Question 1

Which of the following is an injection into the circular flow?

Accepted Answer

A)  interest rates 
B)  saving 
C)  taxes 
D)  exports 
A)  interest rates 
B)  saving 
C)  taxes 
D)  exports D

Question 2

Suppose the price index for 2008 was 100 and the price index for 2009 was 109.How much did prices change between 2008 and 2009?

Accepted Answer

A)  Prices increased by 1 percent. 
B)  Prices increased by 8 percent. 
C)  Prices increased by 9 percent. 
D)  Prices increased by 12 percent. 
A)  Prices increased by 1 percent. 
B)  Prices increased by 8 percent. 
C)  Prices increased by 9 percent. 
D)  Prices increased by 12 percent. C

Question 3

Which of the following is the same as real GDP?

Accepted Answer

A)  total spending on all goods and services 
B)  constant-dollar GDP 
C)  net domestic product 
D)  nominal GDP adjusted for taxes 
A)  total spending on all goods and services 
B)  constant-dollar GDP 
C)  net domestic product 
D)  nominal GDP adjusted for taxes B

Question 4

Why is GDP a poor measure of social well-being?

Accepted Answer

A)  because revenue earned on Canadian exports is ignored 
B)  because each dollar of government spending is valued at less than one-half of private spending 
C)  because the value of leisure time is NOT counted in GDP 
D)  because consumer spending is more important than business spending and should be considered more valuable 
A)  because revenue earned on Canadian exports is ignored 
B)  because each dollar of government spending is valued at less than one-half of private spending 
C)  because the value of leisure time is NOT counted in GDP 
D)  because consumer spending is more important than business spending and should be considered more valuable

Question 5

Which of the following is the best example of an intermediate good or service?

Accepted Answer

A)  any good or service bought by a household, rather than by a firm 
B)  pizzas bought at a restaurant 
C)  legal services hired by a public accounting firm 
D)  a professional performance of The Phantom of the Opera 
A)  any good or service bought by a household, rather than by a firm 
B)  pizzas bought at a restaurant 
C)  legal services hired by a public accounting firm 
D)  a professional performance of The Phantom of the Opera

Question 6

Suppose that, from 2014 to 2015, nominal GDP increased by 3 percent and real GDP increased by 5 percent.What do these changes indicate?

Accepted Answer

A)  Depreciation has occurred. 
B)  Taxes have increased. 
C)  The inflation rate has decreased. 
D)  The price level has decreased. 
A)  Depreciation has occurred. 
B)  Taxes have increased. 
C)  The inflation rate has decreased. 
D)  The price level has decreased.

Question 7

Which of the following is the best indicator of the performance of the national economy?

Accepted Answer

A)  the stock of capital goods in the nation 
B)  the size of the nation's stock of money 
C)  the balance of trade with other nations 
D)  the flow of new goods and services produced in the nation 
A)  the stock of capital goods in the nation 
B)  the size of the nation's stock of money 
C)  the balance of trade with other nations 
D)  the flow of new goods and services produced in the nation

Question 8

In the resource market, how do households and firms interact with each other?

Accepted Answer

A)  Businesses sell services to the households. 
B)  Firms provide resources to the households. 
C)  Households sell resources to firms in return for factor payments. 
D)  Resources flow from the business sector to the household sector. 
A)  Businesses sell services to the households. 
B)  Firms provide resources to the households. 
C)  Households sell resources to firms in return for factor payments. 
D)  Resources flow from the business sector to the household sector.

Question 9

$$\begin{array} { | l | l | } 
\hline \text { Consumption } & \$ 2,000 \
\hline \text { Gross investment } & \$ 600 \
\hline \text { Government purchases } & \$ 500 \
\hline \text { Net exports } & - \$ 40 \
\hline \text { Transfer payments } & \$ 340 \
\hline
\end{array}$$
-Refer to the data in the exhibit.What is GDP?

Accepted Answer

A)  $2,720 
B)  $3,060 
C)  $3,140 
D)  $3,400 
A)  $2,720 
B)  $3,060 
C)  $3,140 
D)  $3,400

Question 10

$$\begin{array} { l c c c } 
\hline \text { Product } & \begin{array} { c } 
\text { Quantity in } \
\text { market basket } \
\text { (no.) }
\end{array} & \begin{array} { c } 
\text { Price in } \
\text { base year } \
( \$ )
\end{array} & \begin{array} { c } 
\text { Price in } \
\text { current year } \
( \$ )
\end{array} \
\hline \text { Bread } & 10 & 1.00 & 1.50 \
\text { Milk } & 5 & 1.00 & 2.00 \
\text { Chewing gum } & 50 & 0.20 & 0.50 \
\hline
\end{array}$$
-Refer to the table in the exhibit.How much did the price index change from the base year to the current year?

Accepted Answer

A)  The price index increased by 100 percent. 
B)  The price index increased by 50 percent. 
C)  The price index decreased by 100 percent. 
D)  The price index decreased by 50 percent. 
A)  The price index increased by 100 percent. 
B)  The price index increased by 50 percent. 
C)  The price index decreased by 100 percent. 
D)  The price index decreased by 50 percent.

Question 11

Which of the following would increase GDP?

Accepted Answer

A)  More people walk to work rather than drive cars. 
B)  Consumers in rural areas switch from buying home heating oil to burning wood collected from their own land. 
C)  Farm families grow more for themselves than for the market. 
D)  The amount consumers spend on buying new vacuum cleaners does NOT change, but the quality of vacuum cleaners decreases so much that consumers spend more on repairing them. 
A)  More people walk to work rather than drive cars. 
B)  Consumers in rural areas switch from buying home heating oil to burning wood collected from their own land. 
C)  Farm families grow more for themselves than for the market. 
D)  The amount consumers spend on buying new vacuum cleaners does NOT change, but the quality of vacuum cleaners decreases so much that consumers spend more on repairing them.

Question 12

Which factor is used to accurately measure the growth rate of output between two years?

Accepted Answer

A)  nominal gross domestic product 
B)  net domestic product 
C)  real net investment 
D)  real gross domestic product 
A)  nominal gross domestic product 
B)  net domestic product 
C)  real net investment 
D)  real gross domestic product

Question 13

Experts have concluded that the current consumer price index overstates increases in the "cost of living".What is the extent of the overstatement?

Accepted Answer

A)  0.2 to 0.6 percent per year 
B)  0.6 to 1.0 percent per year 
C)  1.0 to 1.4 percent per year 
D)  1.4 to 1.8 percent per year 
A)  0.2 to 0.6 percent per year 
B)  0.6 to 1.0 percent per year 
C)  1.0 to 1.4 percent per year 
D)  1.4 to 1.8 percent per year

Question 14

Why does gross domestic product NOT include intermediate goods?

Accepted Answer

A)  because intermediate goods are NOT part of investment spending 
B)  because the value of the intermediate goods is already included in the value of the final goods 
C)  because the value of the intermediate goods is already included as inventory investment 
D)  because intermediate goods are NOT part of current production 
A)  because intermediate goods are NOT part of investment spending 
B)  because the value of the intermediate goods is already included in the value of the final goods 
C)  because the value of the intermediate goods is already included as inventory investment 
D)  because intermediate goods are NOT part of current production

Question 15

Which of the following is a limitation of the national income accounting system?

Accepted Answer

A)  This system values all output at its market price regardless of whether it contributes to a society's economic welfare. 
B)  This system places a market value on all positive externalities but ignores negative externalities. 
C)  This system ignores consumption spending. 
D)  This system ignores government production of goods and services. 
A)  This system values all output at its market price regardless of whether it contributes to a society's economic welfare. 
B)  This system places a market value on all positive externalities but ignores negative externalities. 
C)  This system ignores consumption spending. 
D)  This system ignores government production of goods and services.

Question 16

What is the ultimate goal of studying the circular-flow model?

Accepted Answer

A)  to understand the flow of money through the market system 
B)  to understand the flow of consumer spending through the economy 
C)  to understand the flow of goods and services through the product market 
D)  to understand the flow of resources, goods, and money through the economy 
A)  to understand the flow of money through the market system 
B)  to understand the flow of consumer spending through the economy 
C)  to understand the flow of goods and services through the product market 
D)  to understand the flow of resources, goods, and money through the economy

Question 17

Suppose that storage costs increase, so that firms decide to hold less output in inventory, other things constant.Which expenditure category does this affect?

Accepted Answer

A)  Consumption spending will increase. 
B)  Consumption spending will decrease. 
C)  Investment will increase. 
D)  Investment will decrease. 
A)  Consumption spending will increase. 
B)  Consumption spending will decrease. 
C)  Investment will increase. 
D)  Investment will decrease.

Question 18

Consider the following hypothetical data: C = $3,000; I = $1,200; G = $2,000; X - IM = -$500; depreciation = $200; and transfer payments = $800.According to this data, what is net domestic product?

Accepted Answer

A)  $5,500 
B)  $5,700 
C)  $6,200 
D)  $6,400 
A)  $5,500 
B)  $5,700 
C)  $6,200 
D)  $6,400

Question 19

Suppose a product becomes widely used.How would this tend to be reflected in the consumer price index over time?

Accepted Answer

A)  Inflation would be understated. 
B)  Inflation would NOT be affected. 
C)  Inflation would be overstated. 
D)  The inflation rate would become zero. 
A)  Inflation would be understated. 
B)  Inflation would NOT be affected. 
C)  Inflation would be overstated. 
D)  The inflation rate would become zero.

Question 20

What does the consumer price index measure?

Accepted Answer

A)  the cost of a market basket of consumer goods and services relative to its cost in some base year 
B)  the change in the average price of a market basket of "necessary" goods and services 
C)  the annual inflation rate in the producers' goods market 
D)  the change in the average price level of all final goods and services 
A)  the cost of a market basket of consumer goods and services relative to its cost in some base year 
B)  the change in the average price of a market basket of "necessary" goods and services 
C)  the annual inflation rate in the producers' goods market 
D)  the change in the average price level of all final goods and services

Which of the following is an injection into the circular flow?

Suppose the price index for 2008 was 100 and the price index for 2009 was 109.How much did prices change between 2008 and 2009?

Which of the following is the same as real GDP?

Why is GDP a poor measure of social well-being?

Which of the following is the best example of an intermediate good or service?

Suppose that, from 2014 to 2015, nominal GDP increased by 3 percent and real GDP increased by 5 percent.What do these changes indicate?

Which of the following is the best indicator of the performance of the national economy?

In the resource market, how do households and firms interact with each other?

Consumption \ 2,000 Gross investment \ 600 Government purchases \ 500 Net exports -\ 40 Transfer payments \ 340 -Refer to the data in the exhibit.What is GDP?

Product Quantity in market basket (no.) Price in base year (\ ) Price in current year (\ ) Bread 10 1.00 1.50 Milk 5 1.00 2.00 Chewing gum 50 0.20 0.50 -Refer to the table in the exhibit.How much did the price index change from the base year to the current year?

Which of the following would increase GDP?

Which factor is used to accurately measure the growth rate of output between two years?

Experts have concluded that the current consumer price index overstates increases in the "cost of living".What is the extent of the overstatement?

Why does gross domestic product NOT include intermediate goods?

Which of the following is a limitation of the national income accounting system?

What is the ultimate goal of studying the circular-flow model?

Suppose that storage costs increase, so that firms decide to hold less output in inventory, other things constant.Which expenditure category does this affect?

Consider the following hypothetical data: C = $3,000; I = $1,200; G = $2,000; X - IM = -$500; depreciation = $200; and transfer payments = $800.According to this data, what is net domestic product?

Suppose a product becomes widely used.How would this tend to be reflected in the consumer price index over time?

What does the consumer price index measure?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

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Exam 7: Tracking the Canadian Economy

Which of the following is an injection into the circular flow?

Suppose the price index for 2008 was 100 and the price index for 2009 was 109.How much did prices change between 2008 and 2009?

Which of the following is the same as real GDP?

Why is GDP a poor measure of social well-being?

Which of the following is the best example of an intermediate good or service?

Suppose that, from 2014 to 2015, nominal GDP increased by 3 percent and real GDP increased by 5 percent.What do these changes indicate?

Which of the following is the best indicator of the performance of the national economy?

In the resource market, how do households and firms interact with each other?

Consumption \ 2,000 Gross investment \ 600 Government purchases \ 500 Net exports -\ 40 Transfer payments \ 340 -Refer to the data in the exhibit.What is GDP?

Product Quantity in market basket (no.) Price in base year (\ ) Price in current year (\ ) Bread 10 1.00 1.50 Milk 5 1.00 2.00 Chewing gum 50 0.20 0.50 -Refer to the table in the exhibit.How much did the price index change from the base year to the current year?

Which of the following would increase GDP?

Which factor is used to accurately measure the growth rate of output between two years?

Experts have concluded that the current consumer price index overstates increases in the "cost of living".What is the extent of the overstatement?

Why does gross domestic product NOT include intermediate goods?

Which of the following is a limitation of the national income accounting system?

What is the ultimate goal of studying the circular-flow model?

Suppose that storage costs increase, so that firms decide to hold less output in inventory, other things constant.Which expenditure category does this affect?

Consider the following hypothetical data: C = $3,000; I = $1,200; G = $2,000; X - IM = -$500; depreciation = $200; and transfer payments = $800.According to this data, what is net domestic product?

Suppose a product becomes widely used.How would this tend to be reflected in the consumer price index over time?

What does the consumer price index measure?

The Art and Science of Economic Analysis

Economic Tools and Economic Systems

Economic Decision Makers

Demand, Supply, and Markets

Algebraic Approach to Demand, Supply, and Equilibrium

Introduction to Macroeconomics

Unemployment and Inflation

Productivity and Growth

Aggregate Expenditure and Aggregate Demand

Aggregate Supply

Fiscal Policy

Money and the Financial System

Banking and the Money Supply

Monetary Theory and Policy in an Open Economy

Macro Policy Debate: Active or Passive

International Finance

International Trade

Economic Development

Understanding Graphs

Filters