Question 1

Disposable personal income:

Accepted Answer

A) is computed by subtracting personal tax from personal income. 
B) is generally greater than personal income. 
C) includes corporate profits but not dividends. 
D) does not include government transfers to individuals. 
A) is computed by subtracting personal tax from personal income. 
B) is generally greater than personal income. 
C) includes corporate profits but not dividends. 
D) does not include government transfers to individuals.

Question 2

If nominal GDP increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP _____ by _____ percent.

Accepted Answer

A) increased; 2 
B) decreased; 2 
C) increased; 8 
D) decreased; 8 
A) increased; 2 
B) decreased; 2 
C) increased; 8 
D) decreased; 8

Question 3

An increase in the price of imported goods will show up in:

Accepted Answer

A) the CPI but not in the GDP deflator. 
B) the GDP deflator but not in the CPI. 
C) both the CPI and the GDP deflator. 
D) neither the CPI nor the GDP deflator. 
A) the CPI but not in the GDP deflator. 
B) the GDP deflator but not in the CPI. 
C) both the CPI and the GDP deflator. 
D) neither the CPI nor the GDP deflator.

Question 4

To avoid double counting in the computation of GDP, GDP includes only the value of _____ goods.

Accepted Answer

A) final 
B) used 
C) intermediate 
D) investment 
A) final 
B) used 
C) intermediate 
D) investment

Question 5

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

Accepted Answer

A) is sold to households. 
B) is stored away for later sale. 
C) grows stale and is thrown away. 
D) is sold to other firms. 
A) is sold to households. 
B) is stored away for later sale. 
C) grows stale and is thrown away. 
D) is sold to other firms.

Question 6

Two equivalent ways to view GDP are as the:

Accepted Answer

A) total payments made to all workers in the economy or the total profits of all firms and businesses in the economy. 
B) total expenditures on all goods produced in the economy or the total income earned from producing all services in the economy. 
C) total profits of all firms and businesses in the economy or the total consumption of goods and services by all households in the economy. 
D) total income of everyone in the economy or the total expenditure on the economy's output of goods and services. 
A) total payments made to all workers in the economy or the total profits of all firms and businesses in the economy. 
B) total expenditures on all goods produced in the economy or the total income earned from producing all services in the economy. 
C) total profits of all firms and businesses in the economy or the total consumption of goods and services by all households in the economy. 
D) total income of everyone in the economy or the total expenditure on the economy's output of goods and services.

Question 7

If nominal GDP in 2019 equals $14 trillion and real GDP in 2019 equals $11 trillion, what is the value of the GDP deflator?

Accepted Answer

A) 0.79 
B) 1.03 
C) 1.27 
D) 3.2 
A) 0.79 
B) 1.03 
C) 1.27 
D) 3.2

Question 8

In the national income accounts, consumption expenditures include all of the following except household purchases of:

Accepted Answer

A) durable goods. 
B) nondurable goods. 
C) new residential housing. 
D) services. 
A) durable goods. 
B) nondurable goods. 
C) new residential housing. 
D) services.

Question 9

A fixed-weight price index like the CPI _____ the change in the cost of living because it _____ take into account that people can substitute less expensive goods for ones that have become more expensive.

Accepted Answer

A) underestimates; does not 
B) overestimates; does 
C) accurately estimates; does 
D) overestimates; does not 
A) underestimates; does not 
B) overestimates; does 
C) accurately estimates; does 
D) overestimates; does not

Question 10

Exhibit: Totals Recorded for Canada   In the exhibit above, what were GDP, consumption expenditures, investment expenditures, and net exports?

Accepted Answer

$2,030; $1

Question 11

There are a number of measures of aggregate economic activity, such as GDP, GNP, national income, personal income, and disposable personal income. Each of these measures can be a good indicator, depending on the issue under consideration. For each of the following issues, give your reasons for selecting one of the measures just mentioned as the best indicator to use in studying the issue:
a.the proportion of income households save
b.the relative share of earnings going to labour versus capital
c.the total output of final goods and services

Accepted Answer

a.Disposable personal income provides a

Question 12

The value added of an item produced refers to:

Accepted Answer

A) a firm's profits on the item sold. 
B) the value of the labour inputs in the production of an item. 
C) the value of a firm's output less the value of its costs. 
D) the value of a firm's output less the value of the intermediate goods that the firm purchases. 
A) a firm's profits on the item sold. 
B) the value of the labour inputs in the production of an item. 
C) the value of a firm's output less the value of its costs. 
D) the value of a firm's output less the value of the intermediate goods that the firm purchases.

Question 13

According to the definition used by Statistics Canada, a person is not in the labour force if that person:

Accepted Answer

A) is going to school full time. 
B) is temporarily absent from a job because of illness. 
C) has been temporarily laid off. 
D) is out of a job and was looking for work during the previous four weeks. 
A) is going to school full time. 
B) is temporarily absent from a job because of illness. 
C) has been temporarily laid off. 
D) is out of a job and was looking for work during the previous four weeks.

Question 14

City A has a total population of 10 million, of which 70 percent are adults. Assume that 20 percent of the adult population is not looking for a job and 60 percent of the remaining adult population is employed. Compute the following:
a. Labour-force participation rate
b. Unemployment rate

Accepted Answer

Adult Population = (10)(70))/100 = 7 mil

Question 15

Cass was paid $500 in Old Age Security from the government. Though it was an expenditure made by the government, it is not included in the G component of GDP. Explain why.

Accepted Answer

Even though the government paid Cass, it

Question 16

The Labour Force survey conducted by Statistics Canada provides estimates of the number of workers _____, while the Survey of Employment, Payroll, and Hours provides estimates of the number of workers _____.

Accepted Answer

A) self-employed; unemployed 
B) unemployed; self-employed 
C) with jobs; on firms' payrolls 
D) on firms' payrolls; with jobs 
A) self-employed; unemployed 
B) unemployed; self-employed 
C) with jobs; on firms' payrolls 
D) on firms' payrolls; with jobs

Question 17

Is real GDP a better measure of economic well-being of a country than nominal GDP? Give an explanation for your answer.

Accepted Answer

Yes. Nominal GDP is the current price mu

Question 18

Exhibit: Totals Recorded for Canada   In the exhibit above, what were the Gross National Product and the Net National Product?

Accepted Answer

$2,000 and

Question 19

When prices of different goods are increasing by different amounts, the price index that will rise the fastest is:

Accepted Answer

A) the Laspeyres index. 
B) the CPI. 
C) the GDP deflator. 
D) a Paasche index. 
A) the Laspeyres index. 
B) the CPI. 
C) the GDP deflator. 
D) a Paasche index.

Question 20

The national income accounts identity for an open economy is:

Accepted Answer

A) Y = C + I + G - NX. 
B) Y = C + I + G + NX. 
C) Y = C + I + G. 
D) Y = C + I - G. 
A) Y = C + I + G - NX. 
B) Y = C + I + G + NX. 
C) Y = C + I + G. 
D) Y = C + I - G.

Disposable personal income:

If nominal GDP increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP _ by _ percent.

An increase in the price of imported goods will show up in:

To avoid double counting in the computation of GDP, GDP includes only the value of _____ goods.

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

Two equivalent ways to view GDP are as the:

If nominal GDP in 2019 equals $14 trillion and real GDP in 2019 equals $11 trillion, what is the value of the GDP deflator?

In the national income accounts, consumption expenditures include all of the following except household purchases of:

A fixed-weight price index like the CPI _ the change in the cost of living because it _ take into account that people can substitute less expensive goods for ones that have become more expensive.

Exhibit: Totals Recorded for Canada In the exhibit above, what were GDP, consumption expenditures, investment expenditures, and net exports?

The value added of an item produced refers to:

According to the definition used by Statistics Canada, a person is not in the labour force if that person:

City A has a total population of 10 million, of which 70 percent are adults. Assume that 20 percent of the adult population is not looking for a job and 60 percent of the remaining adult population is employed. Compute the following: a. Labour-force participation rate b. Unemployment rate

Cass was paid $500 in Old Age Security from the government. Though it was an expenditure made by the government, it is not included in the G component of GDP. Explain why.

The Labour Force survey conducted by Statistics Canada provides estimates of the number of workers _, while the Survey of Employment, Payroll, and Hours provides estimates of the number of workers _.

Is real GDP a better measure of economic well-being of a country than nominal GDP? Give an explanation for your answer.

Exhibit: Totals Recorded for Canada In the exhibit above, what were the Gross National Product and the Net National Product?

When prices of different goods are increasing by different amounts, the price index that will rise the fastest is:

The national income accounts identity for an open economy is:

The Science of Macroeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labour Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Islm Model

Aggregate Demand Ii: Applying the Islm Model

The Open Economy Revisited: the Mundellfleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

A Dynamic Model of Economic Fluctuations

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

The Microfoundations of Consumption and Investment

Filters

Exam 2: The Data of Microeconomics

Disposable personal income:

If nominal GDP increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP _____ by _____ percent.

An increase in the price of imported goods will show up in:

To avoid double counting in the computation of GDP, GDP includes only the value of _____ goods.

Assume that a bakery hires more workers and pays them wages and that the workers produce more bread. GDP increases in all of the following cases except when the bread:

Two equivalent ways to view GDP are as the:

If nominal GDP in 2019 equals $14 trillion and real GDP in 2019 equals $11 trillion, what is the value of the GDP deflator?

In the national income accounts, consumption expenditures include all of the following except household purchases of:

A fixed-weight price index like the CPI _____ the change in the cost of living because it _____ take into account that people can substitute less expensive goods for ones that have become more expensive.

Exhibit: Totals Recorded for Canada In the exhibit above, what were GDP, consumption expenditures, investment expenditures, and net exports?

The value added of an item produced refers to:

According to the definition used by Statistics Canada, a person is not in the labour force if that person:

City A has a total population of 10 million, of which 70 percent are adults. Assume that 20 percent of the adult population is not looking for a job and 60 percent of the remaining adult population is employed. Compute the following: a. Labour-force participation rate b. Unemployment rate

Cass was paid $500 in Old Age Security from the government. Though it was an expenditure made by the government, it is not included in the G component of GDP. Explain why.

The Labour Force survey conducted by Statistics Canada provides estimates of the number of workers _____, while the Survey of Employment, Payroll, and Hours provides estimates of the number of workers _____.

Is real GDP a better measure of economic well-being of a country than nominal GDP? Give an explanation for your answer.

Exhibit: Totals Recorded for Canada In the exhibit above, what were the Gross National Product and the Net National Product?

When prices of different goods are increasing by different amounts, the price index that will rise the fastest is:

The national income accounts identity for an open economy is:

The Science of Macroeconomics

National Income: Where It Comes From and Where It Goes

The Monetary System: What It Is and How It Works

Inflation: Its Causes, Effects, and Social Costs

The Open Economy

Unemployment and the Labour Market

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Introduction to Economic Fluctuations

Aggregate Demand I: Building the Islm Model

Aggregate Demand Ii: Applying the Islm Model

The Open Economy Revisited: the Mundellfleming Model and the Exchange-Rate Regime

Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment

A Dynamic Model of Economic Fluctuations

Alternative Perspectives on Stabilization Policy

Government Debt and Budget Deficits

The Financial System: Opportunities and Dangers

The Microfoundations of Consumption and Investment

Filters

If nominal GDP increased by 5 percent and the GDP deflator increased by 3 percent, then real GDP _ by _ percent.

A fixed-weight price index like the CPI _ the change in the cost of living because it _ take into account that people can substitute less expensive goods for ones that have become more expensive.

The Labour Force survey conducted by Statistics Canada provides estimates of the number of workers _, while the Survey of Employment, Payroll, and Hours provides estimates of the number of workers _.