Question 1

The observation that goods and services flow in one direction and money payments flow in another direction is the principle behind

Accepted Answer

A) the double coincidence of wants. 
B) a barter economy. 
C) a pure command economy. 
D) the circular flow of income. 
A) the double coincidence of wants. 
B) a barter economy. 
C) a pure command economy. 
D) the circular flow of income. D

Question 2

If GDP equals $1 billion,investment expenditures are $200 million,exports equal imports,and government spending is $400 million,then

Accepted Answer

A) consumption expenditures are $200 million. 
B) consumption expenditures are $400 million. 
C) spending on consumer durables must be $400 billion. 
D) we cannot determine what expenditures on consumption are without more information. 
A) consumption expenditures are $200 million. 
B) consumption expenditures are $400 million. 
C) spending on consumer durables must be $400 billion. 
D) we cannot determine what expenditures on consumption are without more information. B

Question 3

The difference between nominal and real values is that real values take into account

Accepted Answer

A) depreciation. 
B) changes in the composition of output. 
C) changes in prices between years. 
D) the presence of durable goods. 
A) depreciation. 
B) changes in the composition of output. 
C) changes in prices between years. 
D) the presence of durable goods. C

Question 4

Explain what we mean by True Purchasing Power Parity.Once complete,explain the notion using an example of your own.

Accepted Answer

Define the basket of goods for each coun

Question 5

Which of the following transactions would be included in GDP?

Accepted Answer

A) The purchase of 100 shares of Microsoft stock 
B) The purchase of a government bond 
C) The purchase of a litre of gasoline to run a lawn mower 
D) The purchase of a stolen television set 
A) The purchase of 100 shares of Microsoft stock 
B) The purchase of a government bond 
C) The purchase of a litre of gasoline to run a lawn mower 
D) The purchase of a stolen television set

Question 6

Which of the following is included in determining GDP?

Accepted Answer

A) the purchase of a new car 
B) the purchase of a used car 
C) a housewife preparing breakfast 
D) a gardener cans vegetables for consumption during the winter 
A) the purchase of a new car 
B) the purchase of a used car 
C) a housewife preparing breakfast 
D) a gardener cans vegetables for consumption during the winter

Question 7

The circular flow model shows that consumer goods and services produced by business firms are sold through

Accepted Answer

A) the product market. 
B) the factor market. 
C) the labour market. 
D) the resource market. 
A) the product market. 
B) the factor market. 
C) the labour market. 
D) the resource market.

Question 8

Which of the following is included when measuring GDP?

Accepted Answer

A) the value of services of durable goods purchased in previous years 
B) the value of leisure time 
C) the value of services provided by housewives and househusbands 
D) the rental income received by a landlord 
A) the value of services of durable goods purchased in previous years 
B) the value of leisure time 
C) the value of services provided by housewives and househusbands 
D) the rental income received by a landlord

Question 9

Because of terrible winter storms,gross domestic product for the first quarter of the calendar year falls by 10 percent.As a result,gross domestic income

Accepted Answer

A) falls by less than 10 percent. 
B) also falls by 10 percent because they always have to be equal. 
C) falls by more than 10 percent because incomes always vary more than GDP. 
D) would not change since the time span is less than a year. 
A) falls by less than 10 percent. 
B) also falls by 10 percent because they always have to be equal. 
C) falls by more than 10 percent because incomes always vary more than GDP. 
D) would not change since the time span is less than a year.

Question 10

GDP exceeds net domestic product by an amount equal to

Accepted Answer

A) indirect business taxes. 
B) corporate profits plus personal taxes. 
C) the capital consumption allowance (depreciation). 
D) transfer payments minus personal taxes. 
A) indirect business taxes. 
B) corporate profits plus personal taxes. 
C) the capital consumption allowance (depreciation). 
D) transfer payments minus personal taxes.

Question 11

Suppose the total value of all assets in Canada is $10 billion.In 1993,the total value of all final services produced in Canada was $100 million,the total value of all final goods produced in Canada was $300 million,and the total value of all final goods and services produced by Canadian firms in other countries was $100 million.In this situation,gross domestic product for 1993 was

Accepted Answer

A) $600 million. 
B) $500 million. 
C) $400 million. 
D) $10.4 billion. 
A) $600 million. 
B) $500 million. 
C) $400 million. 
D) $10.4 billion.

Question 12

Because of improved productivity,wages increase 10 percent.As a result,gross domestic income increases.What happens to gross domestic product?

Accepted Answer

A) Gross domestic product also increases since consumption expenditures would increase. 
B) Gross domestic product decreases as people pay more taxes on their higher incomes. 
C) Gross domestic product would not change since consumption expenditures would rise but investment spending would fall. 
D) Gross domestic product would decrease because businesses are spending more on wages. 
A) Gross domestic product also increases since consumption expenditures would increase. 
B) Gross domestic product decreases as people pay more taxes on their higher incomes. 
C) Gross domestic product would not change since consumption expenditures would rise but investment spending would fall. 
D) Gross domestic product would decrease because businesses are spending more on wages.

Question 13

The purchase of a share of stock is excluded in the calculation of GDP because it

Accepted Answer

A) is an intermediate good. 
B) produces value added. 
C) only represents the transfer of ownership rights. 
D) is a final service and not a good. 
A) is an intermediate good. 
B) produces value added. 
C) only represents the transfer of ownership rights. 
D) is a final service and not a good.

Question 14

Where does profit enter in the circular flow? Why?

Accepted Answer

Profit is a payment made to entrepreneur

Question 15

Why aren't financial transactions,sales of secondhand goods,and household production included in measuring GDP?

Accepted Answer

Financial transactions do not involve th

Question 16

If NDP is $50 less than GDP,we know that

Accepted Answer

A) inventories increased over the year. 
B) inventories decreased over the year. 
C) net investment equals $50. 
D) depreciation equals $50. 
A) inventories increased over the year. 
B) inventories decreased over the year. 
C) net investment equals $50. 
D) depreciation equals $50.

Question 17

Total output and total income in the simple circular flow model

Accepted Answer

A) are measures of the economy's level of savings. 
B) include only intermediate goods. 
C) are equal to each other. 
D) are related in the sense that national income is less than national product. 
A) are measures of the economy's level of savings. 
B) include only intermediate goods. 
C) are equal to each other. 
D) are related in the sense that national income is less than national product.

Question 18

Explain with the assistance of the enhanced circular flow diagram why the dollar value of total output must equal total income.

Accepted Answer

It should begin with a discuss

Question 19

Economists consider profit to be

Accepted Answer

A) a cost of producing goods and services. 
B) the same as a salary. 
C) a reward for incurring losses. 
D) something that should be eliminated by anticompetition laws. 
A) a cost of producing goods and services. 
B) the same as a salary. 
C) a reward for incurring losses. 
D) something that should be eliminated by anticompetition laws.

Question 20

Households receive a total income of $5 million.Of this,$3.5 million are wages received for labour services,$1 million are rental payments,and $250,000 are interest payments received.What are the costs of production and profits equal to respectively?

Accepted Answer

A) $5 million;$500,000 
B) $5 million;$250,000 
C) $4.75 million;$250,000 
D) $4.75 million;0 
A) $5 million;$500,000 
B) $5 million;$250,000 
C) $4.75 million;$250,000 
D) $4.75 million;0

The observation that goods and services flow in one direction and money payments flow in another direction is the principle behind

If GDP equals $1 billion,investment expenditures are $200 million,exports equal imports,and government spending is $400 million,then

The difference between nominal and real values is that real values take into account

Explain what we mean by True Purchasing Power Parity.Once complete,explain the notion using an example of your own.

Which of the following transactions would be included in GDP?

Which of the following is included in determining GDP?

The circular flow model shows that consumer goods and services produced by business firms are sold through

Which of the following is included when measuring GDP?

Because of terrible winter storms,gross domestic product for the first quarter of the calendar year falls by 10 percent.As a result,gross domestic income

GDP exceeds net domestic product by an amount equal to

Because of improved productivity,wages increase 10 percent.As a result,gross domestic income increases.What happens to gross domestic product?

The purchase of a share of stock is excluded in the calculation of GDP because it

Where does profit enter in the circular flow? Why?

Why aren't financial transactions,sales of secondhand goods,and household production included in measuring GDP?

If NDP is $50 less than GDP,we know that

Total output and total income in the simple circular flow model

Explain with the assistance of the enhanced circular flow diagram why the dollar value of total output must equal total income.

Economists consider profit to be

Households receive a total income of $5 million.Of this,$3.5 million are wages received for labour services,$1 million are rental payments,and $250,000 are interest payments received.What are the costs of production and profits equal to respectively?

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters

Exam 5: Measuring the Economys Performance

The observation that goods and services flow in one direction and money payments flow in another direction is the principle behind

If GDP equals $1 billion,investment expenditures are $200 million,exports equal imports,and government spending is $400 million,then

The difference between nominal and real values is that real values take into account

Explain what we mean by True Purchasing Power Parity.Once complete,explain the notion using an example of your own.

Which of the following transactions would be included in GDP?

Which of the following is included in determining GDP?

The circular flow model shows that consumer goods and services produced by business firms are sold through

Which of the following is included when measuring GDP?

Because of terrible winter storms,gross domestic product for the first quarter of the calendar year falls by 10 percent.As a result,gross domestic income

GDP exceeds net domestic product by an amount equal to

Because of improved productivity,wages increase 10 percent.As a result,gross domestic income increases.What happens to gross domestic product?

The purchase of a share of stock is excluded in the calculation of GDP because it

Where does profit enter in the circular flow? Why?

Why aren't financial transactions,sales of secondhand goods,and household production included in measuring GDP?

If NDP is $50 less than GDP,we know that

Total output and total income in the simple circular flow model

Explain with the assistance of the enhanced circular flow diagram why the dollar value of total output must equal total income.

Economists consider profit to be

Households receive a total income of $5 million.Of this,$3.5 million are wages received for labour services,$1 million are rental payments,and $250,000 are interest payments received.What are the costs of production and profits equal to respectively?

The Nature of Economics

Production Possibilities and Economic Systems

Demand and Supply

Introduction to Macroeconomics

Modelling Real Gdp and the Price Level in the Long Run

Economic Growth and Development

Modelling Real Gdp and the Price Level in the Short Run

Consumption, investment, and the Multiplier

The Public Sector

Fiscal Policy and the Public Debt

Money and the Banking System

Money Creation and Deposit Insurance

The Bank of Canada and Monetary Policy

Issues in Stabilization Policy

Comparative Advantage and the Open Economy

Exchange Rates and the Balance of Payments

Filters