Question 1

-Refer to the above diagram. Which of the following statements is correct?

Accepted Answer

A)   The price index is greater than 100 for every year shown on the graph.
B)   Nominal GDP must be deflated in each year prior to 1992 to determine real GDP.
C)   Real GDP has grown in this economy, but nominal GDP has not.
D)   Nominal GDP must be deflated in each year since 1992 to determine real GDP.E) A) and C)
F) C) and D)

Question 2

GDP may be defined as:

Accepted Answer

A)   the monetary value of all goods and services (final, intermediate, and non-market)  produced in a given year.
B)   total resource income less taxes, saving, and spending on exports.
C)   the economic value of all economic resources used in the production of a year's output.
D)   the market value of all final goods and services produced within country in a specific year.E) A) and D)
F) B) and D)

Question 3

In an economy, the value of inventories rose from $275 billion in 2000 to $300 billion in 2001. In calculating total investment for 2001, national income accountants would increase it by $25 billion.

Accepted Answer

A) True 
 B)False

Question 4

-Refer to the above information. Canadian imports:

Accepted Answer

A)   cannot be calculated
B)   are $26.
C)   are $16.
D)   are $11.E) None of the above
F) A) and B)

Question 5

-Refer to the above information. The gross domestic product is:

Accepted Answer

A)   $328.
B)   $402.
C)   $382.
D)   $336.E) None of the above
F) B) and D)

Question 6

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($1,050) ; personal consumption expenditures ($4,800) ; imports ($370) ; exports ($240) ; gross investment ($1,130) . Personal consumption expenditures are approximately what percentage of this economy?

Accepted Answer

A)   60 percent
B)   65 percent
C)   70 percent
D)   75 percentE) All of the above
F) A) and C)

Question 7

If we add up the figures for wages, rent, interest and profit:

Accepted Answer

A)   the figure is not equal to the GDP by the expenditure approach because it does not include the amount of investment.
B)   the figure is not equal to the GDP by the expenditure approach because the Canadian national accounts do not reflect each of these four factors of income and also because a few adjustments are necessary.
C)   we obtain a figure which is equal to the GDP by the expenditure approach.
D)   it does not reflect the actual figure for the GDP by the expenditure approach because it does not include the amount of consumption.E) A) and B)
F) A) and C)

Question 8

If depreciation exceeds gross investment:

Accepted Answer

A)   the economy's stock of capital may be either growing or shrinking.
B)   the economy's stock of capital is shrinking.
C)   the economy's stock of capital is growing.
D)   net investment is zero.E) C) and D)
F) A) and B)

Question 9

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Accepted Answer

A) True 
 B)False

Question 10

Answer the question(s)  based on the following data, using year 1 as the base year. All dollars are in billions.
 
-Refer to the above data. From year 1 to year 4, prices rose by:

Accepted Answer

A)   4 percent.
B)   8 percent.
C)   10 percent.
D)   12 percent.E) B) and D)
F) A) and C)

Question 11

Nominal GDP is adjusted for price changes through the use of:

Accepted Answer

A)   the Consumer Price Index (CPI) .
B)   the Producer Price Index (PPI) .
C)   the GDP price index.
D)   exchange rates.E) A) and B)
F) All of the above

Question 12

Which of the following do national income accountants consider to be "investment"?

Accepted Answer

A)   the purchase of an automobile for private, non-business use
B)   the purchase of a new house
C)   the purchase of corporate bonds
D)   the purchase of gold coinsE) B) and C)
F) C) and D)

Question 13

If all the final goods and intermediate goods and services were included in GDP:

Accepted Answer

A)   the GDP would then have to be deflated for changes in the price level.
B)   nominal GDP would exceed real GDP.
C)   the GDP would be overstated.
D)   the GDP would be understated.E) A) and B)
F) B) and D)

Question 14

From an economist's perspective, which is not considered to be an investment?

Accepted Answer

A)   construction of a new factory
B)   purchase of shares of company stock
C)   the building of an apartment complex
D)   additions to inventories at steel plantsE) All of the above
F) C) and D)

Question 15

Money spent on the purchase of a new house is included in the GDP as a part of:

Accepted Answer

A)   the consumption of private fixed capital.
B)   personal consumption expenditures.
C)   personal saving.
D)   investment.E) A) and C)
F) C) and D)

Question 16

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:

Accepted Answer

A)   $110.
B)   $30.
C)   $40.
D)   $70.E) B) and D)
F) B) and C)

Question 17

In an economy experiencing persistent deflation:

Accepted Answer

A)   potential GDP will necessarily exceed actual GDP.
B)   changes in nominal GDP may either overstate or understate changes in real GDP.
C)   changes in nominal GDP understate changes in real GDP.
D)   changes in nominal GDP overstate changes in real GDP.E) All of the above
F) B) and C)

Question 18

The largest component of total expenditures in Canada is:

Accepted Answer

A)   net exports.
B)   government purchases.
C)   consumption.
D)   gross investment.E) A) and B)
F) C) and D)

Question 19

Gross private domestic investment exceeds depreciation in an economy experiencing expanding production capacity.

Accepted Answer

A) True 
 B)False

Question 20

(GDP figures are in billions of dollars.) 
 
-Refer to the above table. What was real GDP in Year 2?

Accepted Answer

A)   $4,820 billion
B)   $4,875 billion
C)   $4,911 billion
D)   $5,320 billionE) B) and C)
F) A) and B)

Exam 5: Measuring the Economys Output

-Refer to the above diagram. Which of the following statements is correct?

Correct Answer
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-Refer to the above information. Canadian imports:

Correct Answer
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Money spent on the purchase of a new house is included in the GDP as a part of:

Correct Answer
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Nominal GDP is adjusted for price changes through the use of:

Correct Answer
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Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:

Correct Answer
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Correct Answer
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If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Correct Answer
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In an economy experiencing persistent deflation:

Correct Answer
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If depreciation exceeds gross investment:

Correct Answer
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If we add up the figures for wages, rent, interest and profit:

Correct Answer
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In an economy, the value of inventories rose from $275 billion in 2000 to $300 billion in 2001. In calculating total investment for 2001, national income accountants would increase it by $25 billion.

Correct Answer
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From an economist's perspective, which is not considered to be an investment?

Correct Answer
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Which of the following do national income accountants consider to be "investment"?

Correct Answer
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If all the final goods and intermediate goods and services were included in GDP:

Correct Answer
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(GDP figures are in billions of dollars.) -Refer to the above table. What was real GDP in Year 2?

Correct Answer
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GDP may be defined as:

Correct Answer
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Answer the question(s) based on the following data, using year 1 as the base year. All dollars are in billions. -Refer to the above data. From year 1 to year 4, prices rose by:

Correct Answer
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-Refer to the above information. The gross domestic product is:

Correct Answer
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Gross private domestic investment exceeds depreciation in an economy experiencing expanding production capacity.

Correct Answer
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The largest component of total expenditures in Canada is:

Correct Answer
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Exam 5: Measuring the Economys Output

-Refer to the above diagram. Which of the following statements is correct?

Correct AnswerverifiedShow Answer

-Refer to the above information. Canadian imports:

Correct AnswerverifiedShow Answer

Money spent on the purchase of a new house is included in the GDP as a part of:

Correct AnswerverifiedShow Answer

Nominal GDP is adjusted for price changes through the use of:

Correct AnswerverifiedShow Answer

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker. The completed speaker sells for $70. The value added by the manufacturer for each speaker is:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Correct AnswerverifiedShow Answer

In an economy experiencing persistent deflation:

Correct AnswerverifiedShow Answer

If depreciation exceeds gross investment:

Correct AnswerverifiedShow Answer

If we add up the figures for wages, rent, interest and profit:

Correct AnswerverifiedShow Answer

In an economy, the value of inventories rose from $275 billion in 2000 to $300 billion in 2001. In calculating total investment for 2001, national income accountants would increase it by $25 billion.

Correct AnswerverifiedShow Answer

From an economist's perspective, which is not considered to be an investment?

Correct AnswerverifiedShow Answer

Which of the following do national income accountants consider to be "investment"?

Correct AnswerverifiedShow Answer

If all the final goods and intermediate goods and services were included in GDP:

Correct AnswerverifiedShow Answer

(GDP figures are in billions of dollars.) -Refer to the above table. What was real GDP in Year 2?

Correct AnswerverifiedShow Answer

GDP may be defined as:

Correct AnswerverifiedShow Answer

Answer the question(s) based on the following data, using year 1 as the base year. All dollars are in billions. -Refer to the above data. From year 1 to year 4, prices rose by:

Correct AnswerverifiedShow Answer

-Refer to the above information. The gross domestic product is:

Correct AnswerverifiedShow Answer

Gross private domestic investment exceeds depreciation in an economy experiencing expanding production capacity.

Correct AnswerverifiedShow Answer

The largest component of total expenditures in Canada is:

Correct AnswerverifiedShow Answer

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