Exam 5: Measuring a Nations Income

Suppose two Canadian provinces, say Alberta and Manitoba, produce only wheat, 10 tonnes each. The price of wheat in Alberta is $240 a tonne and in Manitoba is $250 a tonne. ​a. Calculate nominal GDP in the two provinces and discuss the results. b. Imagine a method of calculating GDP that would allow a more accurate comparison between the economic performances of the two provinces.

GDP is used as the basic measure of a society's economic well-being. What is a better measure of the economic well-being of individuals in society?

-Refer to the Table 5-2. What is the NNP for this economy?

If a small country has current nominal GDP of $20 billion and the GDP deflator is 125, what is its real GDP?

A wind farm in Manitoba buys a large turbine generator from a Swedish-owned factory located in Ontario and using local workers. What happens as a result?

The government reports that "GDP increased by 1.6 percent in the last quarter." What does this statement mean?

A flour mill produces $1000 worth of flour, of which $700 goes to a bakery and $300 to consumers. A water supplier produces $300 worth of water, of which $200 goes to the bakery and $100 to consumers. The bakery produces $1500 worth of bread and sells all of it to consumers. The three companies pay wages as follows: the mill pays $400, the water supplier pays $200, and the bakery pays $200. There are no other costs of production.a. Calculate GDP based on the value of production.b. Calculate profits to the owners of each of the three companies (profit = revenue minus costs).c. Calculate GDP based on income.

How is flour treated in GDP terms?

In a simple circular-flow diagram, why is total income equal to total expenditure?