Question 1

Which of the following is included in the consumption component of GDP?

Accepted Answer

A)  CPP/QPP payments 
B)  purchases of foreign goods and services 
C)  purchases of newly constructed homes 
D)  goods produced but not sold during the reference period 
A)  CPP/QPP payments 
B)  purchases of foreign goods and services 
C)  purchases of newly constructed homes 
D)  goods produced but not sold during the reference period

Question 2

-Refer to Table 5-2. Using 2018 as the base year, what can we conclude for 2017?

Accepted Answer

A)  Real GDP is $760, and the GDP deflator is 100. 
B)  Real GDP is $760, and the GDP deflator is 125. 
C)  Real GDP is $880, and the GDP deflator is 80. 
D)  Real GDP is $950, and the GDP deflator is 80. 
A)  Real GDP is $760, and the GDP deflator is 100. 
B)  Real GDP is $760, and the GDP deflator is 125. 
C)  Real GDP is $880, and the GDP deflator is 80. 
D)  Real GDP is $950, and the GDP deflator is 80.

Question 3

How are goods that go into inventory and are not sold during the current period treated in GDP terms?

Accepted Answer

A)  They are counted as intermediate goods and so are not included in current-period GDP. 
B)  They are counted in current GDP only if the firm that produced them sells them to another firm. 
C)  They are included in current-period GDP as inventory investment. 
D)  They are included in current-period GDP as consumption. 
A)  They are counted as intermediate goods and so are not included in current-period GDP. 
B)  They are counted in current GDP only if the firm that produced them sells them to another firm. 
C)  They are included in current-period GDP as inventory investment. 
D)  They are included in current-period GDP as consumption.

Question 4

How does the value of total sales of all firms in the country for a year compare with GDP?

Accepted Answer

A)  It equals GDP for the year. 
B)  It is larger than GDP for the year. 
C)  It is smaller than GDP for the year. 
D)  It could be larger or smaller than GDP for the year. 
A)  It equals GDP for the year. 
B)  It is larger than GDP for the year. 
C)  It is smaller than GDP for the year. 
D)  It could be larger or smaller than GDP for the year.

Question 5

When a firm produces consumer goods and adds some to inventory rather than selling them, how is the increase in inventory counted in GDP?

Accepted Answer

A)  It is counted in the current quarter GDP as capital consumption allowance. 
B)  It is counted in the current quarter GDP as investment. 
C)  It is counted in the current quarter GDP as consumption. 
D)  It is counted in the current quarter GDP as a statistical discrepancy. 
A)  It is counted in the current quarter GDP as capital consumption allowance. 
B)  It is counted in the current quarter GDP as investment. 
C)  It is counted in the current quarter GDP as consumption. 
D)  It is counted in the current quarter GDP as a statistical discrepancy.

Question 6

According to economists, why is it useful to measure the behaviour of the economy with statistics such as GDP?

Accepted Answer

A)  It can be used to forecast economic recessions and prevent them. 
B)  It measures the total value of a country's wealth. 
C)  It can be helpful in developing macroeconomic science, but is not useful for policymaking. 
D)  It is a crucial step toward developing the science of macroeconomics. 
A)  It can be used to forecast economic recessions and prevent them. 
B)  It measures the total value of a country's wealth. 
C)  It can be helpful in developing macroeconomic science, but is not useful for policymaking. 
D)  It is a crucial step toward developing the science of macroeconomics.

Question 7

The local Land Rover dealership has an increase in inventory of 10 SUVs in 2019. How will the sale of all 10 SUVs in 2020 affect the GDP?

Accepted Answer

A)  The value of the cars will be counted as part of GDP in 2019 but not in 2020. 
B)  The value of the cars will not affect the 2019 GDP, but will be included in 2020 GDP. 
C)  The value of the cars will be included in both 2019 and 2020 GDP. 
D)  The value of the cars will not be included in GDP in 2019 or 2020. 
A)  The value of the cars will be counted as part of GDP in 2019 but not in 2020. 
B)  The value of the cars will not affect the 2019 GDP, but will be included in 2020 GDP. 
C)  The value of the cars will be included in both 2019 and 2020 GDP. 
D)  The value of the cars will not be included in GDP in 2019 or 2020.

Question 8

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are NOT measured as part of GDP. According to most economists, why is GDP a useful measure of society's well-being?

Accepted Answer

A)  It has been measured for many years and changing this measure would create confusion. 
B)  Providing these other attributes is the responsibility of government. 
C)  It measures a nation's ability to produce the things that contribute to well-being. 
D)  These other values cannot actually be measured. 
A)  It has been measured for many years and changing this measure would create confusion. 
B)  Providing these other attributes is the responsibility of government. 
C)  It measures a nation's ability to produce the things that contribute to well-being. 
D)  These other values cannot actually be measured.

Question 9

In a given year, an economy has consumption of $8000, investment of $6000, government purchases of $5500, exports of $3500, and imports of $2000, What is the GDP?

Accepted Answer

A)  $14,000 
B)  $19,500 
C)  $21,000 
D)  $25,000 
A)  $14,000 
B)  $19,500 
C)  $21,000 
D)  $25,000

Question 10

-Refer to Table 5-3. On the basis of the information in the table, which list below contains the correct ordering of GDP per person (from highest to lowest)?

Accepted Answer

A)  A, B, C 
B)  A, C, B 
C)  C, B, A 
D)  C, A, B 
A)  A, B, C 
B)  A, C, B 
C)  C, B, A 
D)  C, A, B

Question 11

Which month of the year has an increase in production and is seasonally adjusted?

Accepted Answer

A)  February 
B)  April 
C)  September 
D)  December 
A)  February 
B)  April 
C)  September 
D)  December

Question 12

Why is GDP computed using market prices as the value of final goods and services?

Accepted Answer

A)  because market prices do not change much, so it is easy to make comparisons between years 
B)  because if market prices are out of line with how people value goods, the government sets ceilings and floors on them 
C)  because costs change too much to reflect the value of goods and services 
D)  because market prices reflect the value of goods and services 
A)  because market prices do not change much, so it is easy to make comparisons between years 
B)  because if market prices are out of line with how people value goods, the government sets ceilings and floors on them 
C)  because costs change too much to reflect the value of goods and services 
D)  because market prices reflect the value of goods and services

Question 13

What prices are used to compute real GDP?

Accepted Answer

A)  current-year prices 
B)  constant prices 
C)  future-year prices 
D)  the ratio of current-year prices to constant prices 
A)  current-year prices 
B)  constant prices 
C)  future-year prices 
D)  the ratio of current-year prices to constant prices

Question 14

If GDP in the fourth quarter is announced to be $1.6 trillion, what does this number reflect?

Accepted Answer

A)  the actual amount of final goods and services produced in the fourth quarter 
B)  about four times the annual GDP rate 
C)  a somewhat lower amount than the amount actually produced in the fourth quarter, because GDP is seasonally adjusted, and nonseasonally adjusted GDP for the fourth quarter is typical higher 
D)  about four times the amount actually produced in that quarter, plus what had been removed for seasonal adjustment 
A)  the actual amount of final goods and services produced in the fourth quarter 
B)  about four times the annual GDP rate 
C)  a somewhat lower amount than the amount actually produced in the fourth quarter, because GDP is seasonally adjusted, and nonseasonally adjusted GDP for the fourth quarter is typical higher 
D)  about four times the amount actually produced in that quarter, plus what had been removed for seasonal adjustment

Question 15

A firm produces consumer goods and adds some to inventory in the third quarter. In the fourth quarter, the firm sells the goods at a retail outlet. As a result of these actions, what happens to the consumption and investment components of GDP in the fourth quarter?

Accepted Answer

A)  investment decreases, consumption does not change 
B)  investment increases, consumption decreases 
C)  investment decreases, consumption increases 
D)  investment does not change, consumption increases 
A)  investment decreases, consumption does not change 
B)  investment increases, consumption decreases 
C)  investment decreases, consumption increases 
D)  investment does not change, consumption increases

Question 16

A country reported nominal GDP of $200 billion in 2020 and $180 billion in 2019 and reported a GDP deflator of 125 in 2020 and 105 in 2019. What happened to real output and prices from 2019 to 2020?

Accepted Answer

A)  Real output and prices both rose. 
B)  Real output rose and prices fell. 
C)  Real output fell and prices rose. 
D)  Real output and prices both fell. 
A)  Real output and prices both rose. 
B)  Real output rose and prices fell. 
C)  Real output fell and prices rose. 
D)  Real output and prices both fell.

Question 17

How is the estimated rental value of owner-occupied houses included in GDP?

Accepted Answer

A)  as consumption, for new and old houses 
B)  as investment, for new and old houses 
C)  as consumption, only for new houses 
D)  as investment, only for new houses 
A)  as consumption, for new and old houses 
B)  as investment, for new and old houses 
C)  as consumption, only for new houses 
D)  as investment, only for new houses

Question 18

GDP is used as the basic measure of a society's economic well-being. What is a better measure of the economic well-being of individuals in society?

Accepted Answer

A)  GDP per person 
B)  the consumption component of GDP 
C)  government expenditures per person 
D)  the level of business investment 
A)  GDP per person 
B)  the consumption component of GDP 
C)  government expenditures per person 
D)  the level of business investment

Question 19

-Refer to Table 5-2. What is the nominal GDP?

Accepted Answer

A)  $680 for 2017, $880 for 2018, and $1200 for 2019 
B)  $760 for 2017, $880 for 2018, and $1000 for 2019 
C)  $760 for 2017, $1100 for 2018, and $1600 for 2019 
D)  $960 for 2017, $1280 for 2018, and $1300 for 2019 
A)  $680 for 2017, $880 for 2018, and $1200 for 2019 
B)  $760 for 2017, $880 for 2018, and $1000 for 2019 
C)  $760 for 2017, $1100 for 2018, and $1600 for 2019 
D)  $960 for 2017, $1280 for 2018, and $1300 for 2019

Question 20

Sophie, a Canadian citizen, works in the United States but lives with her family in Canada. How does her employment impact the GDP of both countries?

Accepted Answer

A)  it raises both the Canadian and the U.S. GDP 
B)  it raises the Canadian GDP and lowers the U.S. GDP 
C)  it raises the U.S. GDP and the Canadian GDP is unaffected 
D)  it lowers the U.S. GDP and raises the Canadian GDP 
A)  it raises both the Canadian and the U.S. GDP 
B)  it raises the Canadian GDP and lowers the U.S. GDP 
C)  it raises the U.S. GDP and the Canadian GDP is unaffected 
D)  it lowers the U.S. GDP and raises the Canadian GDP

Which of the following is included in the consumption component of GDP?

-Refer to Table 5-2. Using 2018 as the base year, what can we conclude for 2017?

How are goods that go into inventory and are not sold during the current period treated in GDP terms?

How does the value of total sales of all firms in the country for a year compare with GDP?

When a firm produces consumer goods and adds some to inventory rather than selling them, how is the increase in inventory counted in GDP?

According to economists, why is it useful to measure the behaviour of the economy with statistics such as GDP?

The local Land Rover dealership has an increase in inventory of 10 SUVs in 2019. How will the sale of all 10 SUVs in 2020 affect the GDP?

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are NOT measured as part of GDP. According to most economists, why is GDP a useful measure of society's well-being?

In a given year, an economy has consumption of $8000, investment of $6000, government purchases of $5500, exports of $3500, and imports of $2000, What is the GDP?

-Refer to Table 5-3. On the basis of the information in the table, which list below contains the correct ordering of GDP per person (from highest to lowest)?

Which month of the year has an increase in production and is seasonally adjusted?

Why is GDP computed using market prices as the value of final goods and services?

What prices are used to compute real GDP?

If GDP in the fourth quarter is announced to be $1.6 trillion, what does this number reflect?

A firm produces consumer goods and adds some to inventory in the third quarter. In the fourth quarter, the firm sells the goods at a retail outlet. As a result of these actions, what happens to the consumption and investment components of GDP in the fourth quarter?

A country reported nominal GDP of $200 billion in 2020 and $180 billion in 2019 and reported a GDP deflator of 125 in 2020 and 105 in 2019. What happened to real output and prices from 2019 to 2020?

How is the estimated rental value of owner-occupied houses included in GDP?

GDP is used as the basic measure of a society's economic well-being. What is a better measure of the economic well-being of individuals in society?

-Refer to Table 5-2. What is the nominal GDP?

Sophie, a Canadian citizen, works in the United States but lives with her family in Canada. How does her employment impact the GDP of both countries?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 5: Measuring a Nations Income

Which of the following is included in the consumption component of GDP?

-Refer to Table 5-2. Using 2018 as the base year, what can we conclude for 2017?

How are goods that go into inventory and are not sold during the current period treated in GDP terms?

How does the value of total sales of all firms in the country for a year compare with GDP?

When a firm produces consumer goods and adds some to inventory rather than selling them, how is the increase in inventory counted in GDP?

According to economists, why is it useful to measure the behaviour of the economy with statistics such as GDP?

The local Land Rover dealership has an increase in inventory of 10 SUVs in 2019. How will the sale of all 10 SUVs in 2020 affect the GDP?

Many things that society values, such as good health, high-quality education, enjoyable recreation opportunities, and desirable moral attributes of the population, are NOT measured as part of GDP. According to most economists, why is GDP a useful measure of society's well-being?

In a given year, an economy has consumption of $8000, investment of $6000, government purchases of $5500, exports of $3500, and imports of $2000, What is the GDP?

-Refer to Table 5-3. On the basis of the information in the table, which list below contains the correct ordering of GDP per person (from highest to lowest)?

Which month of the year has an increase in production and is seasonally adjusted?

Why is GDP computed using market prices as the value of final goods and services?

What prices are used to compute real GDP?

If GDP in the fourth quarter is announced to be $1.6 trillion, what does this number reflect?

A firm produces consumer goods and adds some to inventory in the third quarter. In the fourth quarter, the firm sells the goods at a retail outlet. As a result of these actions, what happens to the consumption and investment components of GDP in the fourth quarter?

A country reported nominal GDP of $200 billion in 2020 and $180 billion in 2019 and reported a GDP deflator of 125 in 2020 and 105 in 2019. What happened to real output and prices from 2019 to 2020?

How is the estimated rental value of owner-occupied houses included in GDP?

GDP is used as the basic measure of a society's economic well-being. What is a better measure of the economic well-being of individuals in society?

-Refer to Table 5-2. What is the nominal GDP?

Sophie, a Canadian citizen, works in the United States but lives with her family in Canada. How does her employment impact the GDP of both countries?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Small Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary Policy on Aggregate Demand

The Influence of Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters