Question 1

-Refer to the Table 5-1. What is the GNP for this economy?

Accepted Answer

A)  $190 
B)  $193 
C)  $207 
D)  $215 
A)  $190 
B)  $193 
C)  $207 
D)  $215

Question 2

George buys and lives in a newly constructed home he paid $200,000 for in 2015. He sells the house in 2016 for $225,000. How is GDP impacted?

Accepted Answer

A)  The 2016 sale increases 2016 GDP by $225,000 and does nothing to 2015 GDP. 
B)  The 2016 sale increases 2016 GDP by $25,000 and does nothing to 2015 GDP. 
C)  The 2016 sale does not increase 2016 GDP and does nothing to 2015 GDP. 
D)  The 2016 sale increases 2016 GDP by $225,000, and 2015 GDP is revised upward by $25,000. 
A)  The 2016 sale increases 2016 GDP by $225,000 and does nothing to 2015 GDP. 
B)  The 2016 sale increases 2016 GDP by $25,000 and does nothing to 2015 GDP. 
C)  The 2016 sale does not increase 2016 GDP and does nothing to 2015 GDP. 
D)  The 2016 sale increases 2016 GDP by $225,000, and 2015 GDP is revised upward by $25,000.

Question 3

How is the value of housing services included in GDP?

Accepted Answer

A)  It is valued as the annual depreciation of the house. 
B)  It is valued as the mortgage payment made on the house. 
C)  It uses the purchase price of the house in the year it is sold. 
D)  It is based on an estimate of its rental value. 
A)  It is valued as the annual depreciation of the house. 
B)  It is valued as the mortgage payment made on the house. 
C)  It uses the purchase price of the house in the year it is sold. 
D)  It is based on an estimate of its rental value.

Question 4

-Refer to the Table 5-1. What is the NNP for this economy?

Accepted Answer

A)  $164 
B)  $170 
C)  $183 
D)  $192 
A)  $164 
B)  $170 
C)  $183 
D)  $192

Question 5

If a small country has current nominal GDP of $30 billion and the GDP deflator is 40, what is its real GDP?

Accepted Answer

A)  $8 billion 
B)  $40 billion 
C)  $75 billion 
D)  $100 billion 
A)  $8 billion 
B)  $40 billion 
C)  $75 billion 
D)  $100 billion

Question 6

If GDP in the fourth quarter is announced to be $1.6 trillion, what does this number reflect?

Accepted Answer

A)  the actual amount of final goods and services produced in the fourth quarter 
B)  about four times the annual GDP rate 
C)  a somewhat lower amount than the amount actually produced in the fourth quarter, because GDP is seasonally adjusted, and nonseasonally adjusted GDP for the fourth quarter is typical higher 
D)  about four times the amount actually produced in that quarter, plus what had been removed for seasonal adjustment 
A)  the actual amount of final goods and services produced in the fourth quarter 
B)  about four times the annual GDP rate 
C)  a somewhat lower amount than the amount actually produced in the fourth quarter, because GDP is seasonally adjusted, and nonseasonally adjusted GDP for the fourth quarter is typical higher 
D)  about four times the amount actually produced in that quarter, plus what had been removed for seasonal adjustment

Question 7

In 2014, what size was Canadian investment?

Accepted Answer

A)  15 percent of GDP 
B)  17 percent of GDP 
C)  19 percent of GDP 
D)  24 percent of GDP 
A)  15 percent of GDP 
B)  17 percent of GDP 
C)  19 percent of GDP 
D)  24 percent of GDP

Question 8

-Refer to Table 5-6. On the basis of the information in the table, which list below contains the correct ordering of GDP per person (from highest to lowest)?

Accepted Answer

A)  P, Q, R 
B)  P, R, Q 
C)  R, P, Q 
D)  R, Q, P 
A)  P, Q, R 
B)  P, R, Q 
C)  R, P, Q 
D)  R, Q, P

Question 9

How are intermediate goods accounted for when calculating GDP?

Accepted Answer

A)  The value of all intermediate goods is included in GDP. 
B)  The value of intermediate goods is included in GDP only if they were produced in the previous year. 
C)  The value of intermediate goods is included in GDP only if they are purchased by firms rather than households. 
D)  The value of intermediate goods is not included in GDP unless they are part of inventory. 
A)  The value of all intermediate goods is included in GDP. 
B)  The value of intermediate goods is included in GDP only if they were produced in the previous year. 
C)  The value of intermediate goods is included in GDP only if they are purchased by firms rather than households. 
D)  The value of intermediate goods is not included in GDP unless they are part of inventory.

Question 10

Suppose an economy produces only wheat and rice. Last year, 20 bushels of wheat are sold at $4 per bushel, and 10 bushels of rice are sold at $2 per bushel. If the price of wheat was $2 per bushel and the price of rice was $1 per bushel in the base year, what can we conclude?

Accepted Answer

A)  Nominal GDP is $100, real GDP is $50, and the GDP deflator is 50. 
B)  Nominal GDP is $100, real GDP is $50, and the GDP deflator is 200. 
C)  Nominal GDP is $50, real GDP is $100, and the GDP deflator is 200. 
D)  Nominal GDP is $50, real GDP is $100, and the GDP deflator is 50. 
A)  Nominal GDP is $100, real GDP is $50, and the GDP deflator is 50. 
B)  Nominal GDP is $100, real GDP is $50, and the GDP deflator is 200. 
C)  Nominal GDP is $50, real GDP is $100, and the GDP deflator is 200. 
D)  Nominal GDP is $50, real GDP is $100, and the GDP deflator is 50.

Question 11

Which of the following best defines retained earnings?

Accepted Answer

A)  the part of income that households retain after paying taxes 
B)  the part of income that businesses retain after paying taxes 
C)  the part of income that corporations pay to their owners in the form of dividends 
D)  the part of income that corporations do not pay to their owners in the form of dividends 
A)  the part of income that households retain after paying taxes 
B)  the part of income that businesses retain after paying taxes 
C)  the part of income that corporations pay to their owners in the form of dividends 
D)  the part of income that corporations do not pay to their owners in the form of dividends

Question 12

Suppose an apartment complex converts to a condominium (i.e., the renters become owners of their apartments). Suppose the value of the condominium owners' housing services is now the same as their former rent. What happens to GDP?

Accepted Answer

A)  GDP necessarily increases. 
B)  GDP necessarily decreases. 
C)  GDP is unaffected because neither the rent nor the estimate of the value of housing services is included in GDP. 
D)  GDP is unaffected because previously rent was included in GDP, and now it is replaced by the estimate of the value of housing services. 
A)  GDP necessarily increases. 
B)  GDP necessarily decreases. 
C)  GDP is unaffected because neither the rent nor the estimate of the value of housing services is included in GDP. 
D)  GDP is unaffected because previously rent was included in GDP, and now it is replaced by the estimate of the value of housing services.

Question 13

When a firm produces consumer goods and adds some to inventory rather than selling them, how is the increase in inventory counted in GDP?

Accepted Answer

A)  It is counted in the current quarter GDP as capital consumption allowance. 
B)  It is counted in the current quarter GDP as investment. 
C)  It is counted in the current quarter GDP as consumption. 
D)  It is counted in the current quarter GDP as a statistical discrepancy. 
A)  It is counted in the current quarter GDP as capital consumption allowance. 
B)  It is counted in the current quarter GDP as investment. 
C)  It is counted in the current quarter GDP as consumption. 
D)  It is counted in the current quarter GDP as a statistical discrepancy.

Question 14

In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, what will Ophelia's government statisticians most likely do?

Accepted Answer

A)  Make sure to account for inventory changes during the second quarter. 
B)  Report real GDP, not nominal GDP. 
C)  Focus on GNP rather than GDP during the second quarter. 
D)  Make a seasonal adjustment for the second quarter data. 
A)  Make sure to account for inventory changes during the second quarter. 
B)  Report real GDP, not nominal GDP. 
C)  Focus on GNP rather than GDP during the second quarter. 
D)  Make a seasonal adjustment for the second quarter data.

Question 15

According to economists, why is it useful to measure the behaviour of the economy with statistics such as GDP?

Accepted Answer

A)  It can be used to forecast economic recessions and prevent them. 
B)  It measures the total value of a country's wealth. 
C)  It can be helpful in developing macroeconomic science, but is not useful for policymaking. 
D)  It is a crucial step toward developing the science of macroeconomics. 
A)  It can be used to forecast economic recessions and prevent them. 
B)  It measures the total value of a country's wealth. 
C)  It can be helpful in developing macroeconomic science, but is not useful for policymaking. 
D)  It is a crucial step toward developing the science of macroeconomics.

Question 16

Which topics are studied in macroeconomics?

Accepted Answer

A)  national income, investment, and exchange rates 
B)  the price of BCE stock, wage differences between genders, and antitrust laws 
C)  differences in market structure and how consumers maximize utility 
D)  the effect of trade tariffs on prices and patterns of international trade 
A)  national income, investment, and exchange rates 
B)  the price of BCE stock, wage differences between genders, and antitrust laws 
C)  differences in market structure and how consumers maximize utility 
D)  the effect of trade tariffs on prices and patterns of international trade

Question 17

National income differs from net national product in that it includes business subsidies. What does national income exclude, as opposed to net national product?

Accepted Answer

A)  profits of corporations 
B)  indirect business taxes 
C)  retained earnings of corporations 
D)  capital consumption allowance 
A)  profits of corporations 
B)  indirect business taxes 
C)  retained earnings of corporations 
D)  capital consumption allowance

Question 18

Which of the following is the best definition of GDP?

Accepted Answer

A)  the market value of all goods produced within a country 
B)  the market value of all final goods and services produced by the citizens of a country 
C)  the market value of all final goods and services consumed within a country over a number of years 
D)  the market value of all final goods and services produced within a country in a given period of time 
A)  the market value of all goods produced within a country 
B)  the market value of all final goods and services produced by the citizens of a country 
C)  the market value of all final goods and services consumed within a country over a number of years 
D)  the market value of all final goods and services produced within a country in a given period of time

Question 19

How are intermediate goods treated in GDP computations?

Accepted Answer

A)  They are included so we can get a measure of sales. 
B)  They are excluded because their value is already counted in the value of final goods. 
C)  They are excluded because there are too many to accurately measure. 
D)  They are included because they are final goods for the firm producing them. 
A)  They are included so we can get a measure of sales. 
B)  They are excluded because their value is already counted in the value of final goods. 
C)  They are excluded because there are too many to accurately measure. 
D)  They are included because they are final goods for the firm producing them.

Question 20

If a Canadian citizen buys a television made in Korea made by a Korean firm, what is the impact on net exports and GDP?

Accepted Answer

A)  Canadian net exports and Canadian GDP decrease. 
B)  Canadian net exports are unaffected, but Canadian GDP decreases. 
C)  Canadian net exports and Canadian GDP are unaffected. 
D)  Canadian net exports decrease, but Canadian GDP is unaffected. 
A)  Canadian net exports and Canadian GDP decrease. 
B)  Canadian net exports are unaffected, but Canadian GDP decreases. 
C)  Canadian net exports and Canadian GDP are unaffected. 
D)  Canadian net exports decrease, but Canadian GDP is unaffected.

-Refer to the Table 5-1. What is the GNP for this economy?

George buys and lives in a newly constructed home he paid $200,000 for in 2015. He sells the house in 2016 for $225,000. How is GDP impacted?

How is the value of housing services included in GDP?

-Refer to the Table 5-1. What is the NNP for this economy?

If a small country has current nominal GDP of $30 billion and the GDP deflator is 40, what is its real GDP?

If GDP in the fourth quarter is announced to be $1.6 trillion, what does this number reflect?

In 2014, what size was Canadian investment?

-Refer to Table 5-6. On the basis of the information in the table, which list below contains the correct ordering of GDP per person (from highest to lowest)?

How are intermediate goods accounted for when calculating GDP?

Suppose an economy produces only wheat and rice. Last year, 20 bushels of wheat are sold at $4 per bushel, and 10 bushels of rice are sold at $2 per bushel. If the price of wheat was $2 per bushel and the price of rice was $1 per bushel in the base year, what can we conclude?

Which of the following best defines retained earnings?

Suppose an apartment complex converts to a condominium (i.e., the renters become owners of their apartments). Suppose the value of the condominium owners' housing services is now the same as their former rent. What happens to GDP?

When a firm produces consumer goods and adds some to inventory rather than selling them, how is the increase in inventory counted in GDP?

In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, what will Ophelia's government statisticians most likely do?

According to economists, why is it useful to measure the behaviour of the economy with statistics such as GDP?

Which topics are studied in macroeconomics?

National income differs from net national product in that it includes business subsidies. What does national income exclude, as opposed to net national product?

Which of the following is the best definition of GDP?

How are intermediate goods treated in GDP computations?

If a Canadian citizen buys a television made in Korea made by a Korean firm, what is the impact on net exports and GDP?

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 5-1. What is the GNP for this economy?

George buys and lives in a newly constructed home he paid $200,000 for in 2015. He sells the house in 2016 for $225,000. How is GDP impacted?

How is the value of housing services included in GDP?

-Refer to the Table 5-1. What is the NNP for this economy?

If a small country has current nominal GDP of $30 billion and the GDP deflator is 40, what is its real GDP?

If GDP in the fourth quarter is announced to be $1.6 trillion, what does this number reflect?

In 2014, what size was Canadian investment?

-Refer to Table 5-6. On the basis of the information in the table, which list below contains the correct ordering of GDP per person (from highest to lowest)?

How are intermediate goods accounted for when calculating GDP?

Suppose an economy produces only wheat and rice. Last year, 20 bushels of wheat are sold at $4 per bushel, and 10 bushels of rice are sold at $2 per bushel. If the price of wheat was $2 per bushel and the price of rice was $1 per bushel in the base year, what can we conclude?

Which of the following best defines retained earnings?

Suppose an apartment complex converts to a condominium (i.e., the renters become owners of their apartments). Suppose the value of the condominium owners' housing services is now the same as their former rent. What happens to GDP?

When a firm produces consumer goods and adds some to inventory rather than selling them, how is the increase in inventory counted in GDP?

In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, what will Ophelia's government statisticians most likely do?

According to economists, why is it useful to measure the behaviour of the economy with statistics such as GDP?

Which topics are studied in macroeconomics?

National income differs from net national product in that it includes business subsidies. What does national income exclude, as opposed to net national product?

Which of the following is the best definition of GDP?

How are intermediate goods treated in GDP computations?

If a Canadian citizen buys a television made in Korea made by a Korean firm, what is the impact on net exports and GDP?

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