Question 1

When a firm produces consumer goods and adds some to inventory rather than selling it, how is the increase in inventory counted in GDP?

Accepted Answer

A) It is not counted in the current quarter GDP. 
B) It is counted in the current quarter GDP as investment. 
C) It is counted in the current quarter GDP as consumption. 
D) It is counted in the current quarter GDP as a statistical discrepancy. 
A) It is not counted in the current quarter GDP. 
B) It is counted in the current quarter GDP as investment. 
C) It is counted in the current quarter GDP as consumption. 
D) It is counted in the current quarter GDP as a statistical discrepancy. B

Question 2

In 2008, how large were Canadian government purchases of goods and services?

Accepted Answer

A) larger than consumption, but smaller than investment 
B) larger than investment, but smaller than consumption 
C) smaller than both consumption and investment 
D) larger than both consumption and investment 
A) larger than consumption, but smaller than investment 
B) larger than investment, but smaller than consumption 
C) smaller than both consumption and investment 
D) larger than both consumption and investment C

Question 3

A farmer produces the same output in 2007 as in 2006. His input prices increase by 50 percent, but so does his product price. What can we conclude?

Accepted Answer

A) The farmer is better off in 2007. 
B) The farmer was better off in 2006. 
C) The farmer is equally well off in 2007 as in 2006. 
D) We cannot tell whether the farmer is better off in 2007 or in 2006 without additional information. 
A) The farmer is better off in 2007. 
B) The farmer was better off in 2006. 
C) The farmer is equally well off in 2007 as in 2006. 
D) We cannot tell whether the farmer is better off in 2007 or in 2006 without additional information. D

Question 4

Which of the following best defines national income?

Accepted Answer

A) all income produced within a country 
B) the total income earned by a nation's residents from the production of goods and services within the borders of the country 
C) the total income earned by a nation's residents in the production of goods and services 
D) the income received by the national government 
A) all income produced within a country 
B) the total income earned by a nation's residents from the production of goods and services within the borders of the country 
C) the total income earned by a nation's residents in the production of goods and services 
D) the income received by the national government

Question 5

If nominal GDP is $1 trillion and real GDP is $0.8 trillion, what is the GDP deflator?

Accepted Answer

A) 0.8 
B) 1.25 
C) 80 
D) 125 
A) 0.8 
B) 1.25 
C) 80 
D) 125

Question 6

In 2008 what was, approximately, GDP per person in Canada?

Accepted Answer

A) $32 000 
B) $37 000 
C) $48 000 
D) $57 000 
A) $32 000 
B) $37 000 
C) $48 000 
D) $57 000

Question 7

Which of the following is included in Canadian GDP?

Accepted Answer

A) the difference in the price of the sale of an existing home and its original purchase price 
B) goods produced by foreign citizens working in Canada 
C) known illegal activities 
D) goods produced by a Canadian company in France 
A) the difference in the price of the sale of an existing home and its original purchase price 
B) goods produced by foreign citizens working in Canada 
C) known illegal activities 
D) goods produced by a Canadian company in France

Question 8

A professional gambler moves from a province where gambling is illegal to a province where gambling is legal. What impact does this move have on Canada's GDP?

Accepted Answer

A) It raises GDP. 
B) It decreases GDP. 
C) It does not change GDP because gambling is never included in GDP. 
D) It does not change GDP because in either case his income is included. 
A) It raises GDP. 
B) It decreases GDP. 
C) It does not change GDP because gambling is never included in GDP. 
D) It does not change GDP because in either case his income is included.

Question 9

Suppose that an apartment complex converts to a condominium where the renters are now owners of their former apartments. What is included in GDP?

Accepted Answer

A) The rent was included in GDP; the purchases of the condominiums are not. 
B) The rent was included in GDP, and so is the purchase of the condominiums. 
C) The rent was not included in GDP; the purchases of the condominiums are. 
D) The rent was not included in GDP; the purchases are not included either. 
A) The rent was included in GDP; the purchases of the condominiums are not. 
B) The rent was included in GDP, and so is the purchase of the condominiums. 
C) The rent was not included in GDP; the purchases of the condominiums are. 
D) The rent was not included in GDP; the purchases are not included either.

Question 10

A country reported nominal GDP of $200 billion in 2007 and $180 billion in 2006, and reported a GDP deflator of 125 in 2007 and 105 in 2006. What happened to real output and prices from 2006 to 2007?

Accepted Answer

A) Real output and prices both rose. 
B) Real output rose and prices fell. 
C) Real output fell and prices rose. 
D) Real output and prices both fell. 
A) Real output and prices both rose. 
B) Real output rose and prices fell. 
C) Real output fell and prices rose. 
D) Real output and prices both fell.

Question 11

Which of these would be included in Canadian consumption?

Accepted Answer

A) A Canadian resident buys a car manufactured in Brazil. 
B) A French resident buys a new house in Canada 
C) Beverly buys a newly issued stock in a Canadian corporation 
D) Samantha produces some art work to decorate her house. 
A) A Canadian resident buys a car manufactured in Brazil. 
B) A French resident buys a new house in Canada 
C) Beverly buys a newly issued stock in a Canadian corporation 
D) Samantha produces some art work to decorate her house.

Question 12

An Italian company opens a pasta company in Ottawa. Where are the profits from this pasta company included?

Accepted Answer

A) in both Canadian and Italian GNP 
B) in both Canadian and Italian GDP 
C) in Canadian GNP and Italian GDP 
D) in Canadian GDP and Italian GNP 
A) in both Canadian and Italian GNP 
B) in both Canadian and Italian GDP 
C) in Canadian GNP and Italian GDP 
D) in Canadian GDP and Italian GNP

Question 13

What does personal income include and exclude?

Accepted Answer

A) It includes retained earnings, corporate income taxes, and social insurance contributions, and excludes interest and transfer payments received by households from government. 
B) It excludes retained earnings, corporate income taxes, social insurance contributions, and interest, and includes transfer payments received by households from government. 
C) It excludes retained earnings, corporate income taxes, and social insurance contributions, and includes interest and transfer payments received by households from government. 
D) It includes retained earnings, corporate income taxes, social insurance contributions, and interest, and excludes transfer payments received by households from government. 
A) It includes retained earnings, corporate income taxes, and social insurance contributions, and excludes interest and transfer payments received by households from government. 
B) It excludes retained earnings, corporate income taxes, social insurance contributions, and interest, and includes transfer payments received by households from government. 
C) It excludes retained earnings, corporate income taxes, and social insurance contributions, and includes interest and transfer payments received by households from government. 
D) It includes retained earnings, corporate income taxes, social insurance contributions, and interest, and excludes transfer payments received by households from government.

Question 14

Over the past few decades Canadians have chosen to cook less at home and eat more at restaurants. What effect has this practice had on GDP?

Accepted Answer

A) It has increased measured GDP. 
B) It has reduced measured GDP. 
C) It has not affected measured GDP. 
D) It has had an ambiguous effect on GDP. 
A) It has increased measured GDP. 
B) It has reduced measured GDP. 
C) It has not affected measured GDP. 
D) It has had an ambiguous effect on GDP.

Question 15

How are nominal GDP and real GDP related?

Accepted Answer

A) Nominal GDP measures base-year production using base-year prices, while real GDP measures current production using current prices. 
B) Nominal GDP measures current production using base-year prices, while real GDP measures current production using current prices. 
C) Nominal GDP measures current production using current prices, while real GDP measures current production using base-year prices. 
D) Nominal GDP measures current production using current prices, while real GDP measures base-year production using base-year prices. 
A) Nominal GDP measures base-year production using base-year prices, while real GDP measures current production using current prices. 
B) Nominal GDP measures current production using base-year prices, while real GDP measures current production using current prices. 
C) Nominal GDP measures current production using current prices, while real GDP measures current production using base-year prices. 
D) Nominal GDP measures current production using current prices, while real GDP measures base-year production using base-year prices.

Question 16

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

Accepted Answer

A) $386 
B) $392 
C) $396 
D) $398 
A) $386 
B) $392 
C) $396 
D) $398

Question 17

Which of the following best defines retained earnings?

Accepted Answer

A) the part of income that households retain after paying taxes 
B) the part of income that businesses retain after paying taxes 
C) the part of income that corporations pay to their owners in the form of dividends 
D) the part of income that corporations do not pay to their owners in the form of dividends 
A) the part of income that households retain after paying taxes 
B) the part of income that businesses retain after paying taxes 
C) the part of income that corporations pay to their owners in the form of dividends 
D) the part of income that corporations do not pay to their owners in the form of dividends

Question 18

When economists talk about growth in the economy, how do they measure that growth?

Accepted Answer

A) with the absolute change in nominal GDP 
B) with the percentage change in real GDP 
C) with the absolute change in real GDP 
D) with the percentage change in nominal GDP 
A) with the absolute change in nominal GDP 
B) with the percentage change in real GDP 
C) with the absolute change in real GDP 
D) with the percentage change in nominal GDP

Question 19

In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, what will Ophelia's government statisticians most likely do?

Accepted Answer

A) make sure to account for inventory changes during the second quarter 
B) report real GDP, not nominal GDP 
C) focus on GNP rather than GDP during the second quarter 
D) make a seasonal adjustment for the second quarter data 
A) make sure to account for inventory changes during the second quarter 
B) report real GDP, not nominal GDP 
C) focus on GNP rather than GDP during the second quarter 
D) make a seasonal adjustment for the second quarter data

Question 20

Recessions are associated with which of the following?

Accepted Answer

A) higher prices 
B) increased profits 
C) higher employment 
D) falling real GDP 
A) higher prices 
B) increased profits 
C) higher employment 
D) falling real GDP

When a firm produces consumer goods and adds some to inventory rather than selling it, how is the increase in inventory counted in GDP?

In 2008, how large were Canadian government purchases of goods and services?

A farmer produces the same output in 2007 as in 2006. His input prices increase by 50 percent, but so does his product price. What can we conclude?

Which of the following best defines national income?

If nominal GDP is $1 trillion and real GDP is $0.8 trillion, what is the GDP deflator?

In 2008 what was, approximately, GDP per person in Canada?

Which of the following is included in Canadian GDP?

A professional gambler moves from a province where gambling is illegal to a province where gambling is legal. What impact does this move have on Canada's GDP?

Suppose that an apartment complex converts to a condominium where the renters are now owners of their former apartments. What is included in GDP?

A country reported nominal GDP of $200 billion in 2007 and $180 billion in 2006, and reported a GDP deflator of 125 in 2007 and 105 in 2006. What happened to real output and prices from 2006 to 2007?

Which of these would be included in Canadian consumption?

An Italian company opens a pasta company in Ottawa. Where are the profits from this pasta company included?

What does personal income include and exclude?

Over the past few decades Canadians have chosen to cook less at home and eat more at restaurants. What effect has this practice had on GDP?

How are nominal GDP and real GDP related?

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

Which of the following best defines retained earnings?

When economists talk about growth in the economy, how do they measure that growth?

In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, what will Ophelia's government statisticians most likely do?

Recessions are associated with which of the following?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

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Exam 5: Measuring a Nations Income

When a firm produces consumer goods and adds some to inventory rather than selling it, how is the increase in inventory counted in GDP?

In 2008, how large were Canadian government purchases of goods and services?

A farmer produces the same output in 2007 as in 2006. His input prices increase by 50 percent, but so does his product price. What can we conclude?

Which of the following best defines national income?

If nominal GDP is $1 trillion and real GDP is $0.8 trillion, what is the GDP deflator?

In 2008 what was, approximately, GDP per person in Canada?

Which of the following is included in Canadian GDP?

A professional gambler moves from a province where gambling is illegal to a province where gambling is legal. What impact does this move have on Canada's GDP?

Suppose that an apartment complex converts to a condominium where the renters are now owners of their former apartments. What is included in GDP?

A country reported nominal GDP of $200 billion in 2007 and $180 billion in 2006, and reported a GDP deflator of 125 in 2007 and 105 in 2006. What happened to real output and prices from 2006 to 2007?

Which of these would be included in Canadian consumption?

An Italian company opens a pasta company in Ottawa. Where are the profits from this pasta company included?

What does personal income include and exclude?

Over the past few decades Canadians have chosen to cook less at home and eat more at restaurants. What effect has this practice had on GDP?

How are nominal GDP and real GDP related?

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

Which of the following best defines retained earnings?

When economists talk about growth in the economy, how do they measure that growth?

In the nation of Ophelia, quarterly GDP is always higher in the second quarter than in other quarters. In order to account for this predictable jump in GDP, what will Ophelia's government statisticians most likely do?

Recessions are associated with which of the following?

Ten Principles of Economics

Thinking Like an Economist

Interdependence and the Gains From Trade

The Market Forces of Supply and Demand

Measuring the Cost of Living

Production and Growth

Saving, Investment, and the Financial System

Unemployment and Its Natural Rate

The Monetary System

Money Growth and Inflation

Open-Economy Macroeconomics: Basic Concepts

A Macroeconomic Theory of the Open Economy

Aggregate Demand and Aggregate Supply

The Influence of Monetary and Fiscal Policy on Aggregate Demand

The Short-Run Tradeoff Between Inflation and Unemployment

Five Debates Over Macroeconomic Policy

Filters