Exam 5: Measuring a Nations Income

Statistics Canada provides the following data on domestic expenditure. Fill in the missing data in the table.

What prices are used to compute real GDP?

If a province with legalized gambling made gambling illegal, then, other things the same, what would happen to GDP?

How is the estimated rental value of owner-occupied housing treated in GDP computations?

-Suppose that the country of Samiam produces only eggs and ham. In 2010 it produced 100 units of eggs at $3 each and 50 units of ham at $4 each. In 2006, the base year, eggs sold for $1.50 per unit and ham sold for $5 per unit. What can we conclude?

How are intermediate goods accounted for when calculating GDP?

If real GDP doubles and the GDP deflator doubles, what will happen to nominal GDP?

What do international GDP and socioeconomic data show?

A country reported a nominal GDP of $115 billion in 2007 and $125 billion in 2006, and reported a GDP deflator of 85 in 2007 and 100 in 2006. What happened to real output and prices from 2006 to 2007?

After the terrorist attacks on September 11, 2001, governments raised expenditures to increase security at airports. How are these purchases of goods and services treated in GDP?

If the government reports that "GDP increased at an annual rate of 6.0 percent for the fourth quarter of 2010," by how much did GDP increase?

Why does expenditure equal income?

Which of the following is counted in Canadian GDP?

A flour mill produces $1000 worth of flour, of which $700 goes to a bakery and $300 to consumers. A water supplier produces $300 worth of water, of which $200 goes to the bakery and $100 to consumers. The bakery produces $1500 worth of bread and sells all of it to consumers. The three companies pay wages as follows: the mill pays $400, the water supplier $200, and the bakery $200. There are no other costs of production. a.Calculate GDP based on the value of production. b.Calculate profits to the owners of each of the three companies (profit = revenue minus costs). c.Calculate GDP based on income.

Draw a graph to show the evolution of this economy in terms of real GDP, nominal GDP, and GDP deflator over the period 2007-2010.

Suppose that an apartment complex converts to a condominium where the renters are now owners of their former apartments. Suppose that an estimate of the value of the condominium owners' housing services is now the same as their former rent. What happens to GDP?

To encourage formation of small businesses, the government could provide subsidies. How would these subsidies be treated?

Anna, a Canadian citizen, works only in Germany. How is the value added to production from her employment included in GDP?

During a federal election campaign, the incumbent argues that he should be re-elected because GDP grew by 12 percent during his 4-year term in office. You know that population grew by 4 percent over the period, and that the GDP deflator increased by 6 percent during the past 4 years. What can you conclude about real GDP per person?

Which of the following is the correct definition of GDP?