Question 1

The income approach to calculating GDP includes

Accepted Answer

A) exports of income earned. 
B) net interest income. 
C) consumer spending. 
D) government surpluses. 
E) investment. 
A) exports of income earned. 
B) net interest income. 
C) consumer spending. 
D) government surpluses. 
E) investment.

Question 2

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000
In taxes. Acme's profit is

Accepted Answer

A) $25,000. 
B) $15,000. 
C) $2,000. 
D) $0. 
E) $3,000. 
A) $25,000. 
B) $15,000. 
C) $2,000. 
D) $0. 
E) $3,000.

Question 3

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by
this table: $$\begin{array} { | l | l | l | } 
\hline & \text { Pens } & \text { Pencils } \
\hline \text { Year 1 quantity } & 15 & 10 \
\hline \text { Year 1 price } & \$ 12 & \$ 12 \
\hline \text { Year 2 quantity } & 17 & 12 \
\hline \text { Year 2 price } & \$ 14 & \$ 15 \
\hline
\end{array}$$
-What is the inflation rate using base year 1?

Accepted Answer

A) 25% 
B) 15% 
C) 13% 
D) 10% 
E) 20% 
A) 25% 
B) 15% 
C) 13% 
D) 10% 
E) 20%

Question 4

Investment spending is

Accepted Answer

A) less volatile than GDP. 
B) less volatile than consumption. 
C) a smaller share of GDP than consumption. 
D) the share of stock prices to GDP. 
E) a larger share of GDP than consumption. 
A) less volatile than GDP. 
B) less volatile than consumption. 
C) a smaller share of GDP than consumption. 
D) the share of stock prices to GDP. 
E) a larger share of GDP than consumption.

Question 5

Suppose that g1 represents the ratio of year 2 GDP to year 1 GDP, both valued at year 1 prices. Suppose that g2 represents the ratio of year 2 GDP to year 1 GDP, both valued at year 2 prices.
The ratio of chain-weighted year 2 GDP to chain-weighted year 1 GDP equals

Accepted Answer

A)  $\sqrt { g 1 \times g 2 }$. 
B)  $\sqrt { g 1 / g 1 }$. 
C)  $( g 1 + g 2 ) / 2$. 
D)  $( \sqrt { g 1 } + \sqrt { g 2 } ) / 2$. 
E)  $( g 1 \times g 2 ) / 2$. 
A)  $\sqrt { g 1 \times g 2 }$. 
B)  $\sqrt { g 1 / g 1 }$. 
C)  $( g 1 + g 2 ) / 2$. 
D)  $( \sqrt { g 1 } + \sqrt { g 2 } ) / 2$. 
E)  $( g 1 \times g 2 ) / 2$.

Question 6

The expenditure approach to calculating GDP includes

Accepted Answer

A) all forms of taxation. 
B) investment. 
C) corporate profits. 
D) wage income. 
E) the sum of government spending on goods and services, transfer payments, and interest on the national debt. 
A) all forms of taxation. 
B) investment. 
C) corporate profits. 
D) wage income. 
E) the sum of government spending on goods and services, transfer payments, and interest on the national debt.

Question 7

Intermediate goods are

Accepted Answer

A) not a consumption good. 
B) purchased by consumers. 
C) goods that are produced and used as inputs into the production process. 
D) sold to foreigners. 
E) irrelevant in the overall economy. 
A) not a consumption good. 
B) purchased by consumers. 
C) goods that are produced and used as inputs into the production process. 
D) sold to foreigners. 
E) irrelevant in the overall economy.

Question 8

The components of investment expenditures include

Accepted Answer

A) investment in health care. 
B) investment in stocks and bonds. 
C) investment in consumer's education. 
D) investment in plant and equipment abroad. 
E) residential investment. 
A) investment in health care. 
B) investment in stocks and bonds. 
C) investment in consumer's education. 
D) investment in plant and equipment abroad. 
E) residential investment.

Question 9

The income-expenditure identity is best paraphrased as

Accepted Answer

A) all spending generates income. 
B) all income is spent. 
C) all profits are used for investment spending. 
D) on average, consumers cannot save. 
E) on average, government can spend no more than what it collects in income taxes. 
A) all spending generates income. 
B) all income is spent. 
C) all profits are used for investment spending. 
D) on average, consumers cannot save. 
E) on average, government can spend no more than what it collects in income taxes.

Question 10

Gross domestic product is defined as

Accepted Answer

A) the value of all goods produced in the economy in a given time period within the borders of Canada. 
B) the total market value of the final goods and services produced during a given time period within the borders of Canada. 
C) the total market value of all the intermediate goods and services produced in the economy for a given time period within the borders of Canada. 
D) the market value of all goods and services produced in the economy during a given time period within the borders of Canada. 
E) the market value of all goods and services produced by Canadian residents domestically and abroad. 
A) the value of all goods produced in the economy in a given time period within the borders of Canada. 
B) the total market value of the final goods and services produced during a given time period within the borders of Canada. 
C) the total market value of all the intermediate goods and services produced in the economy for a given time period within the borders of Canada. 
D) the market value of all goods and services produced in the economy during a given time period within the borders of Canada. 
E) the market value of all goods and services produced by Canadian residents domestically and abroad.

Question 11

Suppose that the government collects $3 million in taxes, pays $2 million in Employment Insurance benefits, pays $0.5 million in interest on the national debt, and pays workers $1 million
To sit at their desks and work as little as possible. The government's contribution to GDP is

Accepted Answer

A) $3 million. 
B) $0. 
C) $3.5 million. 
D) $1 million. 
E) $1.5 million. 
A) $3 million. 
B) $0. 
C) $3.5 million. 
D) $1 million. 
E) $1.5 million.

Question 12

Inventory investment consists of

Accepted Answer

A) goods in process, raw materials, and purchases of office machinery. 
B) raw materials, goods in process, and construction expenditures. 
C) used finished goods. 
D) construction expenditures, raw materials, and inventories of finished goods. 
E) inventories of finished goods, goods in process, and raw materials. 
A) goods in process, raw materials, and purchases of office machinery. 
B) raw materials, goods in process, and construction expenditures. 
C) used finished goods. 
D) construction expenditures, raw materials, and inventories of finished goods. 
E) inventories of finished goods, goods in process, and raw materials.

Question 13

the three approaches to measuring GDP are called the

Accepted Answer

A) accounting approach, the statistical approach, and the product approach. 
B) product approach, the income approach, and the expenditure approach. 
C) product approach, the cost approach, and the expenditure approach. 
D) accounting approach, the income approach, and the expenditure approach. 
E) accounting approach, the statistical approach, and the income approach. 
A) accounting approach, the statistical approach, and the product approach. 
B) product approach, the income approach, and the expenditure approach. 
C) product approach, the cost approach, and the expenditure approach. 
D) accounting approach, the income approach, and the expenditure approach. 
E) accounting approach, the statistical approach, and the income approach.

Question 14

Problems with interpreting the unemployment rate as a measure of labour market tightness include

Accepted Answer

A) discouraged workers and variations in how intensively the unemployed search for work. 
B) the rental vacancy rate. 
C) biases in the CPI and dissatisfied workers. 
D) variations in how intensively the unemployed search for work and biases in the CPI. 
E) dissatisfied workers and discouraged workers. 
A) discouraged workers and variations in how intensively the unemployed search for work. 
B) the rental vacancy rate. 
C) biases in the CPI and dissatisfied workers. 
D) variations in how intensively the unemployed search for work and biases in the CPI. 
E) dissatisfied workers and discouraged workers.

Question 15

Suppose that in a given country in a given year, GNP equals $2,000, investment expenditures equal $200, government expenditures equal $150, and the current account surplus equals $50.
Consumption expenditures therefore equals

Accepted Answer

A) $160. 
B) $230. 
C) $1,000. 
D) $140. 
E) $120. 
A) $160. 
B) $230. 
C) $1,000. 
D) $140. 
E) $120.

Question 16

GDP may inaccurately measure the value of aggregate output because it may not properly account for

Accepted Answer

A) the proper value of purchases and sales of used goods and depreciation of consumer durables. 
B) production in the underground economy and the true value of government production. 
C) all services produced. 
D) the true value of government production and the proper value of purchases and sales of used goods. 
E) the depreciation of consumer durables and production in the underground economy. 
A) the proper value of purchases and sales of used goods and depreciation of consumer durables. 
B) production in the underground economy and the true value of government production. 
C) all services produced. 
D) the true value of government production and the proper value of purchases and sales of used goods. 
E) the depreciation of consumer durables and production in the underground economy.

Question 17

The product approach to calculating GDP values government production at

Accepted Answer

A) its intermediate costs. 
B) market prices. 
C) its estimated value to society. 
D) the total amount of taxes it collects. 
E) its cost of production. 
A) its intermediate costs. 
B) market prices. 
C) its estimated value to society. 
D) the total amount of taxes it collects. 
E) its cost of production.

Question 18

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by
this table: $$\begin{array} { | l | l | l | } 
\hline & \text { Pens } & \text { Pencils } \
\hline \text { Year 1 quantity } & 15 & 10 \
\hline \text { Year 1 price } & \$ 12 & \$ 12 \
\hline \text { Year 2 quantity } & 17 & 12 \
\hline \text { Year 2 price } & \$ 14 & \$ 15 \
\hline
\end{array}$$
-What is the real GDP in year 1 using base year 2?

Accepted Answer

A) $360 
B) $418 
C) $294 
D) $300 
E) $338 
A) $360 
B) $418 
C) $294 
D) $300 
E) $338

Question 19

Discouraged workers are

Accepted Answer

A) those who would like to find a second job to supplement their income, but have not yet found one. 
B) those who have given up looking for work, even though they would like to be employed. 
C) those who quit working because they are dissatisfied with their jobs. 
D) those who only work in the summer months. 
E) those who unmotivated workers who bring down a country's productivity. 
A) those who would like to find a second job to supplement their income, but have not yet found one. 
B) those who have given up looking for work, even though they would like to be employed. 
C) those who quit working because they are dissatisfied with their jobs. 
D) those who only work in the summer months. 
E) those who unmotivated workers who bring down a country's productivity.

Question 20

The implicit GDP price deflator can be defined as

Accepted Answer

A) the consumer price index. 
B) (Nominal GDP + Real GDP)/ 2. 
C) (Real GDP / Nominal GDP) 100. 
D) Nominal GDP - Real GDP. 
E) (Nominal GDP / Real GDP) 100. 
A) the consumer price index. 
B) (Nominal GDP + Real GDP)/ 2. 
C) (Real GDP / Nominal GDP) 100. 
D) Nominal GDP - Real GDP. 
E) (Nominal GDP / Real GDP) 100.

The income approach to calculating GDP includes

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 In taxes. Acme's profit is

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table: Pens Pencils Year 1 quantity 15 10 Year 1 price \ 12 \ 12 Year 2 quantity 17 12 Year 2 price \ 14 \ 15 -What is the inflation rate using base year 1?

Investment spending is

Suppose that g1 represents the ratio of year 2 GDP to year 1 GDP, both valued at year 1 prices. Suppose that g2 represents the ratio of year 2 GDP to year 1 GDP, both valued at year 2 prices. The ratio of chain-weighted year 2 GDP to chain-weighted year 1 GDP equals

The expenditure approach to calculating GDP includes

Intermediate goods are

The components of investment expenditures include

The income-expenditure identity is best paraphrased as

Gross domestic product is defined as

Suppose that the government collects $3 million in taxes, pays $2 million in Employment Insurance benefits, pays $0.5 million in interest on the national debt, and pays workers $1 million To sit at their desks and work as little as possible. The government's contribution to GDP is

Inventory investment consists of

the three approaches to measuring GDP are called the

Problems with interpreting the unemployment rate as a measure of labour market tightness include

Suppose that in a given country in a given year, GNP equals $2,000, investment expenditures equal $200, government expenditures equal $150, and the current account surplus equals $50. Consumption expenditures therefore equals

GDP may inaccurately measure the value of aggregate output because it may not properly account for

The product approach to calculating GDP values government production at

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table: Pens Pencils Year 1 quantity 15 10 Year 1 price \ 12 \ 12 Year 2 quantity 17 12 Year 2 price \ 14 \ 15 -What is the real GDP in year 1 using base year 2?

Discouraged workers are

The implicit GDP price deflator can be defined as

Introduction

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters

Exam 2: Measurement

The income approach to calculating GDP includes

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 In taxes. Acme's profit is

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table: Pens Pencils Year 1 quantity 15 10 Year 1 price \ 12 \ 12 Year 2 quantity 17 12 Year 2 price \ 14 \ 15 -What is the inflation rate using base year 1?

Investment spending is

Suppose that g1 represents the ratio of year 2 GDP to year 1 GDP, both valued at year 1 prices. Suppose that g2 represents the ratio of year 2 GDP to year 1 GDP, both valued at year 2 prices. The ratio of chain-weighted year 2 GDP to chain-weighted year 1 GDP equals

The expenditure approach to calculating GDP includes

Intermediate goods are

The components of investment expenditures include

The income-expenditure identity is best paraphrased as

Gross domestic product is defined as

Suppose that the government collects $3 million in taxes, pays $2 million in Employment Insurance benefits, pays $0.5 million in interest on the national debt, and pays workers $1 million To sit at their desks and work as little as possible. The government's contribution to GDP is

Inventory investment consists of

the three approaches to measuring GDP are called the

Problems with interpreting the unemployment rate as a measure of labour market tightness include

Suppose that in a given country in a given year, GNP equals $2,000, investment expenditures equal $200, government expenditures equal $150, and the current account surplus equals $50. Consumption expenditures therefore equals

GDP may inaccurately measure the value of aggregate output because it may not properly account for

The product approach to calculating GDP values government production at

For the following question(s), suppose an economy produces only pens and pencils, and that the quantity and price data is given by this table: Pens Pencils Year 1 quantity 15 10 Year 1 price \ 12 \ 12 Year 2 quantity 17 12 Year 2 price \ 14 \ 15 -What is the real GDP in year 1 using base year 2?

Discouraged workers are

The implicit GDP price deflator can be defined as

Introduction

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

Income Disparity Among Countries and Endogenous Growth

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model With Investment

Money, Banking, Prices, and Monetary Policy

Business Cycle Models With Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: a Deeper Look

Filters