Question 1

A price index is 100 times the ratio of real GDP to nominal GDP.

Accepted Answer

A) True 
 B)False

Question 2

GDP may be defined as:

Accepted Answer

A)  the monetary value of all goods and services (final, intermediate, and non-market)  produced in a given year.
B)  total resource income less taxes, saving, and spending on exports.
C)  the economic value of all economic resources used in the production of a year's output.
D)  the market value of all final goods and services produced within country in a specific year.E) None of the above
F) All of the above

Question 3

A business buys $7,000 worth of resources to produce a product.The business makes 150 units of the product and each of them sells for $90.The value added by the business to these products is:

Accepted Answer

A)  $13,500
B)  $6,500
C)  $7,000
D)  $6,850E) A) and C)
F) All of the above

Question 4

Net Domestic Income at the factor cost refers to the:

Accepted Answer

A)  total income earned by Canadian-supplied factors of production as wages, interest, rent and profit.
B)  total income earned by foreign-supplied factors of production as wages, interest, rent and profit.
C)  total income earned by foreign-supplied and Canadian-supplied factors of production as wages, interest, rent and profit.
D)  total income earned by Canadian households.E) A) and C)
F) B) and C)

Question 5

For the above economy, the real GDP in year 3 is:

Accepted Answer

A)  $520
B)  $485
C)  $576
D)  $480E) B) and C)
F) B) and D)

Question 6

Real GDP measures:

Accepted Answer

A)  current output at current prices.
B)  current output at base year prices.
C)  base year output at current prices.
D)  base year output at current exchange rates.E) A) and C)
F) A) and B)

Question 7

GDP excludes expenditures by:

Accepted Answer

A)  businesses on pollution control equipment.
B)  business for travel and entertainment.
C)  government on military hardware.
D)  consumers on used automobiles.E) A) and B)
F) None of the above

Question 8

The GDP price index:

Accepted Answer

A)  includes fewer goods and services than the consumer price index.
B)  is identical to the consumer price index.
C)  is another term for the producer price index.
D)  includes all goods comprising the nation's domestic output.E) A) and D)
F) A) and C)

Question 9

In calculating GDP by the income approach, we should sum up:

Accepted Answer

A)  wages, consumption, investment and rent.
B)  wages, rent, interest and profit income.
C)  wages, interest, investment, and exports.
D)  wages, profit income, investment, and consumption.E) All of the above
F) None of the above

Question 10

In a typical year which of the following measures of aggregate output and income is likely to be the smallest?

Accepted Answer

A)  gross domestic product
B)  net domestic income
C)  disposable income
D)  personal incomeE) B) and D)
F) B) and C)

Question 11

Assume an economy which is producing only one product.Output and price data for a three-year period are as follows.  Refer to the above data.If year 2 is chosen as the base year, the price index for year one is:

Accepted Answer

A)  80
B)  100
C)  120
D)  20E) B) and D)
F) A) and D)

Question 12

Which of the following do national income accountants consider to be "investment"?

Accepted Answer

A)  the purchase of an automobile for private, non-business use
B)  the purchase of a new house
C)  the purchase of corporate bonds
D)  the purchase of gold coinsE) A) and B)
F) A) and C)

Question 13

In one-year nominal GDP was $286 billion and the price index was 88.Real GDP in that year was:

Accepted Answer

A)  $252 billion.
B)  $325 billion.
C)  $308 billion.
D)  $262 billion.E) None of the above
F) A) and B)

Question 14

Gross domestic product (GDP)  measures and reports output:

Accepted Answer

A)  as an index number.
B)  in percentage terms.
C)  in dollar amounts.
D)  in quantities of physical units (for example, kilos, litres, and bushels) .E) A) and B)
F) A) and D)

Question 15

From an economist's perspective, which is not considered to be an investment?

Accepted Answer

A)  construction of a new factory
B)  purchase of shares of company stock
C)  the building of an apartment complex
D)  additions to inventories at steel plantsE) A) and B)
F) None of the above

Question 16

Which of the following is not an economic investment?

Accepted Answer

A)  the purchase of a drill press by the Ajax Manufacturing Company
B)  the purchase of 100 shares of Bell Canada by a retired business executive
C)  construction of a suburban housing project
D)  the piling up of inventories on a grocer's shelfE) All of the above
F) None of the above

Question 17

GDP in an economy is $4,600 billion.Consumer expenditures are $3,500 billion, government purchases are $900 billion, and gross investment is $400 billion.Net exports are:

Accepted Answer

A)  +$400 billion.
B)  -$400 billion.
C)  +$200 billion.
D)  -$200 billion.E) C) and D)
F) A) and B)

Question 18

Some of the production of an economy creates pollution.As a result:

Accepted Answer

A)  nominal GDP is greater than real GDP.
B)  real GDP is greater than nominal GDP.
C)  GDP tends to understate social welfare.
D)  GDP tends to overstate social welfare.E) A) and D)
F) A) and C)

Question 19

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:

Accepted Answer

A)  $200,000
B)  $100,000
C)  $300,000
D)  zero dollars.E) A) and D)
F) A) and C)

Question 20

Based on Canada's 2017 GDP calculation (using the expenditure approach) , what areas contributed the most toward Canada's GDP (calculation based on the expenditure approach)  in 2017?

Accepted Answer

A)  Personal consumption expenditure
B)  Gross investment expenditure
C)  Government purchases of goods and services
D)  Net exportsE) A) and D)
F) None of the above

Exam 7: Part B: Measuring the Economys Output

Net Domestic Income at the factor cost refers to the:

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Real GDP measures:

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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:

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From an economist's perspective, which is not considered to be an investment?

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A price index is 100 times the ratio of real GDP to nominal GDP.

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The GDP price index:

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Which of the following do national income accountants consider to be "investment"?

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GDP in an economy is $4,600 billion.Consumer expenditures are $3,500 billion, government purchases are $900 billion, and gross investment is $400 billion.Net exports are:

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Gross domestic product (GDP) measures and reports output:

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A business buys $7,000 worth of resources to produce a product.The business makes 150 units of the product and each of them sells for $90.The value added by the business to these products is:

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In one-year nominal GDP was $286 billion and the price index was 88.Real GDP in that year was:

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Based on Canada's 2017 GDP calculation (using the expenditure approach) , what areas contributed the most toward Canada's GDP (calculation based on the expenditure approach) in 2017?

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Which of the following is not an economic investment?

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GDP may be defined as:

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Assume an economy which is producing only one product.Output and price data for a three-year period are as follows. Refer to the above data.If year 2 is chosen as the base year, the price index for year one is:

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Some of the production of an economy creates pollution.As a result:

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In a typical year which of the following measures of aggregate output and income is likely to be the smallest?

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In calculating GDP by the income approach, we should sum up:

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For the above economy, the real GDP in year 3 is:

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GDP excludes expenditures by:

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