Question 1

Which of the following statements is true?

Accepted Answer

A) Final goods and services produced abroad by Canadians are part of Canadian GDP. 
B) Final goods and services produced in Canada by foreigners are part of the foreign country's GDP. 
C) Final goods and services produced in Canada by foreigners are part of Canada's GDP. 
D) Final goods and services produced in Canada by foreigners are imports. 
E) Final goods and services produced in Canada by foreigners are exports. 
A) Final goods and services produced abroad by Canadians are part of Canadian GDP. 
B) Final goods and services produced in Canada by foreigners are part of the foreign country's GDP. 
C) Final goods and services produced in Canada by foreigners are part of Canada's GDP. 
D) Final goods and services produced in Canada by foreigners are imports. 
E) Final goods and services produced in Canada by foreigners are exports. C

Question 2

Real GDP

Accepted Answer

A) fluctuates from year to year but is always below potential GDP. 
B) grows at a constant 3 percent per year. 
C) fluctuates around potential GDP. 
D) equals potential GDP when the price level is constant. 
E) equals potential GDP in the base year. 
A) fluctuates from year to year but is always below potential GDP. 
B) grows at a constant 3 percent per year. 
C) fluctuates around potential GDP. 
D) equals potential GDP when the price level is constant. 
E) equals potential GDP in the base year. C

Question 3

The largest component of GDP using the expenditure approach is

Accepted Answer

A) investment. 
B) consumption expenditure. 
C) exports. 
D) government expenditure. 
E) imports. 
A) investment. 
B) consumption expenditure. 
C) exports. 
D) government expenditure. 
E) imports. B

Question 4

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 5

A recession is a period with

Accepted Answer

A) negative growth rate in real GDP that lasts at least one quarter. 
B) positive growth rate in real GDP that lasts at least one quarter. 
C) positive growth rate in real GDP that lasts at least two quarters. 
D) negative growth rate in real GDP that lasts at least two quarters. 
E) a slowdown in real GDP growth but not necessarily negative real GDP growth. 
A) negative growth rate in real GDP that lasts at least one quarter. 
B) positive growth rate in real GDP that lasts at least one quarter. 
C) positive growth rate in real GDP that lasts at least two quarters. 
D) negative growth rate in real GDP that lasts at least two quarters. 
E) a slowdown in real GDP growth but not necessarily negative real GDP growth.

Question 6

Use the table below to answer the following question.
Table 20.2.8

-Refer to Table 20.2.8. The base year is 2013 and the table gives the quantities produced and the prices in 2013 and 2014. Real GDP in 2014 using the base-year method is

Accepted Answer

A) $6,400. 
B) $6,100. 
C) $5,900. 
D) $5,800. 
E) $7,100. 
A) $6,400. 
B) $6,100. 
C) $5,900. 
D) $5,800. 
E) $7,100.

Question 7

If you want to investigate the claim that more goods and services were produced in the economy during 2014 than 2015, what should you study?

Accepted Answer

A) real GDP 
B) nominal GDP 
C) intermediate GDP 
D) GDP calculated using the expenditure approach 
E) GDP calculated using the income approach 
A) real GDP 
B) nominal GDP 
C) intermediate GDP 
D) GDP calculated using the expenditure approach 
E) GDP calculated using the income approach

Question 8

Which of the following is not correct?

Accepted Answer

A) Investment is the purchase of new plant, equipment, and buildings and the additions to inventories. 
B) Net investment equals gross investment minus depreciation. 
C) Depreciation decreases the value of a firm's capital. 
D) Gross investment is the amount by which the value of capital increases. 
E) Gross investment is the total amount spent buying new capital and replacing depreciated capital. 
A) Investment is the purchase of new plant, equipment, and buildings and the additions to inventories. 
B) Net investment equals gross investment minus depreciation. 
C) Depreciation decreases the value of a firm's capital. 
D) Gross investment is the amount by which the value of capital increases. 
E) Gross investment is the total amount spent buying new capital and replacing depreciated capital.

Question 9

Suppose the economy of Econoworld produces only two goods, kayaks and birdseed. In one year 20 kayaks are produced and sold for $1,000 each and 10 bags of birdseed are produced and sold for $30 each. The value of nominal GDP for this year is

Accepted Answer

A) $20,000. 
B) $300. 
C) $20,300. 
D) $23,000. 
E) 20 kayaks plus 10 bags of birdseed. 
A) $20,000. 
B) $300. 
C) $20,300. 
D) $23,000. 
E) 20 kayaks plus 10 bags of birdseed.

Question 10

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 11

Use the information below to answer the following questions.
Fact 20.1.1
At the beginning of 2014, 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 2014, 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 2014 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 12

At 2012 prices, the value of production in 2013 was 2 percentage points higher than in 2012. At 2013 prices, the value of production in 2013 was 4 percentage points higher than in 2012.
The chained-dollar real GDP is ________ in 2013 than in 2012.

Accepted Answer

A) 4 percent greater 
B) 3 percent greater 
C) 3 percent smaller 
D) 2 percent smaller 
E) 2 percent greater 
A) 4 percent greater 
B) 3 percent greater 
C) 3 percent smaller 
D) 2 percent smaller 
E) 2 percent greater

Question 13

Capital in year 2015 equals capital in year 2014

Accepted Answer

A) minus depreciation. 
B) plus net investment plus depreciation. 
C) plus gross investment. 
D) plus net investment. 
E) plus net investment minus depreciation. 
A) minus depreciation. 
B) plus net investment plus depreciation. 
C) plus gross investment. 
D) plus net investment. 
E) plus net investment minus depreciation.

Question 14

Use the information below to answer the following questions.
Fact 20.1.1
At the beginning of 2014, 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 2014, 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 2014 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.

Question 15

Which of the following increases Canadian GDP?

Accepted Answer

A) I shovel my own driveway. 
B) I sell my used Honda. 
C) The production and sale of flour to a bakery 
D) The purchase of a CD made in China 
E) The ice cream I buy from my grocery store 
A) I shovel my own driveway. 
B) I sell my used Honda. 
C) The production and sale of flour to a bakery 
D) The purchase of a CD made in China 
E) The ice cream I buy from my grocery store

Question 16

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 net domestic income at factor cost is

Accepted Answer

A) $1,280. 
B) $1,290. 
C) $1,360. 
D) $1,060. 
E) $1,100. 
A) $1,280. 
B) $1,290. 
C) $1,360. 
D) $1,060. 
E) $1,100.

Question 17

Use the table below to answer the following question.
Table 20.4.4
  
-Refer to Table 20.4.4. The table provides data on the economy of Tropical Republic that produces only bananas and coconuts. Nominal GDP in 2013 is ________. Nominal GDP in 2014 is ________.

Accepted Answer

A) $7,500; $7,000 
B) $7,472.50; $7,000 
C) $7,000; $7,500 
D) $7,472.50; $7,500 
E) $1,500; $1,625 
A) $7,500; $7,000 
B) $7,472.50; $7,000 
C) $7,000; $7,500 
D) $7,472.50; $7,500 
E) $1,500; $1,625

Question 18

In comparing the United States and China we find that

Accepted Answer

A) real GDP per person is about the same in the two countries. 
B) U.S. real GDP per person is less than China's real GDP per person once we adjust for currency differences. 
C) China's real GDP per person is less than real GDP per person in the United States. 
D) U.S. real GDP per person is much larger than China's real GDP per person when purchasing power parity prices are used but is less than China's real GDP per person when exchange rate prices are used. 
E) the standard of living is higher in China than in the United States. 
A) real GDP per person is about the same in the two countries. 
B) U.S. real GDP per person is less than China's real GDP per person once we adjust for currency differences. 
C) China's real GDP per person is less than real GDP per person in the United States. 
D) U.S. real GDP per person is much larger than China's real GDP per person when purchasing power parity prices are used but is less than China's real GDP per person when exchange rate prices are used. 
E) the standard of living is higher in China than in the United States.

Question 19

Use the table below to answer the following questions.
Table 20.2.4
  
-Refer to Table 20.2.4. Net investment is equal to

Accepted Answer

A) $250. 
B) $210. 
C) $510. 
D) $560. 
E) $150. 
A) $250. 
B) $210. 
C) $510. 
D) $560. 
E) $150.

Question 20

Which one of the following is not an example of investment in the expenditure approach to measuring GDP? General Motors

Accepted Answer

A) buys a new auto stamping machine. 
B) adds 500 new cars to inventories. 
C) buys shares in another company. 
D) builds another assembly plant. 
E) replaces some worn-out stamping machines. 
A) buys a new auto stamping machine. 
B) adds 500 new cars to inventories. 
C) buys shares in another company. 
D) builds another assembly plant. 
E) replaces some worn-out stamping machines.

Exam 20: Measuring Gdp and Economic Growth

Which of the following statements is true?

Real GDP

The largest component of GDP using the expenditure approach is

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.

A recession is a period with

Use the table below to answer the following question. Table 20.2.8 -Refer to Table 20.2.8. The base year is 2013 and the table gives the quantities produced and the prices in 2013 and 2014. Real GDP in 2014 using the base-year method is

If you want to investigate the claim that more goods and services were produced in the economy during 2014 than 2015, what should you study?

Which of the following is not correct?

Suppose the economy of Econoworld produces only two goods, kayaks and birdseed. In one year 20 kayaks are produced and sold for $1,000 each and 10 bags of birdseed are produced and sold for $30 each. The value of nominal GDP for this year is

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

At 2012 prices, the value of production in 2013 was 2 percentage points higher than in 2012. At 2013 prices, the value of production in 2013 was 4 percentage points higher than in 2012. The chained-dollar real GDP is ________ in 2013 than in 2012.

Capital in year 2015 equals capital in year 2014

Which of the following increases Canadian GDP?

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 net domestic income at factor cost is

Use the table below to answer the following question. Table 20.4.4 -Refer to Table 20.4.4. The table provides data on the economy of Tropical Republic that produces only bananas and coconuts. Nominal GDP in 2013 is ________. Nominal GDP in 2014 is ________.

In comparing the United States and China we find that

Use the table below to answer the following questions. Table 20.2.4 -Refer to Table 20.2.4. Net investment is equal to

Which one of the following is not an example of investment in the expenditure approach to measuring GDP? General Motors

What Is Economics

The Economic Problem

Demand and Supply

Elasticity

Efficiency and Equity

Governments 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 Business Cycle, Inflation, and Deflation

Fiscal Policy

Monetary Policy

Macro Only: International Trade Policy

Filters

Use the table below to answer the following question. Table 20.4.4 -Refer to Table 20.4.4. The table provides data on the economy of Tropical Republic that produces only bananas and coconuts. Nominal GDP in 2013 is . Nominal GDP in 2014 is .