Question 1

Total transfer payments are included in GDP because the recipients of these payments are providing an exchangeable good or service.

Accepted Answer

A) True 
 B)False

Question 2

The value of the housing service provided to individuals who live in housing they own themselves is included in GDP by:

Accepted Answer

A) estimating the rental value of the housing 
B) using the monthly mortgage payment 
C) using the purchase price of the house 
D) none of the above.Because the value cannot be measured directly, it is excluded. 
A) estimating the rental value of the housing 
B) using the monthly mortgage payment 
C) using the purchase price of the house 
D) none of the above.Because the value cannot be measured directly, it is excluded.

Question 3

Macroeconomics is the study of economy-wide phenomena including inflation, unemployment and economic growth.

Accepted Answer

A) True 
 B)False

Question 4

Value added is

Accepted Answer

A) used to measure GDP under the spending approach 
B) the final sales value of a firm's output 
C) the value of a firm's output plus the value of intermediate goods used in production 
D) the value of a firm's output minus the value of intermediate goods used in production 
A) used to measure GDP under the spending approach 
B) the final sales value of a firm's output 
C) the value of a firm's output plus the value of intermediate goods used in production 
D) the value of a firm's output minus the value of intermediate goods used in production

Question 5

Capital income (profits, rental payments and interest payments) is the largest component of income.

Accepted Answer

A) True 
 B)False

Question 6

For the year 2005, nominal GDP is $10 billion and real GDP is $11 billion, so the GDP deflator is 110.

Accepted Answer

A) True 
 B)False

Question 7

Why does GDP include next exports instead of simply exports?

Accepted Answer

Imports need to be subtracted

Question 8

International studies show that higher GDP per person is associated with higher levels of literacy and greater life expectancy.

Accepted Answer

A) True 
 B)False

Question 9

Gross domestic product measures:

Accepted Answer

A) the total income of everyone in the economy 
B) the total expenditure on the economy's output of goods and services 
C) both A and B 
D) neither A nor B 
A) the total income of everyone in the economy 
B) the total expenditure on the economy's output of goods and services 
C) both A and B 
D) neither A nor B

Question 10

Over time, the three measures of GDP tend to arrive at the same result.

Accepted Answer

A) True 
 B)False

Question 11

Consumption is spending by households on goods and services, including household purchases of new housing.

Accepted Answer

A) True 
 B)False

Question 12

Sales of used cars are not part of GDP.

Accepted Answer

A) True 
 B)False

Question 13

All government outlays are part of GDP.

Accepted Answer

A) True 
 B)False

Question 14

Sandra decides to hire her neighbour's son to water her lawn and feed her dog this year instead of doing those tasks herself as she did last year.Since the same work is done in either case, GDP is unaffected by the change.

Accepted Answer

A) True 
 B)False

Question 15

If the total GDP in 2011 was $1302 billion, where consumption expenditure equals $713 million, investment = $285 million, government = $308, the net exports would:

Accepted Answer

A) be 0.4% of the total GDP 
B) equal $5 million 
C) both a and b 
D) have been negative as import spending is greater than export receipts 
A) be 0.4% of the total GDP 
B) equal $5 million 
C) both a and b 
D) have been negative as import spending is greater than export receipts

Question 16

Cyclical adjustments are used by statisticians to ensure that the higher production in certain times of the year is kept in perspective.

Accepted Answer

A) True 
 B)False

Question 17

GDP is considered a good measure of economic wellbeing.However, GDP is not a perfect measure of wellbeing.Why? Discuss factors that are not included in GDP but that affect whether people are better off.

Accepted Answer

GDP is not a perfect measure of wellbein

Question 18

GDP measures an economy's total expenditure on second-hand goods and services produced within a country in a given period of time.

Accepted Answer

A) True 
 B)False

Question 19

The government reports that GDP increased at an annual rate of four per cent for the third quarter of 1999.This means that GDP was four per cent higher at the end of the third quarter than at the beginning of the quarter.

Accepted Answer

A) True 
 B)False

Question 20

What is the process used to separate the change in GDP due to an increased output of goods and services, from the change due to increased prices? Why do we make this distinction?

Accepted Answer

The process is to calculate real GDP as

Exam 24: Measuring a Nations Income

Total transfer payments are included in GDP because the recipients of these payments are providing an exchangeable good or service.

The value of the housing service provided to individuals who live in housing they own themselves is included in GDP by:

Macroeconomics is the study of economy-wide phenomena including inflation, unemployment and economic growth.

Value added is

Capital income (profits, rental payments and interest payments) is the largest component of income.

For the year 2005, nominal GDP is $10 billion and real GDP is $11 billion, so the GDP deflator is 110.

Why does GDP include next exports instead of simply exports?

International studies show that higher GDP per person is associated with higher levels of literacy and greater life expectancy.

Gross domestic product measures:

Over time, the three measures of GDP tend to arrive at the same result.

Consumption is spending by households on goods and services, including household purchases of new housing.

Sales of used cars are not part of GDP.

All government outlays are part of GDP.

Sandra decides to hire her neighbour's son to water her lawn and feed her dog this year instead of doing those tasks herself as she did last year.Since the same work is done in either case, GDP is unaffected by the change.

If the total GDP in 2011 was $1302 billion, where consumption expenditure equals $713 million, investment = $285 million, government = $308, the net exports would:

Cyclical adjustments are used by statisticians to ensure that the higher production in certain times of the year is kept in perspective.

GDP is considered a good measure of economic wellbeing.However, GDP is not a perfect measure of wellbeing.Why? Discuss factors that are not included in GDP but that affect whether people are better off.

GDP measures an economy's total expenditure on second-hand goods and services produced within a country in a given period of time.

The government reports that GDP increased at an annual rate of four per cent for the third quarter of 1999.This means that GDP was four per cent higher at the end of the third quarter than at the beginning of the quarter.

What is the process used to separate the change in GDP due to an increased output of goods and services, from the change due to increased prices? Why do we make this distinction?

Ten Lessons From Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Elasticity and Its Application

Supply, Demand and Government Policies

Consumers, Producers and the Efficiency of Markets

Application: the Costs of Taxation

Application: International Trade

Externalities

Public Goods and Common Resources

The Design of the Tax System

The Costs of Production

Firms in Competitive Markets

Monopoly

Monopolistic Competition

Business Strategy and Oligopoly

Competition Policy

The Markets for the Factors of Production

Earnings, Unions and Discrimination

Income Inequity and Poverty

The Theory of Consumer Choice

Frontiers of Microeconomics

Measuring the Cost of Living

Production and Growth

Saving, Investment and the Financial System

The Natural Rate of Unemployment

The Monetary System

Inflation: Its Causes and Costs

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Trade-Off Between Inflation and Unemployment

Global Financial Crisis of 2008 and Beyond

Five Debates Over Macroeconomic Policy

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