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

In 2014, how large were Canadian government purchases of goods and services?

Accepted Answer

A)  5 percent of GDP 
B)  12 percent of GDP 
C)  21 percent of GDP 
D)  26 percent of GDP 
A)  5 percent of GDP 
B)  12 percent of GDP 
C)  21 percent of GDP 
D)  26 percent of GDP

Question 3

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 4

Which of the following is counted in Canadian GDP?

Accepted Answer

A)  goods and services produced by Canadian citizens working in the U.S. 
B)  American intermediate goods used in the production of Canadian final goods 
C)  Canadian final goods and services purchased by the American government 
D)  American final goods and services purchased by the Canadian government 
A)  goods and services produced by Canadian citizens working in the U.S. 
B)  American intermediate goods used in the production of Canadian final goods 
C)  Canadian final goods and services purchased by the American government 
D)  American final goods and services purchased by the Canadian government

Question 5

Melissa is a Canadian resident. In a typical year, she receives wages from a local employer and dividends from owning shares in some foreign companies. How do these incomes contribute to Canadian GDP? How does the income approach to GDP differ from the way GNP is calculated?

Accepted Answer

The rationale for the equivalence betwee

Question 6

Over the past few decades, Canadians have chosen to cook less at home and eat more at restaurants. How has this practice affected GDP?

Accepted Answer

A)  It has increased measured GDP. 
B)  It has reduced measured GDP. 
C)  It has not affected measured GDP. 
D)  It has had an ambiguous effect on GDP. 
A)  It has increased measured GDP. 
B)  It has reduced measured GDP. 
C)  It has not affected measured GDP. 
D)  It has had an ambiguous effect on GDP.

Question 7

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 8

Which example will increase Canadian net exports?

Accepted Answer

A)  A Canadian resident buys a skateboard manufactured in Canada by a German firm. 
B)  A U.S. resident buys a Blackberry manufactured in Canada. 
C)  A Canadian resident buys a souvenir in Paris. 
D)  A Canadian resident buys Microsoft shares. 
A)  A Canadian resident buys a skateboard manufactured in Canada by a German firm. 
B)  A U.S. resident buys a Blackberry manufactured in Canada. 
C)  A Canadian resident buys a souvenir in Paris. 
D)  A Canadian resident buys Microsoft shares.

Question 9

What would be the cause of a 2% increase in nominal GDP?

Accepted Answer

A)  a 1% increase in prices of and a 3% decrease in output 
B)  a 1% decrease in prices and a 1% increase in output 
C)  a 1% increase in prices and a 1% increase in output 
D)  a 3% increase in prices and a 1% increase in output 
A)  a 1% increase in prices of and a 3% decrease in output 
B)  a 1% decrease in prices and a 1% increase in output 
C)  a 1% increase in prices and a 1% increase in output 
D)  a 3% increase in prices and a 1% increase in output

Question 10

If the GDP deflator is 400 and nominal GDP is $2 trillion billion, 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 11

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 12

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 13

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

Accepted Answer

A)  purchases of previously owned homes 
B)  purchases of government bonds 
C)  purchases of new cars 
D)  purchases of new houses 
A)  purchases of previously owned homes 
B)  purchases of government bonds 
C)  purchases of new cars 
D)  purchases of new houses

Question 14

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 15

When economists talk about growth in the economy, how do they measure that growth?

Accepted Answer

A)  with the absolute change in nominal GDP 
B)  with the percentage change in real GDP 
C)  with the absolute change in real GDP 
D)  with the percentage change in nominal GDP 
A)  with the absolute change in nominal GDP 
B)  with the percentage change in real GDP 
C)  with the absolute change in real GDP 
D)  with the percentage change in nominal GDP

Question 16

A Canadian company owned by a Japanese citizen has opened a sushi restaurant in Romania. Where is the profit included?

Accepted Answer

A)  in Romanian GNP 
B)  in Canadian GDP 
C)  in Romanian GDP 
D)  in Japanese GDP 
A)  in Romanian GNP 
B)  in Canadian GDP 
C)  in Romanian GDP 
D)  in Japanese GDP

Question 17

What is the difference between nominal and real GDP?

Accepted Answer

A)  Nominal GDP values production at current prices, while real GDP values production at constant prices. 
B)  Nominal GDP values production at constant prices, while real GDP values production at current prices. 
C)  Nominal GDP values production at market prices, while real GDP values production at the cost of the resources used in the production process. 
D)  Nominal GDP consistently underestimates the value of production, while real GDP consistently overestimates the value of production. 
A)  Nominal GDP values production at current prices, while real GDP values production at constant prices. 
B)  Nominal GDP values production at constant prices, while real GDP values production at current prices. 
C)  Nominal GDP values production at market prices, while real GDP values production at the cost of the resources used in the production process. 
D)  Nominal GDP consistently underestimates the value of production, while real GDP consistently overestimates the value of production.

Question 18

Margret reports the following income for the last year: $80,000 from employment, $2000 interest from bank accounts, and $25,000 profits and dividends. Of this income, she has spent $50,000 on food and other consumption goods, $20,000 on vacations abroad, saved $10,000 in her retirement account, spent $20,000 on purchasing extra shares and $10,000 on new computers for her business.​
a) What was the increase in GDP generated by Margret's activity?
b) What are her certain contributions to consumption, investment, and net exports?
c) What is the value of production that was newly created by Margret's productive activity?

Accepted Answer

a)Using the income definition of GDP, Ma

Question 19

Dave knits ski caps with tassels at a negligible cost. He sells 4 percent more caps this year than last year. The market price this year is 1 percent lower than last year. Which inflation rate makes Dave as well off this year as last year?

Accepted Answer

A)  1 percent 
B)  2 percent 
C)  3 percent 
D)  4 percent 
A)  1 percent 
B)  2 percent 
C)  3 percent 
D)  4 percent

Question 20

If the government reports that "GDP has increased at an annual rate of 6.0 percent for the fourth quarter of 2015," by how much has GDP increased?

Accepted Answer

A)  6.0 percent during 2015 
B)  24.0 percent during 2015 
C)  6.0 percent during the fourth quarter of 2015 
D)  1.5 percent during the fourth quarter of 2015 
A)  6.0 percent during 2015 
B)  24.0 percent during 2015 
C)  6.0 percent during the fourth quarter of 2015 
D)  1.5 percent during the fourth quarter of 2015

If GDP rises, what happens?

In 2014, how large were Canadian government purchases of goods and services?

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?

Which of the following is counted in Canadian GDP?

Melissa is a Canadian resident. In a typical year, she receives wages from a local employer and dividends from owning shares in some foreign companies. How do these incomes contribute to Canadian GDP? How does the income approach to GDP differ from the way GNP is calculated?

Over the past few decades, Canadians have chosen to cook less at home and eat more at restaurants. How has this practice affected GDP?

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

Which example will increase Canadian net exports?

What would be the cause of a 2% increase in nominal GDP?

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

How is GDP computed?

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?

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

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

When economists talk about growth in the economy, how do they measure that growth?

A Canadian company owned by a Japanese citizen has opened a sushi restaurant in Romania. Where is the profit included?

What is the difference between nominal and real GDP?

Dave knits ski caps with tassels at a negligible cost. He sells 4 percent more caps this year than last year. The market price this year is 1 percent lower than last year. Which inflation rate makes Dave as well off this year as last year?

If the government reports that "GDP has increased at an annual rate of 6.0 percent for the fourth quarter of 2015," by how much has GDP increased?

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 and 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?

In 2014, how large were Canadian government purchases of goods and services?

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?

Which of the following is counted in Canadian GDP?

Melissa is a Canadian resident. In a typical year, she receives wages from a local employer and dividends from owning shares in some foreign companies. How do these incomes contribute to Canadian GDP? How does the income approach to GDP differ from the way GNP is calculated?

Over the past few decades, Canadians have chosen to cook less at home and eat more at restaurants. How has this practice affected GDP?

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

Which example will increase Canadian net exports?

What would be the cause of a 2% increase in nominal GDP?

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

How is GDP computed?

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?

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

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

When economists talk about growth in the economy, how do they measure that growth?

A Canadian company owned by a Japanese citizen has opened a sushi restaurant in Romania. Where is the profit included?

What is the difference between nominal and real GDP?

Dave knits ski caps with tassels at a negligible cost. He sells 4 percent more caps this year than last year. The market price this year is 1 percent lower than last year. Which inflation rate makes Dave as well off this year as last year?

If the government reports that "GDP has increased at an annual rate of 6.0 percent for the fourth quarter of 2015," by how much has GDP increased?

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 and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters