Question 1

The Chain-weighted index links each year to the previous year through:

Accepted Answer

A) the use of nominal GDPs in prior years. 
B) the use of both the prior year prices and current year prices. 
C) the use of real GDPs in prior years. 
D) the use of base year implicit price index. 
A) the use of nominal GDPs in prior years. 
B) the use of both the prior year prices and current year prices. 
C) the use of real GDPs in prior years. 
D) the use of base year implicit price index.

Question 2

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 percent 
A) 60 percent 
B) 65 percent 
C) 70 percent 
D) 75 percent

Question 3

Refer to the information below.Net investment: All figures are in billions.

Accepted Answer

A) cannot be determined from the data given. 
B) is $45. 
C) is $53. 
D) is $72. 
A) cannot be determined from the data given. 
B) is $45. 
C) is $53. 
D) is $72.

Question 4

A nation's stock of capital goods will decline when:

Accepted Answer

A) gross investment exceeds net investment. 
B) net investment is positive, but less than gross investment. 
C) depreciation exceeds gross investment. 
D) gross investment exceeds depreciation. 
A) gross investment exceeds net investment. 
B) net investment is positive, but less than gross investment. 
C) depreciation exceeds gross investment. 
D) gross investment exceeds depreciation.

Question 5

In an economy, the value of inventories rose from $275 billion in 2020 to $300 billion in 2021.In calculating the total investment for 2021, national income accountants would increase it by $25 billion.

Accepted Answer

A) True 
 B)False

Question 6

Suppose nominal GDP was $360 billion in 2010 and $450 billion in 2020.The appropriate price index was 100 in 2010 and 120 in 2020.It can be concluded that between 2010 and 2020 real GDP:

Accepted Answer

A) increased by about $15 billion. 
B) decreased by about $32 billion. 
C) increased by about $90 billion. 
D) increased by about $117 billion. 
A) increased by about $15 billion. 
B) decreased by about $32 billion. 
C) increased by about $90 billion. 
D) increased by about $117 billion.

Question 7

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

Accepted Answer

A) Sweden 
B) Germany 
C) Canada 
D) Japan 
A) Sweden 
B) Germany 
C) Canada 
D) Japan

Question 8

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion.In year 2, the total expenditure for the same market basket of goods was $5,500 billion.What was the GDP price index for the economy in year 2?

Accepted Answer

A) 100 
B) 110 
C) 115 
D) 120 
A) 100 
B) 110 
C) 115 
D) 120

Question 9

Net exports are a negative number when:

Accepted Answer

A) a nation's imports of goods and services fall. 
B) a nation's imports of goods and services rise. 
C) a nation's exports of goods and services are greater than its imports. 
D) a nation's imports of goods and services are greater than its exports. 
A) a nation's imports of goods and services fall. 
B) a nation's imports of goods and services rise. 
C) a nation's exports of goods and services are greater than its imports. 
D) a nation's imports of goods and services are greater than its exports.

Question 10

Economists define investment to include:

Accepted Answer

A) any increase in business inventories. 
B) the addition of cash to a savings account. 
C) the purchase of common or preferred stock. 
D) the purchase of any durable good, for example, an automobile or a refrigerator. 
A) any increase in business inventories. 
B) the addition of cash to a savings account. 
C) the purchase of common or preferred stock. 
D) the purchase of any durable good, for example, an automobile or a refrigerator.

Question 11

In calculating GDP, national income accountants:

Accepted Answer

A) treat inventory changes as an adjustment to personal consumption expenditures. 
B) ignore inventories because they do not represent final goods. 
C) subtract increases in inventories and add decreases in inventories. 
D) add increases in inventories and subtract decreases in inventories. 
A) treat inventory changes as an adjustment to personal consumption expenditures. 
B) ignore inventories because they do not represent final goods. 
C) subtract increases in inventories and add decreases in inventories. 
D) add increases in inventories and subtract decreases in inventories.

Question 12

Refer to the information below.The gross domestic product is: All figures are in billions of dollars.

Accepted Answer

A) $326 
B) $282 
C) $309 
D) $300 
A) $326 
B) $282 
C) $309 
D) $300

Question 13

In November 2017, General Motors produced an automobile that was delivered to a local dealership in December 2017.The auto was sold to Sharon Smith for personal use in February 2018.Following national income accounting practices, this auto would be counted as:

Accepted Answer

A) consumption in 2017 and 2018. 
B) consumption in 2017 and investment in 2018. 
C) disinvestment in 2017 and consumption in 2018. 
D) investment in 2017 and disinvestment in 2018. 
A) consumption in 2017 and 2018. 
B) consumption in 2017 and investment in 2018. 
C) disinvestment in 2017 and consumption in 2018. 
D) investment in 2017 and disinvestment in 2018.

Question 14

A price index is:

Accepted Answer

A) a comparison of the price of a market basket from a fixed point of reference. 
B) a comparison of real GDP in one period relative to another. 
C) the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period. 
D) a ratio of real GDP to nominal GDP. 
A) a comparison of the price of a market basket from a fixed point of reference. 
B) a comparison of real GDP in one period relative to another. 
C) the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period. 
D) a ratio of real GDP to nominal GDP.

Question 15

Real GDP is:

Accepted Answer

A) the nominal value of all goods and services produced in the economy. 
B) the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation. 
C) that aggregate output which is produced when the economy is operating at full employment. 
D) always greater than nominal GDP. 
A) the nominal value of all goods and services produced in the economy. 
B) the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation. 
C) that aggregate output which is produced when the economy is operating at full employment. 
D) always greater than nominal GDP.

Question 16

A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end.Consumption of private fixed capital in the year was $25 billion.Assuming stable prices, gross investment was:

Accepted Answer

A) $25 billion. 
B) $50 billion. 
C) $75 billion. 
D) $90 billion. 
A) $25 billion. 
B) $50 billion. 
C) $75 billion. 
D) $90 billion.

Question 17

The largest component of total expenditures in Canada is:

Accepted Answer

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

Question 18

Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.

Accepted Answer

A) True 
 B)False

Question 19

In 2001, in calculation of the implicit price index, Statistics Canada switched from fixed based price index method to a chain-weighted index.The main reason for this was:

Accepted Answer

A) to avoid complex calculation of the fixed based price index. 
B) to better represent the weight of each category especially the information technology sector. 
C) to avoid underestimation of the GDP growth, due to the rapid growth in the information technology sector. 
D) to be able to use the relatively constant weights for the items in the GDP year after year. 
A) to avoid complex calculation of the fixed based price index. 
B) to better represent the weight of each category especially the information technology sector. 
C) to avoid underestimation of the GDP growth, due to the rapid growth in the information technology sector. 
D) to be able to use the relatively constant weights for the items in the GDP year after year.

Question 20

GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:

Accepted Answer

A) public transfer payments to households. 
B) the consumption of fixed capital. 
C) intermediate goods. 
D) the underground economy. 
A) public transfer payments to households. 
B) the consumption of fixed capital. 
C) intermediate goods. 
D) the underground economy.

Exam 7: Part B: Measuring the Economys Output

The Chain-weighted index links each year to the previous year through:

Refer to the information below.Net investment: All figures are in billions.

A nation's stock of capital goods will decline when:

In an economy, the value of inventories rose from $275 billion in 2020 to $300 billion in 2021.In calculating the total investment for 2021, national income accountants would increase it by $25 billion.

Suppose nominal GDP was $360 billion in 2010 and $450 billion in 2020.The appropriate price index was 100 in 2010 and 120 in 2020.It can be concluded that between 2010 and 2020 real GDP:

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

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion.In year 2, the total expenditure for the same market basket of goods was $5,500 billion.What was the GDP price index for the economy in year 2?

Net exports are a negative number when:

Economists define investment to include:

In calculating GDP, national income accountants:

Refer to the information below.The gross domestic product is: All figures are in billions of dollars.

In November 2017, General Motors produced an automobile that was delivered to a local dealership in December 2017.The auto was sold to Sharon Smith for personal use in February 2018.Following national income accounting practices, this auto would be counted as:

A price index is:

Real GDP is:

A nation's capital stock was valued at $300 billion at the start of the year and $350 billion at the end.Consumption of private fixed capital in the year was $25 billion.Assuming stable prices, gross investment was:

The largest component of total expenditures in Canada is:

Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.

In 2001, in calculation of the implicit price index, Statistics Canada switched from fixed based price index method to a chain-weighted index.The main reason for this was:

GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:

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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