Question 1

To calculate GDP using the value-added method, one would add up

Accepted Answer

A) the market value of final goods and services produced during a particular period. 
B) only the value added by the underground economy. 
C) the value added by each firm involved in the production of final goods and services. 
D) the market value of intermediate goods and services produced during a particular period. 
E) the after tax profits of every firm in the economy. 
A) the market value of final goods and services produced during a particular period. 
B) only the value added by the underground economy. 
C) the value added by each firm involved in the production of final goods and services. 
D) the market value of intermediate goods and services produced during a particular period. 
E) the after tax profits of every firm in the economy.

Question 2

Is nominal GDP measured in terms of quantity or in terms of dollars? If dollars, the value of the dollar from what period? Is real GDP measured in terms of quantity or in terms of dollars? If dollars, the value of the dollar from what period?

Accepted Answer

Both nominal GDP and real GDP are measur

Question 3

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will

Accepted Answer

A) increase GDP and increase well-being in the economy. 
B) increase GDP and decrease well-being in the economy. 
C) decrease GDP and increase well-being in the economy. 
D) decrease GDP and decrease well-being in the economy. 
A) increase GDP and increase well-being in the economy. 
B) increase GDP and decrease well-being in the economy. 
C) decrease GDP and increase well-being in the economy. 
D) decrease GDP and decrease well-being in the economy.

Question 4

Using "chain-weighted" prices to calculate real GDP remedies the distortions caused by changes in relative prices over time.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is not an example of a transfer payment?

Accepted Answer

A) employment insurance payments 
B) the government's contribution to a teacher's pension plan 
C) social program payments to retirees 
D) social program payments to disabled persons 
E) government payments to parents with small children 
A) employment insurance payments 
B) the government's contribution to a teacher's pension plan 
C) social program payments to retirees 
D) social program payments to disabled persons 
E) government payments to parents with small children

Question 6

The GDP deflator is the

Accepted Answer

A) difference between real GDP and nominal GDP multiplied by 100. 
B) difference between nominal GDP and real GDP multiplied by 100. 
C) ratio of real GDP to nominal GDP multiplied by 100. 
D) ratio of nominal GDP to real GDP multiplied by 100. 
E) the different between real GDP and potential GDP. 
A) difference between real GDP and nominal GDP multiplied by 100. 
B) difference between nominal GDP and real GDP multiplied by 100. 
C) ratio of real GDP to nominal GDP multiplied by 100. 
D) ratio of nominal GDP to real GDP multiplied by 100. 
E) the different between real GDP and potential GDP.

Question 7

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

Accepted Answer

A) employment in a specific industry. 
B) employment in the economy. 
C) output of a specific firm. 
D) output of a specific industry. 
E) prices of key natural resources. 
A) employment in a specific industry. 
B) employment in the economy. 
C) output of a specific firm. 
D) output of a specific industry. 
E) prices of key natural resources.

Question 8

One American study found that college students who graduate during a recession have to search longer for a job and end up accepting jobs that, on average, pay ________ than jobs accepted by students who graduate during expansions.

Accepted Answer

A) 50 percent less 
B) 10 percent less 
C) roughly the same 
D) 7 percent more 
E) 10 percent more 
A) 50 percent less 
B) 10 percent less 
C) roughly the same 
D) 7 percent more 
E) 10 percent more

Question 9

Which of the following statements about the underground economy is true?

Accepted Answer

A) The underground economy in developing countries amounts to less than 10% of measured GDP. 
B) Most transactions that occur in the underground economy are included in the calculation of GDP. 
C) Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run. 
D) Income that is earned but not reported as income for tax purposes is included in the calculation of GDP. 
E) The Canadian underground economy is continually growing relative to measured GDP. 
A) The underground economy in developing countries amounts to less than 10% of measured GDP. 
B) Most transactions that occur in the underground economy are included in the calculation of GDP. 
C) Excluding underground economy production from measured GDP causes errors in GDP growth estimates in the long run. 
D) Income that is earned but not reported as income for tax purposes is included in the calculation of GDP. 
E) The Canadian underground economy is continually growing relative to measured GDP.

Question 10

Scenario 4.1
CANOES-R-US makes canoes.It buys the shell of the canoe from another firm for $300 and uses its labour and intermediate goods to make the canoe.It sells the finished canoe to a retail canoe store for $800.The retail canoe store then sells the canoe to a consumer for $1,200.
-Refer to Scenario 4.1.The value added of CANOES-R-US for each canoe equals

Accepted Answer

A) $1,200. 
B) $800. 
C) $500. 
D) $400. 
E) $300. 
A) $1,200. 
B) $800. 
C) $500. 
D) $400. 
E) $300.

Question 11

What is the largest component of spending in Canada?

Accepted Answer

A) final consumption spending 
B) gross fixed capital formation 
C) government purchases 
D) spending on inventories 
E) inventory investment 
A) final consumption spending 
B) gross fixed capital formation 
C) government purchases 
D) spending on inventories 
E) inventory investment

Question 12

Which of the following is not directly counted in GDP?

Accepted Answer

A) investment expenditures 
B) government purchases 
C) intermediate goods 
D) consumer goods 
E) net exports 
A) investment expenditures 
B) government purchases 
C) intermediate goods 
D) consumer goods 
E) net exports

Question 13

To calculate GDP by the expenditure method, one must add

Accepted Answer

A) wages, rents, interest, and profits. 
B) final consumption spending, gross fixed capital formation, investment in inventories, and net exports. 
C) final consumption spending, net fixed capital formation, government spending and exports. 
D) labour, natural resources, entrepreneurship, and capital. 
E) final consumption spending, wages, income taxes, and fixed capital formation. 
A) wages, rents, interest, and profits. 
B) final consumption spending, gross fixed capital formation, investment in inventories, and net exports. 
C) final consumption spending, net fixed capital formation, government spending and exports. 
D) labour, natural resources, entrepreneurship, and capital. 
E) final consumption spending, wages, income taxes, and fixed capital formation.

Question 14

Which of the following transactions would take place in the "underground economy"?

Accepted Answer

A) Elizabeth tells her mother she's going to work but she really goes to see a movie. 
B) Paul buys 30 litres of gasoline for $1.29 a liter, not realizing that a fraction of that price goes to the government as tax revenue. 
C) John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. 
D) Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it. 
E) Sam works as a consultant on the side and doesn't tell the university he works for. 
A) Elizabeth tells her mother she's going to work but she really goes to see a movie. 
B) Paul buys 30 litres of gasoline for $1.29 a liter, not realizing that a fraction of that price goes to the government as tax revenue. 
C) John makes chain-link belts and necklaces and sells them at a local flea market for cash to avoid paying taxes. 
D) Matt bought an iPad for $499 but decided to sell it on eBay instead of keeping it. 
E) Sam works as a consultant on the side and doesn't tell the university he works for.

Question 15

If a Japanese firm produces cars in Canada, that production should count towards

Accepted Answer

A) Canadian GNP. 
B) Japanese GDP. 
C) Canadian GDP. 
D) both Canadian GNP and Japanese GDP. 
E) Canadian GNI. 
A) Canadian GNP. 
B) Japanese GDP. 
C) Canadian GDP. 
D) both Canadian GNP and Japanese GDP. 
E) Canadian GNI.

Question 16

Which of the following would be directly counted in GDP in 2017?

Accepted Answer

A) kitchen cabinets purchased from Lowes in 2017 to be installed in a house built in 1997 
B) kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a brand new country-style home 
C) kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 
D) kitchen cabinets purchased from Home Depot installed in a newly constructed house 
E) none of the above 
A) kitchen cabinets purchased from Lowes in 2017 to be installed in a house built in 1997 
B) kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a brand new country-style home 
C) kitchen cabinets built in 1887, extracted from the 1887 home, and installed in a farm house built in 1950 
D) kitchen cabinets purchased from Home Depot installed in a newly constructed house 
E) none of the above

Question 17

The output of Canadian citizens who work in the United States would be included in the

Accepted Answer

A) gross domestic product of the United States. 
B) gross national income of the United States. 
C) gross domestic product of Canada. 
D) gross national income of the United States and the gross national product of Canada. 
E) gross domestic product of both countries. 
A) gross domestic product of the United States. 
B) gross national income of the United States. 
C) gross domestic product of Canada. 
D) gross national income of the United States and the gross national product of Canada. 
E) gross domestic product of both countries.

To calculate GDP using the value-added method, one would add up

Is nominal GDP measured in terms of quantity or in terms of dollars? If dollars, the value of the dollar from what period? Is real GDP measured in terms of quantity or in terms of dollars? If dollars, the value of the dollar from what period?

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will

Using "chain-weighted" prices to calculate real GDP remedies the distortions caused by changes in relative prices over time.

Which of the following is not an example of a transfer payment?

The GDP deflator is the

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

One American study found that college students who graduate during a recession have to search longer for a job and end up accepting jobs that, on average, pay ________ than jobs accepted by students who graduate during expansions.

Which of the following statements about the underground economy is true?

What is the largest component of spending in Canada?

Which of the following is not directly counted in GDP?

To calculate GDP by the expenditure method, one must add

Which of the following transactions would take place in the "underground economy"?

If a Japanese firm produces cars in Canada, that production should count towards

Which of the following would be directly counted in GDP in 2017?

The output of Canadian citizens who work in the United States would be included in the

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

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Exam 4: GDP: Measuring Total Production and Income

To calculate GDP using the value-added method, one would add up

Is nominal GDP measured in terms of quantity or in terms of dollars? If dollars, the value of the dollar from what period? Is real GDP measured in terms of quantity or in terms of dollars? If dollars, the value of the dollar from what period?

A sharp increase in the divorce rate increases the number of lawyers hired to determine divorce settlements.This will

Using "chain-weighted" prices to calculate real GDP remedies the distortions caused by changes in relative prices over time.

Which of the following is not an example of a transfer payment?

The GDP deflator is the

Macroeconomics, as opposed to microeconomics, includes the study of what determines the level of

One American study found that college students who graduate during a recession have to search longer for a job and end up accepting jobs that, on average, pay ________ than jobs accepted by students who graduate during expansions.

Which of the following statements about the underground economy is true?

What is the largest component of spending in Canada?

Which of the following is not directly counted in GDP?

To calculate GDP by the expenditure method, one must add

Which of the following transactions would take place in the "underground economy"?

If a Japanese firm produces cars in Canada, that production should count towards

Which of the following would be directly counted in GDP in 2017?

The output of Canadian citizens who work in the United States would be included in the

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