Question 1

-Refer to the Table 5-3. What can we conclude about real GDP from this information?

Accepted Answer

A)  Real GDP was higher in 2015 than in 2014, and real GDP in 2014 was higher than in 2013. 
B)  Real GDP was higher in 2015 than in 2013, and real GDP in 2014 was higher than in 2015. 
C)  Real GDP was higher in 2013 than in 2014, and real GDP in 2014 was higher than in 2015. 
D)  Real GDP was higher in 2013 than in 2014, and real GDP in 2015 was higher than in 2014. 
A)  Real GDP was higher in 2015 than in 2014, and real GDP in 2014 was higher than in 2013. 
B)  Real GDP was higher in 2015 than in 2013, and real GDP in 2014 was higher than in 2015. 
C)  Real GDP was higher in 2013 than in 2014, and real GDP in 2014 was higher than in 2015. 
D)  Real GDP was higher in 2013 than in 2014, and real GDP in 2015 was higher than in 2014.

Question 2

Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. What would this change do by itself?

Accepted Answer

A)  It would make GDP fall over time. 
B)  It would not make any change in GDP over time. 
C)  It would make GDP rise over time. 
D)  It would change GDP, but in an uncertain direction. 
A)  It would make GDP fall over time. 
B)  It would not make any change in GDP over time. 
C)  It would make GDP rise over time. 
D)  It would change GDP, but in an uncertain direction.

Question 3

To encourage formation of small businesses, the government could provide subsidies. How would these subsidies be treated?

Accepted Answer

A)  They would be included in GDP because they are part of government expenditures. 
B)  They would be included in GDP because they are part of investment expenditures. 
C)  They would not be included in GDP because they are transfer payments. 
D)  They would not be included in GDP because the government raises taxes to pay for them. 
A)  They would be included in GDP because they are part of government expenditures. 
B)  They would be included in GDP because they are part of investment expenditures. 
C)  They would not be included in GDP because they are transfer payments. 
D)  They would not be included in GDP because the government raises taxes to pay for them.

Question 4

Darla, a U.S. citizen, only works in Canada. How does the value added to production from her employment impact GDP and GNP?

Accepted Answer

A)  It raises Canadian and U.S. GDP. 
B)  It raises Canadian GDP and U.S. GNP. 
C)  It raises Canadian GNP and U.S. GDP. 
D)  It raises Canadian and U.S. GNP. 
A)  It raises Canadian and U.S. GDP. 
B)  It raises Canadian GDP and U.S. GNP. 
C)  It raises Canadian GNP and U.S. GDP. 
D)  It raises Canadian and U.S. GNP.

Question 5

Sally used to prepare her own meals, but now she eats out more. How does Sally's change of habit affect GDP?

Accepted Answer

A)  It raises GDP by the additional value Sally produces during her new extra time. 
B)  It raises GDP by the price of the restaurant meals. 
C)  It raises GDP by less than the restaurant price of the meals because now Sally does not work anymore for preparing meals. 
D)  It raises GDP by more than the restaurant price of the meals because Sally can do something else during the extra time that she now has. 
A)  It raises GDP by the additional value Sally produces during her new extra time. 
B)  It raises GDP by the price of the restaurant meals. 
C)  It raises GDP by less than the restaurant price of the meals because now Sally does not work anymore for preparing meals. 
D)  It raises GDP by more than the restaurant price of the meals because Sally can do something else during the extra time that she now has.

Question 6

How does the value of total sales of all firms in the country for a year compare with GDP?

Accepted Answer

A)  It equals GDP for the year. 
B)  It is larger than GDP for the year. 
C)  It is smaller than GDP for the year. 
D)  It could be larger or smaller than GDP for the year. 
A)  It equals GDP for the year. 
B)  It is larger than GDP for the year. 
C)  It is smaller than GDP for the year. 
D)  It could be larger or smaller than GDP for the year.

Question 7

In a given year, an economy has consumption of $6000, investment of $4000, government purchases of $3500, exports of $1500, imports of $1600, taxes of $1200, transfer payments of $1400, and depreciation of $1300. What is the GDP?

Accepted Answer

A)  $11,200 
B)  $13,400 
C)  $14,600 
D)  $17,300 
A)  $11,200 
B)  $13,400 
C)  $14,600 
D)  $17,300

Question 8

In the national income accounts, what is depreciation called?

Accepted Answer

A)  total consumption depreciation 
B)  capital consumption allowance 
C)  consumption of circulating capital 
D)  loss due to wear 
A)  total consumption depreciation 
B)  capital consumption allowance 
C)  consumption of circulating capital 
D)  loss due to wear

Question 9

Greg, a Canadian citizen, works in the United States but lives with his family in Canada. How does his employment impact GDP and GNP?

Accepted Answer

A)  He raises Canadian GDP because he spends part of his income in Canada. 
B)  He lowers U.S. GDP because he takes his income out of the U.S. 
C)  He raises Canadian GNP because he earns income abroad. 
D)  He lowers Canadian GNP because he earns income abroad. 
A)  He raises Canadian GDP because he spends part of his income in Canada. 
B)  He lowers U.S. GDP because he takes his income out of the U.S. 
C)  He raises Canadian GNP because he earns income abroad. 
D)  He lowers Canadian GNP because he earns income abroad.

Question 10

David is a Canadian resident who works in Canada, where he owns a pizza business. Robert is also Canadian, but he works in the United States. On a typical day, David makes $275 in sales. Robert makes $150 in wages. There are no other costs. Based on this information, compute David and Robert's contributions to the following:a. Canadian GDPb. Canadian GNP
​c. U.S. GDPd. U.S. GNP

Accepted Answer

We can use the income-based definition o

Question 11

A country reported nominal GDP of $200 billion in 2015 and $180 billion in 2014 and reported a GDP deflator of 125 in 2015 and 105 in 2014. What happened to real output and prices from 2014 to 2015?

Accepted Answer

A)  Real output and prices both rose. 
B)  Real output rose and prices fell. 
C)  Real output fell and prices rose. 
D)  Real output and prices both fell. 
A)  Real output and prices both rose. 
B)  Real output rose and prices fell. 
C)  Real output fell and prices rose. 
D)  Real output and prices both fell.

Question 12

What is the GDP deflator?

Accepted Answer

A)  a measure of the overall price level 
B)  a measure of economic well-being 
C)  a measure of price changes 
D)  a measure of total income 
A)  a measure of the overall price level 
B)  a measure of economic well-being 
C)  a measure of price changes 
D)  a measure of total income

Question 13

A Canadian tourist buys a $200 leather jacket in Italy. What happens to Canadian imports/exports and GDP?

Accepted Answer

A)  Canadian imports increase by $200, and Canadian GDP increases by $200. 
B)  Canadian imports increase by $200, but Canadian GDP is unaffected. 
C)  Canadian imports and Canadian GDP are unaffected. 
D)  Canadian exports increase by $200, and Canadian GDP increases by $200. 
A)  Canadian imports increase by $200, and Canadian GDP increases by $200. 
B)  Canadian imports increase by $200, but Canadian GDP is unaffected. 
C)  Canadian imports and Canadian GDP are unaffected. 
D)  Canadian exports increase by $200, and Canadian GDP increases by $200.

Question 14

Which of the following is included in Canadian GDP?

Accepted Answer

A)  Canadian exports of goods and services 
B)  CPP/QPP payments 
C)  the sale of used goods 
D)  Canadian imports of goods and services 
A)  Canadian exports of goods and services 
B)  CPP/QPP payments 
C)  the sale of used goods 
D)  Canadian imports of goods and services

Question 15

How is NNP calculated?

Accepted Answer

A)  by subtracting savings from the total income of citizens of a nation 
B)  by subtracting business expenses and taxes from the total profits earned by citizens of a nation 
C)  by subtracting depreciation from the total income of citizens of a nation 
D)  by subtracting depreciation from the total profits earned by citizens of a nation 
A)  by subtracting savings from the total income of citizens of a nation 
B)  by subtracting business expenses and taxes from the total profits earned by citizens of a nation 
C)  by subtracting depreciation from the total income of citizens of a nation 
D)  by subtracting depreciation from the total profits earned by citizens of a nation

Question 16

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 17

A country reported a nominal GDP of $85 billion in 2015 and $100 billion in 2014 and reported a GDP deflator of 100 in 2015 and 105 in 2014. What happened to real output and prices from 2014 to 2015?

Accepted Answer

A)  Real output and prices both rose. 
B)  Real output rose and prices fell. 
C)  Real output and prices both fell. 
D)  Real output fell and prices rose. 
A)  Real output and prices both rose. 
B)  Real output rose and prices fell. 
C)  Real output and prices both fell. 
D)  Real output fell and prices rose.

Question 18

In order to include many different products in an aggregate measure, how is GDP computed?

Accepted Answer

A)  using values of goods based on consumers' tastes 
B)  using primarily costs of production 
C)  using primarily market prices 
D)  using weights that are computed by how much of a particular good is produced relative to total output 
A)  using values of goods based on consumers' tastes 
B)  using primarily costs of production 
C)  using primarily market prices 
D)  using weights that are computed by how much of a particular good is produced relative to total output

Question 19

How is gasoline treated in GDP terms?

Accepted Answer

A)  It is counted as an intermediate good. 
B)  It is counted as a final good if a company uses it to provide transportation services. 
C)  It is counted as a final good if a consumer uses it to mow her yard. 
D)  It is counted as an intermediate good if a consumer uses it to mow a friend's yard without pay. 
A)  It is counted as an intermediate good. 
B)  It is counted as a final good if a company uses it to provide transportation services. 
C)  It is counted as a final good if a consumer uses it to mow her yard. 
D)  It is counted as an intermediate good if a consumer uses it to mow a friend's yard without pay.

Question 20

Income exceeds production.

Accepted Answer

A) True 
 B)False

-Refer to the Table 5-3. What can we conclude about real GDP from this information?

Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. What would this change do by itself?

To encourage formation of small businesses, the government could provide subsidies. How would these subsidies be treated?

Darla, a U.S. citizen, only works in Canada. How does the value added to production from her employment impact GDP and GNP?

Sally used to prepare her own meals, but now she eats out more. How does Sally's change of habit affect GDP?

How does the value of total sales of all firms in the country for a year compare with GDP?

In a given year, an economy has consumption of $6000, investment of $4000, government purchases of $3500, exports of $1500, imports of $1600, taxes of $1200, transfer payments of $1400, and depreciation of $1300. What is the GDP?

In the national income accounts, what is depreciation called?

Greg, a Canadian citizen, works in the United States but lives with his family in Canada. How does his employment impact GDP and GNP?

A country reported nominal GDP of $200 billion in 2015 and $180 billion in 2014 and reported a GDP deflator of 125 in 2015 and 105 in 2014. What happened to real output and prices from 2014 to 2015?

What is the GDP deflator?

A Canadian tourist buys a $200 leather jacket in Italy. What happens to Canadian imports/exports and GDP?

Which of the following is included in Canadian GDP?

How is NNP calculated?

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?

A country reported a nominal GDP of $85 billion in 2015 and $100 billion in 2014 and reported a GDP deflator of 100 in 2015 and 105 in 2014. What happened to real output and prices from 2014 to 2015?

In order to include many different products in an aggregate measure, how is GDP computed?

How is gasoline treated in GDP terms?

Income exceeds production.

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

-Refer to the Table 5-3. What can we conclude about real GDP from this information?

Over time, people have come to rely more on market-produced goods and less on goods that they produce for themselves. What would this change do by itself?

To encourage formation of small businesses, the government could provide subsidies. How would these subsidies be treated?

Darla, a U.S. citizen, only works in Canada. How does the value added to production from her employment impact GDP and GNP?

Sally used to prepare her own meals, but now she eats out more. How does Sally's change of habit affect GDP?

How does the value of total sales of all firms in the country for a year compare with GDP?

In a given year, an economy has consumption of $6000, investment of $4000, government purchases of $3500, exports of $1500, imports of $1600, taxes of $1200, transfer payments of $1400, and depreciation of $1300. What is the GDP?

In the national income accounts, what is depreciation called?

Greg, a Canadian citizen, works in the United States but lives with his family in Canada. How does his employment impact GDP and GNP?

A country reported nominal GDP of $200 billion in 2015 and $180 billion in 2014 and reported a GDP deflator of 125 in 2015 and 105 in 2014. What happened to real output and prices from 2014 to 2015?

What is the GDP deflator?

A Canadian tourist buys a $200 leather jacket in Italy. What happens to Canadian imports/exports and GDP?

Which of the following is included in Canadian GDP?

How is NNP calculated?

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?

A country reported a nominal GDP of $85 billion in 2015 and $100 billion in 2014 and reported a GDP deflator of 100 in 2015 and 105 in 2014. What happened to real output and prices from 2014 to 2015?

In order to include many different products in an aggregate measure, how is GDP computed?

How is gasoline treated in GDP terms?

Income exceeds production.

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