. 
B)  the movement from below potential GDP back to potential GDP. 
C)  the movement from peak to trough. 
D)  a decrease in unemployment. 
A)  the movement from trough to peak. 
B)  the movement from below potential GDP back to potential GDP. 
C)  the movement from peak to trough. 
D)  a decrease in unemployment.

Question 20

All of the following are included in gross private domestic investment expenditure EXCEPT a

Accepted Answer

A)  business's purchase of a fleet of cars. 
B)  household's purchase of a new house. 
C)  business's purchase of another company's stock. 
D)  a retail store's purchase of shoes to add to its inventory. 
A)  business's purchase of a fleet of cars. 
B)  household's purchase of a new house. 
C)  business's purchase of another company's stock. 
D)  a retail store's purchase of shoes to add to its inventory.

The chain-weighted output index

A time series graph can show both the level of a variable and the speed with which the variable changes over time.

The circular flow diagram shows only the aggregate expenditures measure of GDP.

What is the relationship between gross investment, net investment, and depreciation? Which measures the change in the capital stock?

If depreciation is less than gross investment, then net investment is

-The above table shows data from the GDP accounts of Hypothetica. Hypothetica's GDP is ________ billion.

To measure economic welfare, one needs only to measure real GDP.

Trend refers to

The underground economy means that GDP will overstate the actual level of economic welfare.

In the circular flow model of an economy, households

-The above table shows some (but not all) national income accounting data for a hypothetical country. According to these data, the value of GDP is ________ billion.

-In the above figure, flow B represents

gross domestic product is the value of linked back to the prices of a single year.

-The figure above shows a

The presence of ________ creates a difference in the value between the market price and the factor cost of a product.

Real GDP measures the

Real GDP decreases during

All of the following are included in gross private domestic investment expenditure EXCEPT a

What Is Economics

The Economic Problem

Demand and Supply

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

Exam 4: Measuring Gdp and Economic Growth

The chain-weighted output index

A time series graph can show both the level of a variable and the speed with which the variable changes over time.

The circular flow diagram shows only the aggregate expenditures measure of GDP.

What is the relationship between gross investment, net investment, and depreciation? Which measures the change in the capital stock?

If depreciation is less than gross investment, then net investment is

-The above table shows data from the GDP accounts of Hypothetica. Hypothetica's GDP is ________ billion.

To measure economic welfare, one needs only to measure real GDP.

Trend refers to

The underground economy means that GDP will overstate the actual level of economic welfare.

In the circular flow model of an economy, households

-The above table shows some (but not all) national income accounting data for a hypothetical country. According to these data, the value of GDP is ________ billion.

-In the above figure, flow B represents

________ gross domestic product is the value of ________ linked back to the prices of a single year.

-The figure above shows a

The presence of ________ creates a difference in the value between the market price and the factor cost of a product.

Real GDP measures the

Real GDP decreases during

All of the following are included in gross private domestic investment expenditure EXCEPT a

What Is Economics

The Economic Problem

Demand and Supply

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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

International Trade Policy

Filters

gross domestic product is the value of linked back to the prices of a single year.