Exam 2: The Measurement and Structure of the Canadian Economy

A variable-weight price index

The uses-of-saving identity shows that if the government budget deficit rises, then one of the following must happen:

Pete the Pizza Man produced $87 thousand worth of pizzas in the past year. He paid $39 thousand to employees, paid $11 thousand for vegetables and other ingredients, and paid $5 thousand in taxes. He began the year with ingredient inventories valued at $1 thousand, and ended the year with inventories valued at $2 thousand. What was Pete's (and his employees') total contribution to GDP this year?

In 2001 private saving in the country of Polity was $112 billion, investment was $114.5 billion, and the current account balance was -$26.5 billion. From the uses-of-saving identity, how much was the government of Polity saving?

Underground activities in the economy are

If GDP in an economy is greater than its GNP, it means that

Which of the following statements is true?

The A company collects bushels of wild berries, which it sells for $2 million to the B company to be made into jam. The B company's wild berry jam is sold for a total of $6 million. What is the value added of company B?

The measurement of GDP includes

Countries A and B have the same GDP. In country A, people eat often in restaurants, but in country B people eat more often at home. Therefore,

Inventories are

The real interest rate is equal to

If a country runs a current account ________, it means that its national saving is ________ than investment.

Nations such as Egypt and Turkey have wide differences between GNP and GDP because both countries

Which of the following statements is true?

You are given information on the consumer price index (CPI), where the values given are those for December 31 of each year. Year CPI 1997 126.1 1998 133.8 1999 137.9 2000 141.9 2001 145.8 In which year was the inflation rate the highest?

The consumer price index is 132 in 2004 and 112 in 2003 when the base year is 1997. The 2004 annual inflation rate, using 2003 as a base year, is

Because government services are not sold in markets,

Explain why CPI inflation overstates increases in the cost of living.

The country of Old Jersey produces milk and butter, and it has published the following macroeconomic data, where quantities are in gallons and prices are dollars per gallon: 2000 2001 Good Quantity Price Quantity Price Milk 500 \ 2 900 \ 3 Butter 2000 \ 1 3000 \ 2 Between 2000 and 2001 real GDP grew by how much, using a variable-weight price index?