Question 1

"Value added" refers to:

Accepted Answer

A)   any increase in GDP which has been adjusted for adverse environmental effects.
B)   the excess of gross investment over net investment.
C)   the difference between the value of a firm's output and the value of the inputs it has purchased from others.
D)   the portion of any increase in GDP which is caused by inflation as opposed to an increase in real output.E) A) and D)
F) C) and D)

Question 2

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) A) and D)
F) B) and C)

Question 3

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($940) ; personal consumption expenditures ($4,920) ; imports ($170) ; exports ($133) ; gross investment ($640) . What is GDP in this economy?

Accepted Answer

A)   $6,463 billion
B)   $6,500 billion
C)   $6,537 billion
D)   $6,633 billionE) None of the above
F) C) and D)

Question 4

Net exports are negative when:

Accepted Answer

A)   a nation's imports exceed its exports.
B)   the economy's stock of capital goods is declining.
C)   depreciation exceeds domestic investment.
D)   a nation's exports exceed its imports.E) B) and D)
F) B) and C)

Question 5

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 B)
F) A) and C)

Question 6

Suppose Smith pays $100 to Jones.

Accepted Answer

A)   We can say with certainty that the GDP has increased by $100.
B)   We can say with certainty that the GDP has increased, but we cannot determine the amount.
C)   We can say with certainty that the nominal GDP has increased, but we can't say whether real GDP has increased or decreased.
D)   We need more information to determine whether GDP has changed.E) A) and C)
F) A) and D)

Question 7

If real GDP falls from one period to another, we can conclude that:

Accepted Answer

A)   deflation occurred.
B)   inflation occurred.
C)   nominal GDP fell.
D)   less goods and services have been produced.E) None of the above
F) All of the above

Question 8

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. Nominal GDP in the current year is:

Accepted Answer

A)   $110.
B)   $115.
C)   $45.
D)   $90.E) B) and D)
F) C) and D)

Question 9

Tom Atoe grows tomatoes for home consumption. This activity is:

Accepted Answer

A)   excluded from GDP in order to avoid double counting.
B)   excluded from GDP because an intermediate good is involved.
C)   productive but is excluded from GDP because no market transaction occurs.
D)   included in GDP because it reflects production.E) None of the above
F) C) and D)

Question 10

The simplest way to calculate GDP is to sum the total sales of all business firms.

Accepted Answer

A) True 
 B)False

Question 11

A price index can rise from one year to the next even though:

Accepted Answer

A)   some individual prices in the economy fall.
B)   nominal GDP falls.
C)   real GDP falls.
D)   all of the above occur.E) A) and B)
F) None of the above

Question 12

Real GDP and nominal GDP differ because the real GDP:

Accepted Answer

A)   is adjusted for changes in the volume of intermediate transactions.
B)   includes the economic effects of international trade.
C)   has been adjusted for changes in the price level.
D)   excludes depreciation charges.E) A) and D)
F) All of the above

Question 13

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 D)
F) B) and C)

Question 14

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) C) and D)
F) A) and D)

Question 15

GDP includes:

Accepted Answer

A)   neither intermediate nor final goods.
B)   both intermediate and final goods.
C)   intermediate, but not final, goods.
D)   final, but not intermediate, goods.E) B) and C)
F) None of the above

Question 16

A nation's gross domestic product (GDP) :

Accepted Answer

A)   is the dollar value of the total output produced within the borders of the nation.
B)   is the dollar value of the total output produced by its citizens, regardless of where they are living.
C)   can be found by summing C + In + S + Xn.
D)   is always some amount less than its C + Ig + G + Xn.E) B) and D)
F) B) and C)

Question 17

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)   20.E) A) and B)
F) A) and D)

Question 18

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) A) and B)
F) C) and D)

Question 19

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. The nominal GDP for year 3 is:

Accepted Answer

A)   125 percent higher than the nominal GDP for year 1.
B)   50 percent higher than the nominal GDP for year 1.
C)   $120.
D)   $30.E) B) and C)
F) A) and B)

Question 20

In 2011 Trailblazer Bicycle Company produced a mountain bike which was delivered to a retail outlet in November of 1998. The bicycle was sold to

Accepted Answer

A)   consumption in 2011 and as disinvestment in 2012.
B)   disinvestment in 2011 and as consumption in 2012.
C)   disinvestment in 2011 and as investment in 2012.
D)   investment in 2011 and as disinvestment in 2012.
E)  Z. Ryder in March of 2012. This bicycle is counted as:F) C) and D)
G) A) and D)

Exam 5: Measuring the Economys Output

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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Net exports are negative when:

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Real GDP and nominal GDP differ because the real GDP:

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GDP includes:

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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:

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Suppose Smith pays $100 to Jones.

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The GDP price index:

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Tom Atoe grows tomatoes for home consumption. This activity is:

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"Value added" refers to:

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In 2011 Trailblazer Bicycle Company produced a mountain bike which was delivered to a retail outlet in November of 1998. The bicycle was sold to

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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. The nominal GDP for year 3 is:

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Wages, salaries, and supplementary labour income in Canada:

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A nation's gross domestic product (GDP) :

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The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($940) ; personal consumption expenditures ($4,920) ; imports ($170) ; exports ($133) ; gross investment ($640) . What is GDP in this economy?

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A price index can rise from one year to the next even though:

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The simplest way to calculate GDP is to sum the total sales of all business firms.

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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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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. Nominal GDP in the current year is:

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If real GDP falls from one period to another, we can conclude that:

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

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