Deck 7: Gdp and the Cpi: Tracking the Macroeconomy

Question 1

The national accounts do NOT keep track of:

A) the spending of consumers and the government.
B) the sales of producers.
C) business investment.
D) exchange rates.

Answer 1

exchange rates.

Question 2

In the factor markets:

A) households supply goods and services.
B) households demand goods and services.
C) firms demand resources.
D) firms supply resources.

Answer 2

firms demand resources.

Question 3

In the circular-flow diagram,a person or a group of people who share income is a:

A) government.
B) factor.
C) household.
D) firm.

Answer 3

household.

Question 4

According to the circular-flow diagram,which economic agents engage in consumer spending?

A) firms
B) households
C) factor markets
D) financial markets

Question 5

In the circular-flow diagram,households:

A) supply goods.
B) supply services.
C) buy resources.
D) buy goods and services.

Question 6

In the circular-flow diagram,firms:

A) demand goods.
B) demand services.
C) supply resources.
D) demand resources.

Question 7

In the factor markets:

A) households supply goods and services.
B) households supply resources.
C) firms demand goods and services.
D) firms supply goods and services.

Question 8

In the circular-flow diagram,the places where resources,especially capital and labour,are bought and sold are the:

A) product markets.
B) factor markets.
C) households.
D) firms.

Question 9

In the circular-flow diagram,an organization that produces goods and services for sale is a:

A) government.
B) factor.
C) household.
D) firm.

Question 10

In the Canadian economy,the circular-flow diagram does NOT illustrate:

A) growing income inequality.
B) flows of money.
C) flows of goods and services.
D) the purchase and sale of factors of production.

Question 11

The national income and product accounts are calculated by the:

A) Office of National Income Accounts.
B) Bank of Canada.
C) Statistics Canada.
D) Office of Management and Budget.

Question 12

The circular-flow diagram is important because it shows that the flow of money into each market or sector of the economy is _____ the flow of money coming out of that sector.

A) greater than
B) equal to
C) less than
D) unrelated to

Question 13

The national income and product accounts keep track of:

A) consumer spending.
B) interest rates.
C) rates of inflation.
D) exchange rates.

Question 14

The circular-flow diagram illustrates:

A) the minimum wage state by state.
B) fluctuations in exchange rates.
C) changes in worker productivity.
D) the key concepts in the national accounts.

Question 15

In the circular-flow diagram,households:

A) supply goods.
B) supply services.
C) supply resources.
D) buy resources.

Question 16

In the product markets:

A) households supply goods and services.
B) households supply resources.
C) firms demand goods and services.
D) firms supply goods and services.

Question 17

The national income and product accounts keep track of:

A) consumer debt.
B) sales and investment spending by businesses.
C) worker productivity.
D) unemployment rates.

Question 18

In the product markets:

A) households supply goods and services.
B) households demand goods and services.
C) firms demand resources.
D) firms supply resources.

Question 19

In the circular-flow diagram,firms:

A) supply goods and services.
B) demand goods.
C) supply resources.
D) demand services.

Question 20

In the circular-flow diagram,the places where goods and services are bought and sold are the:

A) product markets.
B) factor markets.
C) households.
D) firms.

Question 21

A share in the ownership of a company is a(n):

A) bond.
B) stock.
C) dividend.
D) IOU.

Question 22

_____ is considered to be an IOU.

A) A tock
B) A bond
C) Interest
D) A dividend

Question 23

The total income of households after taxes and government transfers is called:

A) disposable income.
B) private savings.
C) aggregate spending.
D) investment.

Question 24

Stock in a company is:

A) a share of ownership of the company.
B) an IOU that pays interest.
C) a portion of a firm's profits paid to shareholders.
D) a component of private savings.

Question 25

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.How does the government finance its purchases of goods and services?

A) by printing money
B) by taxes
C) by borrowing
D) by taxes and borrowing

Question 26

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.What is the value of GDP in this economy?

A) $100
B) $400
C) $500
D) $600

Question 27

Private savings is equal to:

A) disposable income less taxes.
B) disposable income less consumption.
C) wealth.
D) wealth plus government transfer payments.

Question 28

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it)and there is a decrease in government spending,holding everything else constant,which outcome is likely to occur?

A) an increase in the nominal GDP
B) an increase in the real GDP
C) an increase in the unemployment rate
D) an increase in the inflation rate

Question 29

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it)and there is a decrease in investment spending,holding everything else constant,which outcome is likely to occur?

A) an increase in the nominal GDP
B) an increase in the real GDP
C) an increase in the unemployment rate
D) an increase in the inflation rate

Question 30

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.What are net exports?

A) $0
B) $30
C) $60
D) $100

Question 31

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it)and there is a decrease in consumer spending,holding everything else constant,which outcome is likely to occur?

A) an increase in nominal GDP
B) an increase in real GDP
C) an increase in the unemployment rate
D) an increase in the inflation rate

Question 32

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it)and there is an increase in government spending,holding everything else constant,which outcome is likely to occur?

A) an increase in the nominal GDP
B) a decrease in the real GDP
C) an increase in the unemployment rate
D) a decrease in the inflation rate

Question 33

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it)and there is an increase in investment spending,holding everything else constant,which outcome is likely to occur?

A) a decrease in GDP
B) an increase in GDP
C) an increase in the unemployment rate
D) a decrease in the inflation rate

Question 34

A bond is:

A) a share of ownership of a company.
B) an IOU that pays interest.
C) a portion of a firm's profits paid to shareholders.
D) a component of private savings.

Question 35

Households do NOT derive income from:

A) wages or labour income.
B) interest from lending.
C) rent from allowing firms to use their land.
D) imports.

Question 36

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it)and there is an increase in exports,holding everything else constant,which outcome is likely to occur?

A) a decrease in the nominal GDP
B) a decrease in the real GDP
C) a decrease in the unemployment rate
D) a decrease in the inflation rate

Question 37

The portion of a firm's profit paid to the owner of one share of its stock would accurately be characterized as:

A) an interest payment.
B) a dividend.
C) a stock.
D) a bond.

Question 38

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it)and there is a decrease in exports,holding everything else constant,which outcome is likely to occur?

A) a decrease in the nominal GDP
B) an increase in the real GDP
C) a decrease in the unemployment rate
D) an increase in the inflation rate

Question 39

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.What is disposable income?

A) $0
B) $100
C) $400
D) $500

Question 40

Use the following to answer questions:
(Figure 7-1: Circular-Flow Model)Use Figure 7-1: Circular-Flow Model.If the circular-flow model is in equilibrium (the sum of money flowing into each box is equal to the sum of the money flowing out of it)and there is an increase in consumer spending,holding everything else constant,which outcome is likely to occur?

A) an increase in GDP
B) a decrease in GDP
C) an increase in the unemployment rate
D) a decrease in the inflation rate

Question 41

Government borrowing is:

A) the amount of funds raised by government in financial markets.
B) government spending on goods and services.
C) government tax revenues.
D) the amount of funds raised by government in the financial markets,government spending on goods and services,and government tax revenues.

Question 42

Investment spending is spending on:

A) productive physical capital.
B) stocks.
C) mutual funds.
D) corporate bonds.

Question 43

Which factor causes an outflow of funds from a domestic economy?

A) household savings
B) government tax collections
C) government transfer payments
D) imports

Question 44

Investment spending is spending on:

A) productive physical capital.
B) bonds.
C) shares of stock.
D) productive physical capital,bonds,and shares of stock.

Question 45

Which transaction is included in a current year's GDP as investment spending?

A) ABC company purchased 10 000 shares of Bombardier stock.
B) Ronnie bought a new BMW.
C) Anton purchased his friend's condo.
D) Maggie bought a play-gym set for her day-care business.

Question 46

If we add up the consumer spending on goods and services,investment spending,government purchases of goods and services,and the value of exports,then subtract the value of imports,we have measured the nation's:

A) disposable income.
B) gross domestic product.
C) trade deficit.
D) budget deficit.

Question 47

Which example is NOT a government transfer?

A) employment insurance compensation
B) pension benefits
C) payments by the Ministry of Defense for a new weapons system
D) old age security payments

Question 48

Domestically produced goods and services sold to people in other countries are known as:

A) imports.
B) investments.
C) exports.
D) transfer payments.

Question 49

Purchases of foreign-produced goods and services are:

A) net exports.
B) exports.
C) imports.
D) transfer payments.

Question 50

Disposable income equals:

A) income plus government transfers minus taxes.
B) income plus government spending minus taxes.
C) income minus taxes plus government spending.
D) income minus taxes minus government transfers.

Question 51

Which example illustrates consumption expenditure?

A) Samantha bought an oven for her cooking show on Food Network.
B) Stephanie bought a laptop for her brother.
C) Jim purchased 200 shares of Google stock.
D) Herman Smith spent $1 500 to buy a used car for his son.

Question 52

An example of a government transfer is a(n):

A) expenditure on a provincial highway.
B) bequest from a deceased relative.
C) employment insurance payment.
D) salary for a member of the armed forces.

Question 53

The money spent on domestically produced final goods and services is:

A) equal to GDP.
B) equal to exports minus imports.
C) subtracted in the circular-flow model.
D) equal to GDP,equal to exports minus imports,and subtracted in the circular-flow model.

Question 54

Disposable income in a particular period is:

A) total earned income.
B) earned income plus government transfer payments.
C) earned income plus government transfer payments less taxes.
D) earned income plus government transfer payments less taxes and savings.

Question 55

Goods that are produced domestically but sold abroad are:

A) imports.
B) exports.
C) part of domestic consumption.
D) investment.

Question 56

In the circular-flow model,households:

A) receive transfer payments from the government.
B) buy resources in the factor markets.
C) sell products in the market for goods and services.
D) issue stocks and bonds to raise capital.

Question 57

An example of investment spending is the purchase of a:

A) bond by a banker.
B) loaf of bread by your aunt.
C) new tractor by a farmer.
D) ticket to a football game by a student.

Question 58

A transfer payment is a payment for:

A) a military transfer to a war zone.
B) which no services were rendered by the government.
C) transfer of a debt to a different person.
D) being transferred to a different city by your employer.

Question 59

The indirect ownership of physical capital refers to households owning:

A) cash.
B) stocks.
C) savings accounts.
D) their house.

Question 60

Most households derive the bulk of their income from:

A) wages.
B) interest.
C) profit.
D) rent.

Question 61

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.The flow of funds into and out of the rest of the world is:

A) $30.
B) $80.
C) $160.
D) $240.

Question 62

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.What is GDP?

A) $200
B) $700
C) $1 000
D) $1 080

Question 63

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.The flow of funds into and out of financial markets is:

A) $70.
B) $110.
C) $170.
D) $300.

Question 64

Goods that are produced in a particular period but NOT sold in that period:

A) go into inventory and are called consumption.
B) end up in inventory and are included in investment.
C) are finally included in depreciation when they are sold.
D) are classified as intermediate goods.

Question 65

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.The flow of funds into and out of households is:

A) $1 020.
B) $1 000.
C) $850.
D) $700.

Question 66

The value,at current market prices,of the final goods and services produced within a country during a particular period is:

A) disposable personal product.
B) gross foreign factor output.
C) gross personal product.
D) gross domestic product.

Question 67

Which example illustrates consumption?

A) a new computer purchased by Canada Post for one of its executives
B) a storage facility for a moving company
C) a new car purchased for personal use
D) a dump truck purchased by a demolition company

Question 68

An example of investment spending is the:

A) amount of funds raised by the government in the financial markets.
B) purchase of government bonds by a private household.
C) purchase of a freezer by an ice-cream parlor.
D) purchase of stock shares by a mutual fund.

Question 69

Inventory is counted as investment because it:

A) is used for future production.
B) is a source of future sales.
C) has no opportunity cost.
D) is tax deductible.

Question 70

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.How much is total government spending?

A) $20
B) $220
C) $370
D) $200

Question 71

Gross domestic product is defined as:

A) consumer spending + government purchases of goods and services + financial spending + exports - imports.
B) consumer spending + government transfers + investment spending + exports - imports.
C) disposable income + taxes + investment spending + exports + imports.
D) consumer spending + government purchases of goods and services + investment spending + exports - imports.

Question 72

Households do NOT receive income in the form of:

A) wages.
B) dividends.
C) interest and rent.
D) investment spending.

Question 73

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.How does the government finance its spending?

A) taxes of $150 plus borrowing of $70
B) foreign borrowing and sales of stock of $110
C) investment spending of $120
D) net exports of $80

Question 74

A laptop computer that is purchased by an accounting firm is considered to be:

A) consumption spending.
B) investment spending.
C) private saving.
D) a pre-tax dividend.

Question 75

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.What is the value of disposable income?

A) $1 020
B) $1 000
C) $870
D) $850

Question 76

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model The government has a budget:

A) surplus of $150.
B) surplus of $220.
C) deficit of $70.
D) deficit of $200.

Question 77

A laptop computer purchased by a private individual for personal use is considered to be:

A) consumption spending.
B) investment spending.
C) private saving.
D) a transfer of income.

Question 78

Use the following to answer questions:
(Figure 7-2: Expanded Circular-Flow Model)Use Figure 7-2: Expanded Circular-Flow Model.What is the value of net exports?

A) -$20
B) $20
C) $50
D) $130

Question 79

Which factor is NOT included in investment spending in the national income accounts?

A) new residential construction
B) the purchase of machinery and other productive physical capital
C) the purchase of stocks and bonds by a business
D) spending on inventories

Question 80

The total of the values added at every stage of production for a good leads to the:

A) total cost of the labour used to produce the good.
B) prices of the factors of production used to produce the good.
C) final value of the good.
D) intermediate value of the good.