Question 1

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

Accepted Answer

The underground economy is that part of

Question 2

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

Accepted Answer

A) GNI is much larger than GDP. 
B) GDP is much larger than GNI. 
C) GDP is equal to GNI. 
D) GDP is not comparable to GNI. 
A) GNI is much larger than GDP. 
B) GDP is much larger than GNI. 
C) GDP is equal to GNI. 
D) GDP is not comparable to GNI.

Question 3

The OECD's Better Life Index

Accepted Answer

A) gives a very similar ranking of countries as GDP per capita. 
B) shows that wealthy countries typically have a much lower quality of life than middle income countries. 
C) shows that there is no relationship between quality of life and GDP per capita. 
D) can be expected to completely replace GDP as a measure used by economists in the next few years. 
E) shows that GDP is a highly inaccurate measure of well being. 
A) gives a very similar ranking of countries as GDP per capita. 
B) shows that wealthy countries typically have a much lower quality of life than middle income countries. 
C) shows that there is no relationship between quality of life and GDP per capita. 
D) can be expected to completely replace GDP as a measure used by economists in the next few years. 
E) shows that GDP is a highly inaccurate measure of well being.

Question 4

Caroline is an artist.She purchases canvas, paints, brushes, and accessories for $75.She sells one of her original paintings to an art gallery for $1,500, even though an art lover would pay $4,500 for that painting.How much value does Caroline add?

Accepted Answer

A) $75 
B) $1,425 
C) $1,500 
D) $4,425 
E) $5,075 
A) $75 
B) $1,425 
C) $1,500 
D) $4,425 
E) $5,075

Question 5

Net national income equals gross domestic product

Accepted Answer

A) plus sales taxes. 
B) plus government transfer payments. 
C) minus the consumption of fixed capital. 
D) minus government transfer payments. 
E) minus transfers to other countries. 
A) plus sales taxes. 
B) plus government transfer payments. 
C) minus the consumption of fixed capital. 
D) minus government transfer payments. 
E) minus transfers to other countries.

Question 6

The GDP deflator in year 2 is 105, using year 1 as the base year.This means that, on average, the cost of goods and services is

Accepted Answer

A) 5% higher in year 2 than in year 1. 
B) 105% higher in year 2 than in year 1. 
C) 5% higher in year 1 than in year 2. 
D) 105% higher in year 1 than in year 2. 
E) 95% higher in year 2 than in year 1. 
A) 5% higher in year 2 than in year 1. 
B) 105% higher in year 2 than in year 1. 
C) 5% higher in year 1 than in year 2. 
D) 105% higher in year 1 than in year 2. 
E) 95% higher in year 2 than in year 1.

Question 7

Gross domestic product understates the total production of final goods and services because of the omission of

Accepted Answer

A) the underground economy. 
B) intermediate goods. 
C) inflation. 
D) exports. 
E) imports. 
A) the underground economy. 
B) intermediate goods. 
C) inflation. 
D) exports. 
E) imports.

Question 8

Which component of consumption spending is the greatest in the Canadian economy?

Accepted Answer

A) household consumption 
B) government consumption 
C) non-profit consumption 
D) wages and salaries 
E) gross fixed capital formation 
A) household consumption 
B) government consumption 
C) non-profit consumption 
D) wages and salaries 
E) gross fixed capital formation

Question 9

Which of the following would increase GNI in Canada?

Accepted Answer

A) an increase in the production of oil by Canadian-owned Talisman Energy from wells in Mexico 
B) an increase in the production of Japanese-owned Toyota cars in Mexico 
C) an increase in the production of Japanese-owned Toyota cars in Canada 
D) an increase in the production of Mexican-owned Grupo Minsa corn in Canada 
E) an increase in the production of Korean-owned Hyundai cars in South Korea 
A) an increase in the production of oil by Canadian-owned Talisman Energy from wells in Mexico 
B) an increase in the production of Japanese-owned Toyota cars in Mexico 
C) an increase in the production of Japanese-owned Toyota cars in Canada 
D) an increase in the production of Mexican-owned Grupo Minsa corn in Canada 
E) an increase in the production of Korean-owned Hyundai cars in South Korea

Question 10

Which of the following is included in both Canadian GDP and Canadian GNI?

Accepted Answer

A) the value of all cars produced by General Motors Canada in Canada 
B) the value of all cars produced by Ford in Mexico 
C) the value of all cars produced by Toyota in Canada 
D) the value of all cars produced by Nissan in Japan and Canada 
E) the value of car parts produced by Magna in Mexico 
A) the value of all cars produced by General Motors Canada in Canada 
B) the value of all cars produced by Ford in Mexico 
C) the value of all cars produced by Toyota in Canada 
D) the value of all cars produced by Nissan in Japan and Canada 
E) the value of car parts produced by Magna in Mexico

Question 11

Which of the following transactions would be included in the official calculation of GDP?

Accepted Answer

A) A student buys a used textbook at the bookstore. 
B) Magna sells $2 million worth of seats to General Motors. 
C) You wash and wax your father's car as a favour to him. 
D) You buy a new iPod. 
E) You illegally download music off the Internet to put on your new iPhone. 
A) A student buys a used textbook at the bookstore. 
B) Magna sells $2 million worth of seats to General Motors. 
C) You wash and wax your father's car as a favour to him. 
D) You buy a new iPod. 
E) You illegally download music off the Internet to put on your new iPhone.

Question 12

When American GDP grows more quickly,

Accepted Answer

A) Canadian firms will export more, leading to faster Canadian GDP growth. 
B) Canadians will import some of the newly made American goods, causing Canadian GDP to shrink. 
C) government spending in Canada will likely increase. 
D) Canadian firms will invest less, causing domestic investment to fall and Canadian GDP to rise. 
E) Canadian prices will rise more quickly causing household disposable income to fall in Canada. 
A) Canadian firms will export more, leading to faster Canadian GDP growth. 
B) Canadians will import some of the newly made American goods, causing Canadian GDP to shrink. 
C) government spending in Canada will likely increase. 
D) Canadian firms will invest less, causing domestic investment to fall and Canadian GDP to rise. 
E) Canadian prices will rise more quickly causing household disposable income to fall in Canada.

Question 13

If the quantity of goods and services produced in the economy decreases,

Accepted Answer

A) it may be possible for real GDP to increase. 
B) real GDP would certainly increase. 
C) it may be possible for nominal GDP to increase. 
D) nominal GDP would certainly increase. 
E) nominal GDP would certainly decrease. 
A) it may be possible for real GDP to increase. 
B) real GDP would certainly increase. 
C) it may be possible for nominal GDP to increase. 
D) nominal GDP would certainly increase. 
E) nominal GDP would certainly decrease.

Question 14

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

Accepted Answer

A) CPI; real GDP; nominal GDP 
B) GDP deflator; real GDP; nominal GDP 
C) GDP deflator; nominal GDP; real GDP 
D) PPI; nominal GDP; real GDP 
E) PPI; real GDP; nominal GDP 
A) CPI; real GDP; nominal GDP 
B) GDP deflator; real GDP; nominal GDP 
C) GDP deflator; nominal GDP; real GDP 
D) PPI; nominal GDP; real GDP 
E) PPI; real GDP; nominal GDP

Question 15

The drawback to calculating real GDP using base-year prices is that

Accepted Answer

A) real GDP in one year is not comparable to real GDP in another year. 
B) relative prices change over time, which is not reflected in base-year prices, and this distorts GDP. 
C) relative prices change over time and these changes are reflected in base-year prices. 
D) quality changes are reflected in base-year prices. 
E) base year prices do not capture changes in production from year to year. 
A) real GDP in one year is not comparable to real GDP in another year. 
B) relative prices change over time, which is not reflected in base-year prices, and this distorts GDP. 
C) relative prices change over time and these changes are reflected in base-year prices. 
D) quality changes are reflected in base-year prices. 
E) base year prices do not capture changes in production from year to year.

Question 16

Legalizing all forms of illegal activities

Accepted Answer

A) reduces GDP and the size of the underground economy. 
B) reduces GDP and increases the size of the underground economy. 
C) increases GDP and reduces the size of the underground economy. 
D) increases GDP and increases the size of the underground economy. 
A) reduces GDP and the size of the underground economy. 
B) reduces GDP and increases the size of the underground economy. 
C) increases GDP and reduces the size of the underground economy. 
D) increases GDP and increases the size of the underground economy.

Question 17

Table 4.25  
-Refer to Table 4.25.Given the information above, calculate the rate of increase in the price level from 2016 to 2017.Use the percent change in the GDP deflator.

Accepted Answer

To calculate the rate of chang

Question 18

The measure of production that values production using current prices is called

Accepted Answer

A) value-added GDP. 
B) nominal GDP. 
C) real GDP. 
D) underground GDP. 
E) expenditure approach GDP. 
A) value-added GDP. 
B) nominal GDP. 
C) real GDP. 
D) underground GDP. 
E) expenditure approach GDP.

Question 19

Increases in real GDP would understate the well-being of a country over time if, over that time period, the

Accepted Answer

A) crime rate increased. 
B) percentage of people addicted to illegal drugs increased. 
C) amount of pollution decreased. 
D) average hours worked per week decreased. 
E) the size of the underground economy decreased. 
A) crime rate increased. 
B) percentage of people addicted to illegal drugs increased. 
C) amount of pollution decreased. 
D) average hours worked per week decreased. 
E) the size of the underground economy decreased.

Question 20

Nominal GDP measures the value of all final goods and services at base-year prices.

Accepted Answer

A) True 
 B)False

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

The OECD's Better Life Index

Caroline is an artist.She purchases canvas, paints, brushes, and accessories for $75.She sells one of her original paintings to an art gallery for $1,500, even though an art lover would pay $4,500 for that painting.How much value does Caroline add?

Net national income equals gross domestic product

The GDP deflator in year 2 is 105, using year 1 as the base year.This means that, on average, the cost of goods and services is

Gross domestic product understates the total production of final goods and services because of the omission of

Which component of consumption spending is the greatest in the Canadian economy?

Which of the following would increase GNI in Canada?

Which of the following is included in both Canadian GDP and Canadian GNI?

Which of the following transactions would be included in the official calculation of GDP?

When American GDP grows more quickly,

If the quantity of goods and services produced in the economy decreases,

The is a measure of the price level and is calculated by dividing by and multiplying by 100.

The drawback to calculating real GDP using base-year prices is that

Legalizing all forms of illegal activities

Table 4.25 -Refer to Table 4.25.Given the information above, calculate the rate of increase in the price level from 2016 to 2017.Use the percent change in the GDP deflator.

The measure of production that values production using current prices is called

Increases in real GDP would understate the well-being of a country over time if, over that time period, the

Nominal GDP measures the value of all final goods and services at base-year prices.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

Exam 4: GDP: Measuring Total Production and Income

What is the underground economy and how could it hurt an economy? How does it hurt developing economies?

A country in which a significant fraction of domestic production takes place in foreign-owned factories and facilities is most likely a country where

The OECD's Better Life Index

Caroline is an artist.She purchases canvas, paints, brushes, and accessories for $75.She sells one of her original paintings to an art gallery for $1,500, even though an art lover would pay $4,500 for that painting.How much value does Caroline add?

Net national income equals gross domestic product

The GDP deflator in year 2 is 105, using year 1 as the base year.This means that, on average, the cost of goods and services is

Gross domestic product understates the total production of final goods and services because of the omission of

Which component of consumption spending is the greatest in the Canadian economy?

Which of the following would increase GNI in Canada?

Which of the following is included in both Canadian GDP and Canadian GNI?

Which of the following transactions would be included in the official calculation of GDP?

When American GDP grows more quickly,

If the quantity of goods and services produced in the economy decreases,

The ________ is a measure of the price level and is calculated by dividing ________ by ________ and multiplying by 100.

The drawback to calculating real GDP using base-year prices is that

Legalizing all forms of illegal activities

Table 4.25 -Refer to Table 4.25.Given the information above, calculate the rate of increase in the price level from 2016 to 2017.Use the percent change in the GDP deflator.

The measure of production that values production using current prices is called

Increases in real GDP would understate the well-being of a country over time if, over that time period, the

Nominal GDP measures the value of all final goods and services at base-year prices.

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: The Interaction of Supply and Demand

Unemployment and Inflation

Economic Growth, The Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, Banks, and the Bank of Canada

Monetary Policy

Fiscal Policy

Inflation, Unemployment, and Bank of Canada Policy

Macroeconomics in an Open Economy

The International Financial System

Filters

The is a measure of the price level and is calculated by dividing by and multiplying by 100.