Question 1

Which of the following is a final good or service?

Accepted Answer

A)  diesel fuel bought for a delivery truck
B)  fertilizer purchased by a farm supplier
C)  a haircut
D)  Chevrolet windows purchased by a General Motors assembly plantE) B) and C)
F) A) and D)

Question 2

In calculating GDP by the expenditure approach, we sum up:

Accepted Answer

A)  consumption, investment, government purchases, exports, and imports.
B)  investment, government purchases, consumption, and net exports.
C)  consumption, investment, wages, and rents.
D)  consumption, investment, government purchases, and imports.E) A) and D)
F) A) and C)

Question 3

National income accountants can avoid multiple counting by:

Accepted Answer

A)  including transfers in their calculations.
B)  counting both intermediate and final goods.
C)  only counting final goods.
D)  only counting intermediate goods.E) A) and B)
F) C) and D)

Question 4

Only three goods are produced in an economy in the following amounts: A = 10, B = 30, C = 5.The current year per unit prices of these three goods are A = $2, B = $3, and C = $1.Refer to the above information.If the per unit prices of the three goods each were $1 in a base year used to construct a GDP price index, then real GDP in the current year:

Accepted Answer

A)  is $110.
B)  is $115.
C)  is $45.
D)  cannot be determined on the basis of this data.E) A) and D)
F) A) and C)

Question 5

In Year 1, inventories rose by $25 billion.In Year 2, inventories fell by $20 billion.In calculating total investment, national income accountants would have:

Accepted Answer

A)  decreased it by $25 billion in Year 1 and increased it by $20 billion in Year 2.
B)  decreased it by $25 billion in Year 1 and increased it by $5 billion in Year 2.
C)  increased it by $25 billion in Year 1 and decreased it by $5 billion in Year 2.
D)  increased it by $25 billion in Year 1 and decreased it by $20 billion in Year 2.E) None of the above
F) All of the above

Question 6

Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the highest percentage?

Accepted Answer

A)  Mexico
B)  South Korea
C)  India
D)  ItalyE) All of the above
F) A) and B)

Question 7

Nominal GDP is adjusted for price changes through the use of:

Accepted Answer

A)  the Consumer Price Index (CPI) .
B)  the Producer Price Index (PPI) .
C)  the GDP price index.
D)  exchange rates.E) None of the above
F) All of the above

Question 8

Refer to the above diagram.Which of the following statements is correct?

Accepted Answer

A)  The price index is greater than 100 for every year shown on the graph.
B)  Nominal GDP must be deflated in each year prior to 1992 to determine real GDP.
C)  Real GDP has grown in this economy, but nominal GDP has not.
D)  Nominal GDP must be deflated in each year since 1992 to determine real GDP.E) None of the above
F) B) and D)

Question 9

An example of a final good in national income accounts would be new:

Accepted Answer

A)  lawn mowers purchased by Cut-rite Mowers.
B)  flowers purchased by homeowner Lenny Davis.
C)  chemicals purchased by Green Grass Lawn Care.
D)  trees purchased by Wendy Lee's Garden Center.E) B) and D)
F) All of the above

Question 10

Environmental pollution is accounted for in:

Accepted Answer

A)  GDP.
B)  DI.
C)  PI.
D)  None of these.E) None of the above
F) All of the above

Question 11

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

Accepted Answer

A)  spending by the government on military goods.
B)  spending by businesses to reduce the level of pollution.
C)  the work done by construction companies to remodel homes.
D)  the personal labour time homeowners spend on home repairs.E) A) and B)
F) A) and C)

Question 12

Gordon James is a person who sells narcotics "on the street." This type of illegal activity:

Accepted Answer

A)  would be considered double counting in calculating GDP.
B)  is estimated and included in GDP figures.
C)  is excluded from GDP figures.
D)  causes GDP to be overstated.E) None of the above
F) All of the above

Question 13

Nondurable goods are products:

Accepted Answer

A)  with expected lives of over three years.
B)  with expected lives of less than three years.
C)  with expected lives of over 2 years.
D)  with expected lives of under 2 years.E) B) and C)
F) A) and B)

Question 14

In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

Accepted Answer

A)  of changes in our trade deficits and surpluses.
B)  the length of the workweek has declined historically.
C)  the price level may change over time.
D)  depreciation may be greater or smaller than gross investment.E) B) and D)
F) B) and C)

Question 15

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, in years 1 and 3 the price index values, respectively, are:

Accepted Answer

A)  4 and 6.
B)  6 and 4.
C)  120 and 100.
D)  100 and 150.E) A) and C)
F) B) and D)

Question 16

Wages, salaries, and supplementary labour income in Canada:

Accepted Answer

A)  is about 30% of the income categories.
B)  is the smallest category in the calculation of the GDP by the income approach.
C)  is the largest category in the calculation of the GDP by the income approach.
D)  is the only category in the calculation of the GDP by the income approach.E) A) and C)
F) A) and B)

Question 17

If we add up the figures for wages, rent, interest and profit:

Accepted Answer

A)  the figure is not equal to the GDP by the expenditure approach because it does not include the amount of investment.
B)  the figure is not equal to the GDP by the expenditure approach because the Canadian national accounts do not reflect each of these four factors of income and also because a few adjustments are necessary.
C)  we obtain a figure which is equal to the GDP by the expenditure approach.
D)  it does not reflect the actual figure for the GDP by the expenditure approach because it does not include the amount of consumption.E) B) and C)
F) B) and D)

Question 18

Gross domestic product (GDP)  is equal to personal consumption expenditures:

Accepted Answer

A)  plus gross investment, minus government spending, and plus net exports.
B)  plus gross investment, plus government spending, and minus net exports.
C)  minus gross investment, plus government spending, and plus net exports.
D)  plus gross investment, plus government spending, and plus net exports.E) A) and D)
F) A) and C)

Question 19

Which of the following best defines disposable income?

Accepted Answer

A)  income received by households less personal taxes
B)  the before-tax income received by households
C)  all income earned by resource suppliers for their current contributions to production
D)  the market value of the annual output net of consumption of fixed capitalE) A) and D)
F) A) and C)

Question 20

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

Accepted Answer

A)  the price of that good.
B)  the total income generated by that good's production.
C)  the total cost (including profits)  of that product.
D)  all of these.E) None of the above
F) B) and D)

Exam 7: Part B: Measuring the Economys Output

Nondurable goods are products:

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

Correct Answer
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Gross domestic product (GDP) is equal to personal consumption expenditures:

Correct Answer
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Gordon James is a person who sells narcotics "on the street." This type of illegal activity:

Correct Answer
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Nominal GDP is adjusted for price changes through the use of:

Correct Answer
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If we add up the figures for wages, rent, interest and profit:

Correct Answer
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Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the highest percentage?

Correct Answer
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Which of the following is a final good or service?

Correct Answer
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Refer to the above diagram.Which of the following statements is correct?

Correct Answer
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Which of the following best defines disposable income?

Correct Answer
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National income accountants can avoid multiple counting by:

Correct Answer
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In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

Correct Answer
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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, in years 1 and 3 the price index values, respectively, are:

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

Correct Answer
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In calculating GDP by the expenditure approach, we sum up:

Correct Answer
verified

Environmental pollution is accounted for in:

Correct Answer
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An example of a final good in national income accounts would be new:

Correct Answer
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In Year 1, inventories rose by $25 billion.In Year 2, inventories fell by $20 billion.In calculating total investment, national income accountants would have:

Correct Answer
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Correct Answer
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Wages, salaries, and supplementary labour income in Canada:

Correct Answer
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Exam 7: Part B: Measuring the Economys Output

Nondurable goods are products:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Gross domestic product (GDP) is equal to personal consumption expenditures:

Correct AnswerverifiedShow Answer

Gordon James is a person who sells narcotics "on the street." This type of illegal activity:

Correct AnswerverifiedShow Answer

Nominal GDP is adjusted for price changes through the use of:

Correct AnswerverifiedShow Answer

If we add up the figures for wages, rent, interest and profit:

Correct AnswerverifiedShow Answer

Of the countries listed in Image 7.2 Global Perspective The underground economy as a percentage of GDP, which country has the highest percentage?

Correct AnswerverifiedShow Answer

Which of the following is a final good or service?

Correct AnswerverifiedShow Answer

Refer to the above diagram.Which of the following statements is correct?

Correct AnswerverifiedShow Answer

Which of the following best defines disposable income?

Correct AnswerverifiedShow Answer

National income accountants can avoid multiple counting by:

Correct AnswerverifiedShow Answer

In comparing GDP data over a period of years a difference between nominal and real GDP may arise because:

Correct AnswerverifiedShow Answer

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, in years 1 and 3 the price index values, respectively, are:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

In calculating GDP by the expenditure approach, we sum up:

Correct AnswerverifiedShow Answer

Environmental pollution is accounted for in:

Correct AnswerverifiedShow Answer

An example of a final good in national income accounts would be new:

Correct AnswerverifiedShow Answer

In Year 1, inventories rose by $25 billion.In Year 2, inventories fell by $20 billion.In calculating total investment, national income accountants would have:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Wages, salaries, and supplementary labour income in Canada:

Correct AnswerverifiedShow Answer

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