Question 1

Nondurable goods are products:

Accepted Answer

A) with expected lives of over three years. 
B) with expected lives of less than three years. 
C) with expected lives of over 2 years. 
D) with expected lives of under 2 years. 
A) with expected lives of over three years. 
B) with expected lives of less than three years. 
C) with expected lives of over 2 years. 
D) with expected lives of under 2 years.

Question 2

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. 
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.

Question 3

Wages, salaries, and supplementary labour income in Canada:

Accepted Answer

A) is about 30% of the income categories. 
B) is the smallest category in the calculation of the GDP by the income approach. 
C) is the largest category in the calculation of the GDP by the income approach. 
D) is the only category in the calculation of the GDP by the income approach. 
A) is about 30% of the income categories. 
B) is the smallest category in the calculation of the GDP by the income approach. 
C) is the largest category in the calculation of the GDP by the income approach. 
D) is the only category in the calculation of the GDP by the income approach.

Question 4

An example of a final good in national income accounts would be new:

Accepted Answer

A) lawn mowers purchased by Cut-rite Mowers. 
B) flowers purchased by homeowner Lenny Davis. 
C) chemicals purchased by Green Grass Lawn Care. 
D) trees purchased by Wendy Lee's Garden Center. 
A) lawn mowers purchased by Cut-rite Mowers. 
B) flowers purchased by homeowner Lenny Davis. 
C) chemicals purchased by Green Grass Lawn Care. 
D) trees purchased by Wendy Lee's Garden Center.

Question 5

Environmental pollution is accounted for in:

Accepted Answer

A) GDP. 
B) DI. 
C) PI. 
D) None of these. 
A) GDP. 
B) DI. 
C) PI. 
D) None of these.

Question 6

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. 
A) the Consumer Price Index (CPI). 
B) the Producer Price Index (PPI). 
C) the GDP price index. 
D) exchange rates.

Question 7

Which of the following best defines disposable income?

Accepted Answer

A) income received by households less personal taxes 
B) the before-tax income received by households 
C) all income earned by resource suppliers for their current contributions to production 
D) the market value of the annual output net of consumption of fixed capital 
A) income received by households less personal taxes 
B) the before-tax income received by households 
C) all income earned by resource suppliers for their current contributions to production 
D) the market value of the annual output net of consumption of fixed capital

Question 8

Gordon James is a person who sells narcotics "on the street." This type of illegal activity:

Accepted Answer

A) would be considered double counting in calculating GDP. 
B) is estimated and included in GDP figures. 
C) is excluded from GDP figures. 
D) causes GDP to be overstated. 
A) would be considered double counting in calculating GDP. 
B) is estimated and included in GDP figures. 
C) is excluded from GDP figures. 
D) causes GDP to be overstated.

Question 9

Which of the following is a final good or service?

Accepted Answer

A) diesel fuel bought for a delivery truck 
B) fertilizer purchased by a farm supplier 
C) a haircut 
D) Chevrolet windows purchased by a General Motors assembly plant 
A) diesel fuel bought for a delivery truck 
B) fertilizer purchased by a farm supplier 
C) a haircut 
D) Chevrolet windows purchased by a General Motors assembly plant

Question 10

In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

Accepted Answer

A) of changes in our trade deficits and surpluses. 
B) the length of the workweek has declined historically. 
C) the price level may change over time. 
D) depreciation may be greater or smaller than gross investment. 
A) of changes in our trade deficits and surpluses. 
B) the length of the workweek has declined historically. 
C) the price level may change over time. 
D) depreciation may be greater or smaller than gross investment.

Question 11

Gross domestic product (GDP) is equal to personal consumption expenditures:

Accepted Answer

A) plus gross investment, minus government spending, and plus net exports. 
B) plus gross investment, plus government spending, and minus net exports. 
C) minus gross investment, plus government spending, and plus net exports. 
D) plus gross investment, plus government spending, and plus net exports. 
A) plus gross investment, minus government spending, and plus net exports. 
B) plus gross investment, plus government spending, and minus net exports. 
C) minus gross investment, plus government spending, and plus net exports. 
D) plus gross investment, plus government spending, and plus net exports.

Question 12

GDP tends to underestimate the productive activity in the economy because it excludes:

Accepted Answer

A) spending by the government on military goods. 
B) spending by businesses to reduce the level of pollution. 
C) the work done by construction companies to remodel homes. 
D) the personal labour time homeowners spend on home repairs. 
A) spending by the government on military goods. 
B) spending by businesses to reduce the level of pollution. 
C) the work done by construction companies to remodel homes. 
D) the personal labour time homeowners spend on home repairs.

Question 13

National income accountants can avoid multiple counting by:

Accepted Answer

A) including transfers in their calculations. 
B) counting both intermediate and final goods. 
C) only counting final goods. 
D) only counting intermediate goods. 
A) including transfers in their calculations. 
B) counting both intermediate and final goods. 
C) only counting final goods. 
D) only counting intermediate goods.

Question 14

In Year 1, inventories rose by $25 billion.In Year 2, inventories fell by $20 billion.In calculating total investment, national income accountants would have:

Accepted Answer

A) decreased it by $25 billion in Year 1 and increased it by $20 billion in Year 2. 
B) decreased it by $25 billion in Year 1 and increased it by $5 billion in Year 2. 
C) increased it by $25 billion in Year 1 and decreased it by $5 billion in Year 2. 
D) increased it by $25 billion in Year 1 and decreased it by $20 billion in Year 2. 
A) decreased it by $25 billion in Year 1 and increased it by $20 billion in Year 2. 
B) decreased it by $25 billion in Year 1 and increased it by $5 billion in Year 2. 
C) increased it by $25 billion in Year 1 and decreased it by $5 billion in Year 2. 
D) increased it by $25 billion in Year 1 and decreased it by $20 billion in Year 2.

Question 15

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. 
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.

Question 16

Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the highest percentage?

Accepted Answer

A) Mexico 
B) South Korea 
C) India 
D) Italy 
A) Mexico 
B) South Korea 
C) India 
D) Italy

Question 17

Assume an economy which is producing only one product.Output and price data for a three-year period are as follows.   Refer to the above data.If year 2 is chosen as the base year, in years 1 and 3 the price index values, respectively, are:

Accepted Answer

A) 4 and 6. 
B) 6 and 4. 
C) 120 and 100. 
D) 100 and 150. 
A) 4 and 6. 
B) 6 and 4. 
C) 120 and 100. 
D) 100 and 150.

Question 18

Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5.The current year per unit prices of these three goods are A = $2, B = $3, and C = $1.Refer to the above information.If the per unit prices of the three goods each were $1 in a base year used to construct a GDP price index, then real GDP in the current year:

Accepted Answer

A) is $110. 
B) is $115. 
C) is $45. 
D) cannot be determined on the basis of this data. 
A) is $110. 
B) is $115. 
C) is $45. 
D) cannot be determined on the basis of this data.

Question 19

In calculating GDP by the expenditure approach, we sum up:

Accepted Answer

A) consumption, investment, government purchases, exports, and imports. 
B) investment, government purchases, consumption, and net exports. 
C) consumption, investment, wages, and rents. 
D) consumption, investment, government purchases, and imports. 
A) consumption, investment, government purchases, exports, and imports. 
B) investment, government purchases, consumption, and net exports. 
C) consumption, investment, wages, and rents. 
D) consumption, investment, government purchases, and imports.

Question 20

By summing the values added at each stage in the production of some good we obtain:

Accepted Answer

A) the price of that good. 
B) the total income generated by that good's production. 
C) the total cost (including profits) of that product. 
D) all of these. 
A) the price of that good. 
B) the total income generated by that good's production. 
C) the total cost (including profits) of that product. 
D) all of these.

Exam 7: Part B: Measuring the Economys Output

Nondurable goods are products:

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

Wages, salaries, and supplementary labour income in Canada:

An example of a final good in national income accounts would be new:

Environmental pollution is accounted for in:

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

Which of the following best defines disposable income?

Gordon James is a person who sells narcotics "on the street." This type of illegal activity:

Which of the following is a final good or service?

In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

Gross domestic product (GDP) is equal to personal consumption expenditures:

GDP tends to underestimate the productive activity in the economy because it excludes:

National income accountants can avoid multiple counting by:

In Year 1, inventories rose by $25 billion.In Year 2, inventories fell by $20 billion.In calculating total investment, national income accountants would have:

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

Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the highest percentage?

Assume an economy which is producing only one product.Output and price data for a three-year period are as follows. Refer to the above data.If year 2 is chosen as the base year, in years 1 and 3 the price index values, respectively, are:

In calculating GDP by the expenditure approach, we sum up:

By summing the values added at each stage in the production of some good we obtain:

Part A: Limits, Alternatives, and Choices

Part B: Limits, Alternatives, and Choices

Part A: The Market System and the Circular Flow

Part B: The Market System and the Circular Flow

Part A: Demand, Supply, and Market Equilibrium

Part B: Demand, Supply, and Market Equilibrium

Part A: Market Failures: Public Goods and Externalities

Part B: Market Failures: Public Goods and Externalities

Part A: Governments Role and Government Failure

Part B: Governments Role and Government Failure

Part A: An Introduction to Macroeconomics

Part B: An Introduction to Macroeconomics

Part A: Measuring the Economys Output

Part A: Economic Growth

Part B: Economic Growth

Part A: Business Cycles, Unemployment, and Inflation

Part B: Business Cycles, Unemployment, and Inflation

Part A: Basic Macroeconomic Relationships

Part B: Basic Macroeconomic Relationships

Part A: The Aggregate Expenditures Model

Part B: The Aggregate Expenditures Model

Part A: Aggregate Demand and Aggregate Supply

Part B: Aggregate Demand and Aggregate Supply

Part A: Fiscal Policy, Deficits, Surpluses, and Debt

Part B: Fiscal Policy, Deficits, Surpluses, and Debt

Part A: Money, Banking, and Money Creation

Part B: Money, Banking, and Money Creation

Part A: Interest Rates and Monetary Policy

Part B: Interest Rates and Monetary Policy

Part A: Long-Run Macroeconomic Adjustments

Part B: Long-Run Macroeconomic Adjustments

Part A: International Trade

Part B: International Trade

Part C: Financial Economics

Part A: The Balance of Payments and Exchange Rates

Part B: The Balance of Payments and Exchange Rates

The Economics of Developing Countries

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