Question 1

When lumber from Brazilian forests is used by a U.S.-owned company to produce furniture in Canada, the value of the furniture produced will be counted as a final good in

Accepted Answer

A) U)S.GDP. 
B) Canada's GDP. 
C) Brazil's GDP. 
D) Brazil's GNP. 
E) Brazil's GNI.

Question 2

An increase in net national income could be caused by which of the following?

Accepted Answer

A) an increase in depreciation 
B) an increase in personal taxes 
C) a decrease in personal income 
D) an increase in gross domestic product 
E) an increase in housing costs

Question 3

American in data on consumption includes which of the following that wouldn't be included in Canadian consumption?

Accepted Answer

A) purchases of new houses 
B) business travel 
C) purchases of sports equipment 
D) expenditures on health care 
E) purchases of new homes

Question 4

In the circular flow diagram, the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following describes the relationship between the Better Life Index and GDP per person?

Accepted Answer

A) As GDP per person increases the Better Life Index decreases. 
B) As GDP per person increases the Better Life Index increases. 
C) Increases in GDP per person appear to have no relationship with the Better Life Index. 
D) There is a perfect linear relationship between GDP per person and the Better Life Index. 
E) There is no relationship between GDP per person and the Better Life Index.

Question 6

Government spending on subsidies is included in government consumption when calculating GDP because it results in the production of new goods and services.

Accepted Answer

A) True 
 B)False

Question 7

The values of real GDP and real GNI are almost the same for Canada.

Accepted Answer

A) True 
 B)False

Question 8

Table 4.20  A very simple economy produces three goods: cameras, legal services, and books.The quantities produced and their corresponding prices for 2007 and 2017 are shown in the table above.
-Refer to Table 4.20.What is the GDP deflator in 2017 if 2017 is the base year?

Accepted Answer

A) 120 
B) 118 
C) 100 
D) 87 
E) 78

Question 9

Under what circumstances would the GDP deflator be less than 100 after the base year?

Accepted Answer

A) The GDP deflator will be less than 100 if there has been inflation relative to the base year. 
B) The GDP deflator will be less than 100 if there has been inflation of less than 2% per year relative to the base year. 
C) The GDP deflator will be less than 100 if there has been deflation relative to the base year. 
D) The GDP deflator will be less than 100 if there has been a recession since the base year. 
E) There are no circumstances under which the GDP deflator could be less than 100.

Question 10

Disposable household income is defined as

Accepted Answer

A) personal income, less personal taxes, plus indirect sales taxes. 
B) personal income, less transfer payments, plus personal taxes. 
C) personal income less personal taxes. 
D) personal income less depreciation. 
E) personal income plus depreciation.

Question 11

Use the formula for the GDP deflator to explain how it is affected by an increase in prices in the economy.If the value of the deflator equals 100, what does that tell you about that year with respect to the base year?

Accepted Answer

The answer of Use the formula for the GDP deflator...

Question 12

Export growth in Canada will help increase Canadian GDP because

Accepted Answer

A) an increase in exports will increase net exports, assuming no change in imports. 
B) growth in exports indicates a decline in imports. 
C) exports are added to imports when calculating GDP, causing GDP to increase. 
D) exports are subtracted from imports when calculating GDP. 
E) exports are the largest element of GDP.

Question 13

When consumers are less confident about their jobs or incomes, they are more likely to

Accepted Answer

A) reduce purchases of durable goods than nondurable goods. 
B) reduce purchases of nondurable goods and increase purchases of durable goods. 
C) increase investment spending and decrease consumption spending. 
D) increase consumption spending and decrease investment spending. 
E) reduce savings for the future.

Question 14

The total value of production from Ford's manufacturing plant in Cologne, Germany would be included in Germany's gross national income.

Accepted Answer

A) True 
 B)False

Question 15

GDP is not a perfect measure of well-being because

Accepted Answer

A) the value of leisure is included in GDP. 
B) GDP is not adjusted for pollution. 
C) GDP is adjusted for changes in crime rates. 
D) GDP is adjusted for increases in drug addiction. 
E) GDP can be adjusted to account for inflation.

Question 16

The size of the underground economy would tend to increase if the government of a country

Accepted Answer

A) decreased government regulations on businesses. 
B) increased income tax rates. 
C) legalized prostitution. 
D) legalized marijuana. 
E) decreased sales taxes.

Question 17

If an increase in crime causes households to spend money on police and security systems, GDP will rise.

Accepted Answer

A) True 
 B)False

Question 18

The circular flow diagram shows that

Accepted Answer

A) the value of total income is equal to the total value of expenditures on final goods and services. 
B) firms pay households wages, and households receive transfer payments from firms. 
C) households spend all their income on goods and services. 
D) GDP will be less than the total value of expenditures on final goods and services in the economy. 
E) firms own all factors of production.

Question 19

Which of the following goods is directly counted in GDP?

Accepted Answer

A) the lettuce that Subway purchases for its sandwiches 
B) the bread that Subway purchases for its sandwiches 
C) a 12-inch Subway sandwich purchased by a student 
D) the plastic bags that Subway purchases to wrap its sandwiches 
E) the rent paid by the Subway franchise owner for their restaurant

Question 20

An example of an intermediate good would be

Accepted Answer

A) the bread that goes into a sub sandwich that is sold by Mr.Sub. 
B) the soda pop sold by Mr.Sub. 
C) a sub sandwich sold by Mr.Sub. 
D) the potato chips sold by Mr.Sub. 
E) a Mr.Sub sandwich sold to a construction worker on their lunch break.

Exam 4: GDP: Measuring Total Production and Income

When lumber from Brazilian forests is used by a U.S.-owned company to produce furniture in Canada, the value of the furniture produced will be counted as a final good in

An increase in net national income could be caused by which of the following?

American in data on consumption includes which of the following that wouldn't be included in Canadian consumption?

In the circular flow diagram, the value of all the income in the economy is greater than the value of goods and services produced in the economy.

Which of the following describes the relationship between the Better Life Index and GDP per person?

Government spending on subsidies is included in government consumption when calculating GDP because it results in the production of new goods and services.

The values of real GDP and real GNI are almost the same for Canada.

Table 4.20 A very simple economy produces three goods: cameras, legal services, and books.The quantities produced and their corresponding prices for 2007 and 2017 are shown in the table above. -Refer to Table 4.20.What is the GDP deflator in 2017 if 2017 is the base year?

Under what circumstances would the GDP deflator be less than 100 after the base year?

Disposable household income is defined as

Use the formula for the GDP deflator to explain how it is affected by an increase in prices in the economy.If the value of the deflator equals 100, what does that tell you about that year with respect to the base year?

Export growth in Canada will help increase Canadian GDP because

When consumers are less confident about their jobs or incomes, they are more likely to

The total value of production from Ford's manufacturing plant in Cologne, Germany would be included in Germany's gross national income.

GDP is not a perfect measure of well-being because

The size of the underground economy would tend to increase if the government of a country

If an increase in crime causes households to spend money on police and security systems, GDP will rise.

The circular flow diagram shows that

Which of the following goods is directly counted in GDP?

An example of an intermediate good would be