Question 1

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 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 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 2

Which of the following relationships is correct?

Accepted Answer

A) Gross Investment = Net Investment + Depreciation 
B) Consumption expenditure = Net Investment - Depreciation 
C) Net Investment = Gross Investment + Depreciation 
D) Depreciation = Gross Investment - Consumption expenditure 
E) Saving = Gross Investment - Taxes 
A) Gross Investment = Net Investment + Depreciation 
B) Consumption expenditure = Net Investment - Depreciation 
C) Net Investment = Gross Investment + Depreciation 
D) Depreciation = Gross Investment - Consumption expenditure 
E) Saving = Gross Investment - Taxes

Question 3

Use the table below to answer the following question.
Table 20.2.7
  
-Table 20.2.7 shows items of income and expenditure in an economy. GDP equals

Accepted Answer

A) $1,242 billion. 
B) $435 billion. 
C) $802 billion. 
D) $875 billion. 
E) $2,267 billion. 
A) $1,242 billion. 
B) $435 billion. 
C) $802 billion. 
D) $875 billion. 
E) $2,267 billion.

Question 4

To derive net domestic income at market prices from GDP (income approach),

Accepted Answer

A) subtract gross investment from GDP. 
B) subtract the statistical discrepancy from GDP. 
C) add the statistical discrepancy to GDP. 
D) subtract depreciation from GDP. 
E) add depreciation to GDP. 
A) subtract gross investment from GDP. 
B) subtract the statistical discrepancy from GDP. 
C) add the statistical discrepancy to GDP. 
D) subtract depreciation from GDP. 
E) add depreciation to GDP.

Question 5

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 2014, A was $100, B was $50, C was $30 and D was $10. How much is net exports?

Accepted Answer

A) $10 
B) $25 
C) $30 
D) $50 
E) $100 
A) $10 
B) $25 
C) $30 
D) $50 
E) $100

Question 6

The four parts of the business cycle occur in the following order:

Accepted Answer

A) recession, trough, peak, expansion. 
B) expansion, trough, peak, recession. 
C) recession, trough, expansion, peak. 
D) expansion, trough, recession, peak. 
E) trough, peak, expansion, recession. 
A) recession, trough, peak, expansion. 
B) expansion, trough, peak, recession. 
C) recession, trough, expansion, peak. 
D) expansion, trough, recession, peak. 
E) trough, peak, expansion, recession.

Question 7

A bakery uses flour to produce bread. When calculating GDP, we include ________, because when we add the value of the flour to the value of the loaf of bread to calculate GDP, the result is ________.

Accepted Answer

A) only the value of the bread sold in a store; double counting 
B) only the value of the flour used to produce the bread; double counting 
C) both the value of the bread sold in a store and the value of the flour used to produce the bread; double counting 
D) both the value of the bread sold in a store and the value of the flour used to produce the bread; the true value of the economy's output 
E) none of the above 
A) only the value of the bread sold in a store; double counting 
B) only the value of the flour used to produce the bread; double counting 
C) both the value of the bread sold in a store and the value of the flour used to produce the bread; double counting 
D) both the value of the bread sold in a store and the value of the flour used to produce the bread; the true value of the economy's output 
E) none of the above

Question 8

Use the table below to answer the following question.
Table 20.4.2
  
-Refer to Table 20.4.2. An economy produces only digital cameras, chocolate bars, and watches. The table gives the quantities produced and prices in 2012 and 2013.
The base year is 2012.
The chained-dollar real GDP in 2013 is

Accepted Answer

A) $34. 
B) $25. 
C) $147. 
D) $109. 
E) $36. 
A) $34. 
B) $25. 
C) $147. 
D) $109. 
E) $36.

Question 9

From the following list, choose the item that would be included in a current measure of GDP.

Accepted Answer

A) the purchase of a previously owned house that was built last year 
B) a social security cheque for $500 
C) the purchase of 10 litres of gasoline for your car 
D) a $2,000 cheque from your Aunt Grace 
E) income from the sale of your Canadian Snowfun stocks 
A) the purchase of a previously owned house that was built last year 
B) a social security cheque for $500 
C) the purchase of 10 litres of gasoline for your car 
D) a $2,000 cheque from your Aunt Grace 
E) income from the sale of your Canadian Snowfun stocks

Question 10

Potential GDP is

Accepted Answer

A) the maximum amount of GDP that can be produced while avoiding shortages of labour, capital, land, and entrepreneurship that would bring rising inflation. 
B) the same as real GDP. 
C) the same as nominal GDP. 
D) equal to real GDP multiplied by the price level. 
E) equal to nominal GDP multiplied by the price level. 
A) the maximum amount of GDP that can be produced while avoiding shortages of labour, capital, land, and entrepreneurship that would bring rising inflation. 
B) the same as real GDP. 
C) the same as nominal GDP. 
D) equal to real GDP multiplied by the price level. 
E) equal to nominal GDP multiplied by the price level.

Question 11

Stock and bond sales are not included in GDP because they

Accepted Answer

A) do not occur in the year in which the production represented by them takes place. 
B) represent corporate production. 
C) represent indebtedness. 
D) are not goods and services. 
E) are not sold in the country in which they are produced. 
A) do not occur in the year in which the production represented by them takes place. 
B) represent corporate production. 
C) represent indebtedness. 
D) are not goods and services. 
E) are not sold in the country in which they are produced.

Question 12

Intermediate goods are

Accepted Answer

A) sold to their ultimate user. 
B) produced by one firm, bought by another firm, and used as a component of a final good or service. 
C) included directly in the measure of GDP. 
D) capital. 
E) purchased this year but consumed in future years. 
A) sold to their ultimate user. 
B) produced by one firm, bought by another firm, and used as a component of a final good or service. 
C) included directly in the measure of GDP. 
D) capital. 
E) purchased this year but consumed in future years.

Question 13

Which approach to measuring GDP is being used when Statistics Canada sums spending on goods and services for consumer goods, government, business investments and net exports?

Accepted Answer

A) value added 
B) income 
C) factor cost 
D) expenditure 
E) opportunity cost 
A) value added 
B) income 
C) factor cost 
D) expenditure 
E) opportunity cost

Question 14

Why is the Human Development Index thought to be a better measure of economic well-being than real GDP per person?

Accepted Answer

A) It includes a measure of resource depletion. 
B) It ignores health, which is hard to measure. 
C) It includes leisure time and household production. 
D) It includes health and education measures, as well as real GDP per person. 
E) It includes only health and education measures, ignoring real GDP per person. 
A) It includes a measure of resource depletion. 
B) It ignores health, which is hard to measure. 
C) It includes leisure time and household production. 
D) It includes health and education measures, as well as real GDP per person. 
E) It includes only health and education measures, ignoring real GDP per person.

Question 15

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 16

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 17

Use the information below to answer the following questions.
Fact 20.1.2
Classify each of the following items as a final good or an intermediate good, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services:
Item 1. A DVD bought by a household
Item 2. A new airplane bought by WestJet
Item 3. Aluminum sheets bought by Boeing
Item 4. A new limousine for the prime minister
-Refer to Fact 20.1.2. Item 3 is ________ and item 4 is ________.

Accepted Answer

A) an intermediate good; a final good that is government expenditure 
B) a final good that is investment; a final good that is investment 
C) a final good that is investment; a final good that is government expenditure 
D) an intermediate good; a final good that is investment 
E) a final good that is investment; an intermediate good 
A) an intermediate good; a final good that is government expenditure 
B) a final good that is investment; a final good that is investment 
C) a final good that is investment; a final good that is government expenditure 
D) an intermediate good; a final good that is investment 
E) a final good that is investment; an intermediate good

Question 18

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.

Question 19

What we produce during our working time is ________ as part of GDP and the enjoyment we gain from our leisure time is ________ as part of GDP.

Accepted Answer

A) included; included 
B) not included; not included 
C) included; not included 
D) not included; included 
E) included; sometimes but not always included 
A) included; included 
B) not included; not included 
C) included; not included 
D) not included; included 
E) included; sometimes but not always included

Question 20

Use the information below to answer the following questions.
Fact 20.1.3
The components and robots for Toyota auto assembly lines in Canada are built in Japan. Toyota assembles cars for the Canadian market in Ontario.
-Refer to Fact 20.1.3. Choose the correct statement.

Accepted Answer

A) The assembly line components and robots appear as exports in Canada's GDP. 
B) The assembly line components and robots appear as investment in Canada's GDP. 
C) The assembly line components and robots appear as a positive entry in calculating Canada's GDP. 
D) The assembly line components and robots appear as imports in Canada's GDP. 
E) The assembly line components and robots appear as consumption expenditure in Canada's GDP. 
A) The assembly line components and robots appear as exports in Canada's GDP. 
B) The assembly line components and robots appear as investment in Canada's GDP. 
C) The assembly line components and robots appear as a positive entry in calculating Canada's GDP. 
D) The assembly line components and robots appear as imports in Canada's GDP. 
E) The assembly line components and robots appear as consumption expenditure in Canada's GDP.

Exam 20: Measuring Gdp and Economic Growth

The value of intermediate goods is not counted in GDP

Which of the following relationships is correct?

Use the table below to answer the following question. Table 20.2.7 -Table 20.2.7 shows items of income and expenditure in an economy. GDP equals

To derive net domestic income at market prices from GDP (income approach),

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 2014, A was $100, B was $50, C was $30 and D was $10. How much is net exports?

The four parts of the business cycle occur in the following order:

A bakery uses flour to produce bread. When calculating GDP, we include ________, because when we add the value of the flour to the value of the loaf of bread to calculate GDP, the result is ________.

Use the table below to answer the following question. Table 20.4.2 -Refer to Table 20.4.2. An economy produces only digital cameras, chocolate bars, and watches. The table gives the quantities produced and prices in 2012 and 2013. The base year is 2012. The chained-dollar real GDP in 2013 is

From the following list, choose the item that would be included in a current measure of GDP.

Potential GDP is

Stock and bond sales are not included in GDP because they

Intermediate goods are

Which approach to measuring GDP is being used when Statistics Canada sums spending on goods and services for consumer goods, government, business investments and net exports?

Why is the Human Development Index thought to be a better measure of economic well-being than real GDP per person?

The business cycle is defined as the

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

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 we produce during our working time is ________ as part of GDP and the enjoyment we gain from our leisure time is ________ as part of GDP.

Use the information below to answer the following questions. Fact 20.1.3 The components and robots for Toyota auto assembly lines in Canada are built in Japan. Toyota assembles cars for the Canadian market in Ontario. -Refer to Fact 20.1.3. Choose the correct statement.

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

A bakery uses flour to produce bread. When calculating GDP, we include , because when we add the value of the flour to the value of the loaf of bread to calculate GDP, the result is .

What we produce during our working time is as part of GDP and the enjoyment we gain from our leisure time is as part of GDP.