Exam 5: Measuring the Economys Output

In an economy, the total expenditures for a market basket of goods in year 1 (the base year) was $5,000 billion. In year 2, the total expenditure for the same market basket of goods was $5,500 billion. What was the GDP price index for the economy in year 2?

Nominal GDP is:

The current GDP price index used by Statistics Canada is referred to as the chain-weighted index, because by using both the previous year prices and current prices it links each year to the prior year.

Real GDP measures:

GDP excludes expenditures by:

Setup Corporation buys $100,000 of sand, rock, and cement to produce ready-mix concrete. It sells 10,000 cubic yards of concrete at $30 a cubic yard. The value added by Setup Corporation is:

Refer to the information below. The capital consumption allowance: All figures are in billions of dollars.

GDP tends to underestimate the productive activity in the economy because it excludes:

By summing the values added at each stage in the production of some good we obtain:

Refer to the information below. The gross domestic product is: All figures are in billions of dollars.

The ZZZ Corporation issued $25 million in new common stock in 2012. It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans. As a result, investment:

Net investment refers to:

Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.

Interest on the public debt is included as a part of government purchases in determining GDP by the expenditures method.

Suppose nominal GDP was $360 billion in 2002 and $450 billion in 2012. The appropriate price index was 100 in 2002 and 120 in 2012. It can be concluded that between 2002 and 2012 real GDP:

The smallest component of aggregate spending in Canada is:

-Refer to the above information. Negative net investment is occurring in:

If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock:

-Refer to the above diagram. The base year used in determining the price indices for this economy:

(GDP figures are in billions of dollars.) -Refer to the above table. What is the GDP price index in Year 1?