Question 1

The employment statistics computed from the Survey of Employment, Payroll, and Hours do not include:

Accepted Answer

A) workers with two jobs. 
B) those who are self-employed. 
C) workers on firms' payrolls. 
D) part-time workers on firms' payrolls.

Question 2

Assume that two countries have the same nominal GDP (measured in the same currency using the same accounting rules). Provide at least three reasons why you cannot assume that citizens in each country enjoy approximately the same level of economic well-being.

Accepted Answer

The answer of Assume that two countries have the same...

Question 3

An increase in the price of goods bought by firms and the government will show up in:

Accepted Answer

A) the CPI but not in the GDP deflator. 
B) the GDP deflator but not in the CPI. 
C) both the CPI and the GDP deflator. 
D) neither the CPI nor the GDP deflator.

Question 4

Real GDP is a better measure of economic well-being than nominal GDP because real GDP:

Accepted Answer

A) excludes the value of goods and services exported aboard. 
B) includes the value of government transfer payments. 
C) measures changes in the quantity of goods and services produced by holding prices constant. 
D) adjusts the value of goods and services produced for changes in the foreign exchange rate.

Question 5

GDP is all of the following except:

Accepted Answer

A) the total expenditure of everyone in the economy. 
B) the total income of everyone in the economy. 
C) the overall expenditure on the economy's output of goods and services. 
D) the total output of the economy.

Question 6

An example of an imputed value in the GDP is the:

Accepted Answer

A) value added of meals cooked at home. 
B) housing services enjoyed by homeowners. 
C) rental services of automobiles to their owners. 
D) value of illegal drugs sold.

Question 7

In the circular flow model, the flow of dollars from firms to households is paid _____, and the flow of dollars from households to firms is paid _____.

Accepted Answer

A) as wages, capital income, and profits; for goods and services 
B) for value added; as imputed values 
C) in current dollars; in constant dollars 
D) as interest and dividends; for depreciation and taxes

Question 8

The CPI is determined by computing:

Accepted Answer

A) an average of prices of all goods and services. 
B) the price of a basket of goods and services that changes every year, relative to the same basket in a base year. 
C) the price of a fixed basket of goods and services, relative to the price of the same basket in a base year. 
D) nominal GDP relative to real GDP.

Question 9

A farmer grows wheat and sells it to a miller for $1; the miller turns the wheat into flour and sells it to a baker for $3; the baker uses the flour to make bread and sells the bread for $6. The value added by the miller is:

Accepted Answer

A) $1. 
B) $2. 
C) $3. 
D) $6.

Question 10

Explain which expenditure category of GDP changes and the direction of the change that results for each transaction described.
a.A domestic business purchases a domestically produced computer to use in a business office.
b.A domestic business produces a computer that is sold to a foreign company.
c.The federal government purchases a domestically produced computer to use in a courthouse.
d.A domestic household purchases a domestically produced computer to use in a home.
e.A domestic household purchases a computer produced in a foreign country to use in a home.​

Accepted Answer

The answer of Explain which expenditure category of GDP changes...

Question 11

According to the definition used by Statistics Canada, people are considered to be unemployed if they:

Accepted Answer

A) are out of a job but not looking for work. 
B) retired from the labour force before age 65. 
C) do not have a job but have looked for work in the past four weeks. 
D) are absent from work because of bad weather or illness.

Question 12

Measuring the rate of inflation using a market basket that excludes some volatile components of the CPI such as food and energy prices is preferred by some analysts because this measure, called core inflation,

Accepted Answer

A) provides a real, rather than a nominal, rate of inflation. 
B) gives a better measure of ongoing, sustained price changes. 
C) is more consistent with measures of inflation used in other countries. 
D) fluctuates more than measures of inflation that include food and energy prices.

Question 13

Assume that apples cost $0.50 in 2012 and $1 in 2019, whereas oranges cost $1 in 2012 and $1.50 in 2019. If 4 apples were produced in 2012 and 5 in 2019, whereas 3 oranges were produced in 2012 and 5 in 2019, then the GDP deflator in 2019, using a base year of 2012, was approximately:

Accepted Answer

A) 1.5. 
B) 1.7. 
C) 1.9. 
D) 2.0.

Question 14

Chain-weighted measures of real GDP make use of prices from:

Accepted Answer

A) an unchanging base year. 
B) a continuously changing base year. 
C) a base year that is changed approximately every five years. 
D) a base year that is changed approximately every 10 years.

Question 15

Sam wants a loan from Dean. While discussing the interest, Dean told Sam that he will give him two options. Which one should Sam choose and why? The options are:
a. Sam will pay the nominal interest of 8 percent per annum.
b. Sam will pay real interest of 4 percent per annum.

Accepted Answer

The answer of Sam wants a loan from Dean. While...

Question 16

"GDP deflator is a better price level indicator than CPI." Give reasons both supporting and opposing this statement.

Accepted Answer

The answer of "GDP deflator is a better price level...

Question 17

In computing GDP:

Accepted Answer

A) expenditures on used goods are included. 
B) production added to inventories is excluded. 
C) the amount of production in the underground economy is imputed. 
D) the value of intermediate goods is included in the market price of the final goods.

Question 18

Statistics Canada defines the underground economy as consisting of:

Accepted Answer

A) activities related to drugs and prostitution. 
B) only illegal activities. 
C) market-based economic activities that escape measurement because of their hidden, illegal, or informal nature. 
D) all trades involving the exchange of money.

Question 19

The GDP deflator is a:

Accepted Answer

A) Laspeyres price index. 
B) Paasche price index. 
C) Laspeyres quantity index. 
D) Paasche quantity index.

Question 20

Assume that a firm buys all the parts that it puts into an automobile for $10,000, pays its workers $10,000 to fabricate the automobile, and sells the automobile for $22,000. In this case, the value added by the automobile company is:

Accepted Answer

A) $10,000. 
B) $12,000. 
C) $20,000. 
D) $22,000.

Exam 2: The Data of Microeconomics