Question 1

If GDP rises, what happens?

Accepted Answer

A)  Income and expenditure must both rise. 
B)  Income and expenditure must both fall. 
C)  Income must rise, but expenditure may rise or fall. 
D)  Expenditure must rise, but income may rise or fall. 
A)  Income and expenditure must both rise. 
B)  Income and expenditure must both fall. 
C)  Income must rise, but expenditure may rise or fall. 
D)  Expenditure must rise, but income may rise or fall.

Question 2

A Canadian tourist buys a $1000 camera in the U.S. What happens to Canadian imports/exports and GDP?

Accepted Answer

A)  Canadian imports increase by $1000, and Canadian GDP increases by $1000. 
B)  Canadian imports increase by $1000, but Canadian GDP is unaffected. 
C)  Canadian imports and Canadian GDP are unaffected. 
D)  Canadian exports increase by $1000, and Canadian GDP increases by $1000. 
A)  Canadian imports increase by $1000, and Canadian GDP increases by $1000. 
B)  Canadian imports increase by $1000, but Canadian GDP is unaffected. 
C)  Canadian imports and Canadian GDP are unaffected. 
D)  Canadian exports increase by $1000, and Canadian GDP increases by $1000.

Question 3

If the GDP deflator is 400 and nominal GDP is $2 trillion, what is real GDP?

Accepted Answer

A)  $5 billion 
B)  $200 billion 
C)  $500 billion 
D)  $2 trillion 
A)  $5 billion 
B)  $200 billion 
C)  $500 billion 
D)  $2 trillion

Question 4

According to international studies, larger GDP per person is associated with which other measures of well-being?

Accepted Answer

A)  longer life expectancy and a higher rate of population growth 
B)  longer life expectancy and a higher percentage of the population that is literate 
C)  similar life expectancy and a higher quality of the environment 
D)  similar life expectancy and a higher percentage of the population that is literate 
A)  longer life expectancy and a higher rate of population growth 
B)  longer life expectancy and a higher percentage of the population that is literate 
C)  similar life expectancy and a higher quality of the environment 
D)  similar life expectancy and a higher percentage of the population that is literate

Question 5

A Manitoba farmer buys a new tractor made in Alberta by a German company. What is the impact on investment and GDP?

Accepted Answer

A)  Canadian investment and German GDP increase, but Canadian GDP is unaffected. 
B)  Canadian investment and GDP increase, but German GDP is unaffected. 
C)  Canadian investment, Canadian GDP, and German GDP are unaffected, because tractors are intermediate goods. 
D)  Canadian investment, Canadian GDP, and German GDP all increase. 
A)  Canadian investment and German GDP increase, but Canadian GDP is unaffected. 
B)  Canadian investment and GDP increase, but German GDP is unaffected. 
C)  Canadian investment, Canadian GDP, and German GDP are unaffected, because tractors are intermediate goods. 
D)  Canadian investment, Canadian GDP, and German GDP all increase.

Question 6

How is GDP computed?

Accepted Answer

A)  add up the quantities of all final goods and services within a country 
B)  add up the cost of producing final goods and services within a country 
C)  use weights determined by a survey regarding how much people value different sorts of goods and services to compute GDP as a weighted average 
D)  add up the market values of all final goods and services produced within a country in a given period of time 
A)  add up the quantities of all final goods and services within a country 
B)  add up the cost of producing final goods and services within a country 
C)  use weights determined by a survey regarding how much people value different sorts of goods and services to compute GDP as a weighted average 
D)  add up the market values of all final goods and services produced within a country in a given period of time

Question 7

What is the term used when GDP is modified to account for fluctuations in production that occur during the year?

Accepted Answer

A)  realization 
B)  deflation 
C)  seasonally adjusted 
D)  manually adjusted 
A)  realization 
B)  deflation 
C)  seasonally adjusted 
D)  manually adjusted

Question 8

How are intermediate goods accounted for when calculating GDP?

Accepted Answer

A)  The value of all intermediate goods is included in GDP. 
B)  The value of intermediate goods is included in GDP only if they were produced in the previous year. 
C)  The value of intermediate goods is included in GDP only if they are purchased by firms rather than households. 
D)  The value of intermediate goods is not included in GDP unless they are part of inventory. 
A)  The value of all intermediate goods is included in GDP. 
B)  The value of intermediate goods is included in GDP only if they were produced in the previous year. 
C)  The value of intermediate goods is included in GDP only if they are purchased by firms rather than households. 
D)  The value of intermediate goods is not included in GDP unless they are part of inventory.

Question 9

A professional gambler moves from a province where gambling is legal to a province where gambling is illegal. What impact does this move have on Canada's GDP?

Accepted Answer

A)  It raises GDP. 
B)  It decreases GDP. 
C)  It does not change GDP because gambling is never included in GDP. 
D)  It does not change GDP because in either case his income is included. 
A)  It raises GDP. 
B)  It decreases GDP. 
C)  It does not change GDP because gambling is never included in GDP. 
D)  It does not change GDP because in either case his income is included.

Question 10

What is included in GDP?

Accepted Answer

A)  the sale of stocks and bonds 
B)  the sale of used goods 
C)  the sale of services such as visits to a doctor 
D)  the sale of ownership in a new company 
A)  the sale of stocks and bonds 
B)  the sale of used goods 
C)  the sale of services such as visits to a doctor 
D)  the sale of ownership in a new company

Question 11

How are nominal GDP and real GDP related?

Accepted Answer

A)  Nominal GDP measures base-year production using base-year prices, while real GDP measures current production using current prices. 
B)  Nominal GDP measures current production using base-year prices, while real GDP measures current production using current prices. 
C)  Nominal GDP measures current production using current prices, while real GDP measures current production using base-year prices. 
D)  Nominal GDP measures current production using current prices, while real GDP measures base-year production using base-year prices. 
A)  Nominal GDP measures base-year production using base-year prices, while real GDP measures current production using current prices. 
B)  Nominal GDP measures current production using base-year prices, while real GDP measures current production using current prices. 
C)  Nominal GDP measures current production using current prices, while real GDP measures current production using base-year prices. 
D)  Nominal GDP measures current production using current prices, while real GDP measures base-year production using base-year prices.

Question 12

Roommates Grace and Kelly are sharing household chores and think they have an even exchange. If instead they paid each other for the chores the other did, what would happen to GDP?

Accepted Answer

A)  It would fall. 
B)  It would rise. 
C)  It would be unaffected because paid or not, household chores are not included in GDP. 
D)  It would be unaffected because paid or not, household chores are included in GDP. 
A)  It would fall. 
B)  It would rise. 
C)  It would be unaffected because paid or not, household chores are not included in GDP. 
D)  It would be unaffected because paid or not, household chores are included in GDP.

Question 13

Which statement best describes real GDP?

Accepted Answer

A)  Real GDP evaluates, at current prices, all goods and services produced in a base year. 
B)  Real GDP evaluates, at base-year prices, all goods and services produced in the current year. 
C)  Real GDP evaluates, at current prices, a current-year basket of goods and services. 
D)  Real GDP evaluates, at current prices, a base-year basket of goods and services. 
A)  Real GDP evaluates, at current prices, all goods and services produced in a base year. 
B)  Real GDP evaluates, at base-year prices, all goods and services produced in the current year. 
C)  Real GDP evaluates, at current prices, a current-year basket of goods and services. 
D)  Real GDP evaluates, at current prices, a base-year basket of goods and services.

Question 14

What do international GDP and socioeconomic data show?

Accepted Answer

A)  They are inconclusive about the relationship between GDP and the economic well-being of citizens. 
B)  They suggest that GDP is a weak measure of a country's well-being. 
C)  They leave no doubt that a nation's GDP is closely associated with its citizens' standard of living. 
D)  They indicate that there are few real differences in living standards around the world, in spite of the large differences in GDP between nations. 
A)  They are inconclusive about the relationship between GDP and the economic well-being of citizens. 
B)  They suggest that GDP is a weak measure of a country's well-being. 
C)  They leave no doubt that a nation's GDP is closely associated with its citizens' standard of living. 
D)  They indicate that there are few real differences in living standards around the world, in spite of the large differences in GDP between nations.

Question 15

A Canadian solar panel company purchases new assembly equipment. What impact does this purchase have on investment and GDP?

Accepted Answer

A)  It makes investment higher and GDP higher. 
B)  It leaves GDP unchanged and makes investment higher. 
C)  It makes investment higher and GDP lower. 
D)  It leaves investment unchanged and makes GDP lower. 
A)  It makes investment higher and GDP higher. 
B)  It leaves GDP unchanged and makes investment higher. 
C)  It makes investment higher and GDP lower. 
D)  It leaves investment unchanged and makes GDP lower.

Question 16

In a simple circular-flow diagram, how are total income and total expenditure interrelated?

Accepted Answer

A)  They are seldom equal because of fluctuations in the business cycle that occur in an economy. 
B)  They are equal only when all goods and services produced are sold. 
C)  They are always equal because every transaction has a buyer and a seller. 
D)  They are always equal because of accounting rules. 
A)  They are seldom equal because of fluctuations in the business cycle that occur in an economy. 
B)  They are equal only when all goods and services produced are sold. 
C)  They are always equal because every transaction has a buyer and a seller. 
D)  They are always equal because of accounting rules.

Question 17

Which question is more likely to be studied by a macroeconomist than a microeconomist?

Accepted Answer

A)  Why do prices in general rise by more in some countries than others? 
B)  Why do wages differ across industries? 
C)  Does education increase a worker's income on average? 
D)  Is there usually a gain from trade between two countries? 
A)  Why do prices in general rise by more in some countries than others? 
B)  Why do wages differ across industries? 
C)  Does education increase a worker's income on average? 
D)  Is there usually a gain from trade between two countries?

Question 18

In 2018, how large were Canadian government purchases of goods and services?

Accepted Answer

A)  7 percent of GDP 
B)  12 percent of GDP 
C)  21 percent of GDP 
D)  32 percent of GDP 
A)  7 percent of GDP 
B)  12 percent of GDP 
C)  21 percent of GDP 
D)  32 percent of GDP

Question 19

Suppose that 25 years ago a country had nominal GDP of 1000, a GDP deflator of 200, and a population of 100. Today, that country has a nominal GDP of 3000, a deflator of 400, and a population of 150. What happened to the real GDP per person?

Accepted Answer

A)  It more than doubled. 
B)  It rose, but less than doubled. 
C)  It fell. 
D)  It did not change. 
A)  It more than doubled. 
B)  It rose, but less than doubled. 
C)  It fell. 
D)  It did not change.

Question 20

Suppose two Canadian provinces, say Alberta and Manitoba, produce only wheat, 10 tonnes each. The price of wheat in Alberta is $240 a tonne and in Manitoba is $250 a tonne.
a. Calculate nominal GDP in the two provinces and discuss the results.
b. Imagine a method of calculating GDP that would allow a more accurate comparison between the economic performances of the two provinces.

Accepted Answer

a. Alberta's GDP = 10 × 240 = $2400; Man

If GDP rises, what happens?

A Canadian tourist buys a $1000 camera in the U.S. What happens to Canadian imports/exports and GDP?

If the GDP deflator is 400 and nominal GDP is $2 trillion, what is real GDP?

According to international studies, larger GDP per person is associated with which other measures of well-being?

A Manitoba farmer buys a new tractor made in Alberta by a German company. What is the impact on investment and GDP?

How is GDP computed?

What is the term used when GDP is modified to account for fluctuations in production that occur during the year?

How are intermediate goods accounted for when calculating GDP?

A professional gambler moves from a province where gambling is legal to a province where gambling is illegal. What impact does this move have on Canada's GDP?

What is included in GDP?

How are nominal GDP and real GDP related?

Roommates Grace and Kelly are sharing household chores and think they have an even exchange. If instead they paid each other for the chores the other did, what would happen to GDP?

Which statement best describes real GDP?

What do international GDP and socioeconomic data show?

A Canadian solar panel company purchases new assembly equipment. What impact does this purchase have on investment and GDP?

In a simple circular-flow diagram, how are total income and total expenditure interrelated?

Which question is more likely to be studied by a macroeconomist than a microeconomist?

In 2018, how large were Canadian government purchases of goods and services?

Suppose that 25 years ago a country had nominal GDP of 1000, a GDP deflator of 200, and a population of 100. Today, that country has a nominal GDP of 3000, a deflator of 400, and a population of 150. What happened to the real GDP per person?

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

If GDP rises, what happens?

A Canadian tourist buys a $1000 camera in the U.S. What happens to Canadian imports/exports and GDP?

If the GDP deflator is 400 and nominal GDP is $2 trillion, what is real GDP?

According to international studies, larger GDP per person is associated with which other measures of well-being?

A Manitoba farmer buys a new tractor made in Alberta by a German company. What is the impact on investment and GDP?

How is GDP computed?

What is the term used when GDP is modified to account for fluctuations in production that occur during the year?

How are intermediate goods accounted for when calculating GDP?

A professional gambler moves from a province where gambling is legal to a province where gambling is illegal. What impact does this move have on Canada's GDP?

What is included in GDP?

How are nominal GDP and real GDP related?

Roommates Grace and Kelly are sharing household chores and think they have an even exchange. If instead they paid each other for the chores the other did, what would happen to GDP?

Which statement best describes real GDP?

What do international GDP and socioeconomic data show?

A Canadian solar panel company purchases new assembly equipment. What impact does this purchase have on investment and GDP?

In a simple circular-flow diagram, how are total income and total expenditure interrelated?

Which question is more likely to be studied by a macroeconomist than a microeconomist?

In 2018, how large were Canadian government purchases of goods and services?

Suppose that 25 years ago a country had nominal GDP of 1000, a GDP deflator of 200, and a population of 100. Today, that country has a nominal GDP of 3000, a deflator of 400, and a population of 150. What happened to the real GDP per person?

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