Question 1

Net investment

Accepted Answer

A)  equals gross investment minus depreciation. 
B)  equals gross investment plus depreciation. 
C)  is equivalent to the existing capital stock in the economy. 
D)  is the only measure of investment used to calculate GDP.

Question 2

Of the following, the largest component of GDP is

Accepted Answer

A)  personal consumption expenditure. 
B)  government expenditure on goods and services. 
C)  gross private domestic investment. 
D)  net exports of goods and services.

Question 3

If we compare the four sources of spending in the economy we see that

Accepted Answer

A)  government expenditure is the largest. 
B)  business investment is the largest. 
C)  household consumption is the smallest. 
D)  household consumption is the largest.

Question 4

It is estimated that in 2007, Mexico had a population of 110 million and Brazil had a population of 190 million. At the same time, Mexicoʹs GDP was $1 trillion while Brazilʹs was $1.31 trillion. These data show that

Accepted Answer

A)  Mexicoʹs GDP per person was $9090 in 2007. 
B)  Brazilʹs GDP per person was $5300 in 2007. 
C)  Mexicoʹs GDP per person was lower than was Brazilʹs GDP per person in 2007. 
D)  Brazil had a healthier economy than did Mexico.

Question 5

A productivity growth slowdown can be shown as year-to-year fluctuations of real GDP around potential GDP.

Accepted Answer

A) True 
 B)False

Question 6

GDP using the expenditure approach equals the sum of personal consumption expenditures plus

Accepted Answer

A)  gross private investment plus government expenditure on goods and services. 
B)  gross private investment plus government expenditure on goods and services minus imports of goods and services. 
C)  gross private investment plus government expenditure on goods and services plus net exports of goods and services. 
D)  gross private investment.

Question 7

-In the above figure, household income is shown by flow

Accepted Answer

A)  A. 
B)  B. 
C)  C. 
D)  F.

Question 8

Canadaʹs economy expanded by...0.1 percent in the second quarter...further evidence that the economy has stalled...following a first quarter slip in gross domestic product. The second quarter figures fell well below forecasts of a 0.7 per cent growth in real GDP. Exports.	fell for the fourth consecutive quarter. The accumulating gloom is increasingly
discouraging business investment. Consumer spending remains strong and corporate profits were at their highest since 2004. ʺThe sources of strength in the second quarter are clearly unsustainable,ʺ said Sal Gautieri, senior economist at BMO capital markets.
Canada Avoids Fall into Recession, www.FT.com, by Christopher Mason, August 30, 2008
-According to the article,  the best description of Canadaʹs position in the business cycle is

Accepted Answer

A)  in a recession 
B)  in an expansion 
C)  at a peak 
D)  at a trough

Question 9

Which of the following best represents an indirect tax?

Accepted Answer

A)  local property tax 
B)  sales taxes paid on goods and services 
C)  federal income tax 
D)  state income tax

Question 10

A loaf of bread purchased by one of your instructors would be best described as

Accepted Answer

A)  an intermediate good. 
B)  a used good. 
C)  a financial asset. 
D)  a final good.

Question 11

In calculating GDP, household production is

Accepted Answer

A)  not included because there is no market transaction. 
B)  included as part of consumption. 
C)  included under employee compensation. 
D)  ignored because it is not a large amount.

Question 12

-Using the above figure, during which of the following periods does the price of crude oil shows an upward trend?

Accepted Answer

A)  July to October 
B)  May to November 
C)  April to November 
D)  May to July and October to December

Question 13

A time-series graph showing total production in Japan from 1960 to 2010 shows a positive trend. It is the case that total production

Accepted Answer

A)  was higher in 2010 than in 1960. 
B)  was lower in 2010 than in 1960. 
C)  fell every year between 1960 and 2010. 
D)  rose every year between 1960 and 2010.

Exam 4: Measuring Gdp and Economic Growth