Question 1

A price index is:

Accepted Answer

A)   a comparison of the price of a market basket from a fixed point of reference.
B)   a comparison of real GDP in one period relative to another.
C)   the cost of a market basket of goods and services in a base period divided by the cost of the same market basket in another period.
D)   a ratio of real GDP to nominal GDP.E) B) and C)
F) A) and D)

Question 2

If nominal GDP rises:

Accepted Answer

A)   real GDP may either rise or fall.
B)   we can be certain that the price level has risen.
C)   real GDP must fall.
D)   real GDP must also rise.E) B) and C)
F) All of the above

Question 3

To calculate the real GDP, Statistics Canada has started to consider both the quantities and prices in the base year and the following year and then average the two.

Accepted Answer

A) True 
 B)False

Question 4

Assume that the size of the underground economy increases both absolutely and relatively over time. As a result:

Accepted Answer

A)   real GDP will rise more rapidly than nominal GDP.
B)   GDP will tend to increasingly understate the level of output through time.
C)   GDP will tend to increasingly overstate the level of output through time.
D)   the accuracy of GDP will be unaffected through time.E) B) and D)
F) A) and D)

Question 5

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

Question 6

In calculating GDP, governmental transfer payments, such as welfare payments, are:

Accepted Answer

A)   not counted.
B)   counted as investment spending.
C)   counted as government spending.
D)   counted as consumption spending.E) B) and C)
F) None of the above

Question 7

The amount of after-tax income received by households is measured by:

Accepted Answer

A)   discretionary income.
B)   net domestic income.
C)   disposable income.
D)   personal income.E) A) and B)
F) A) and C)

Question 8

The term "real GDP" refers to:

Accepted Answer

A)   the value of the domestic output after adjustments have been made for environmental pollution and changes in the distribution of income.
B)   GDP data which embody changes in the price level, but not changes in physical output.
C)   GDP data which reflect changes in both physical output and the price level.
D)   GDP data which have been adjusted for changes in the price level.E) A) and B)
F) A) and C)

Question 9

Net income from farms and unincorporated businesses is defined as:

Accepted Answer

A)   the earnings of investment of corporate businesses.
B)   the earnings of corporate stock holders.
C)   the earnings of government received from farmers.
D)   the earnings of farmers and proprietors from their own businesses.E) A) and B)
F) All of the above

Question 10

All expenditures on new construction are included as investment in calculating GDP.

Accepted Answer

A) True 
 B)False

Question 11

In an economy experiencing a declining production capacity:

Accepted Answer

A)   the nation's stock of capital goods is expanding.
B)   net exports are necessarily zero.
C)   Net Investment exceeds GDP.
D)   depreciation exceeds gross investment.E) B) and D)
F) All of the above

Question 12

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) All of the above

Question 13

A nation's gross domestic product (GDP)  by the expenditure approach:

Accepted Answer

A)   can be found by summing C + Ig + G + Xn.
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 + S + G + Xn.
D)   is always some amount less than its NDI.E) A) and D)
F) None of the above

Question 14

Consider the following data for a hypothetical economy:  The economy's real GDP has declined between years:

Accepted Answer

A)   1 and 2.
B)   2 and 3.
C)   3 and 4.
D)   4 and 5.E) A) and B)
F) None of the above

Question 15

In calculating GDP, national income accountants:

Accepted Answer

A)   treat inventory changes as an adjustment to personal consumption expenditures.
B)   ignore inventories because they do not represent final goods.
C)   subtract increases in inventories and add decreases in inventories.
D)   add increases in inventories and subtract decreases in inventories.E) C) and D)
F) A) and B)

Question 16

The following are national income account data for a hypothetical economy in billions of dollars: gross investment ($320) ; imports ($35) ; exports ($22) ; personal consumption expenditures ($2,460) ; and, government purchases ($470) . What is GDP in this economy?

Accepted Answer

A)   $3,237 billion
B)   $3,263 billion
C)   $3,273 billion
D)   $3,290 billionE) B) and C)
F) A) and D)

Question 17

In 1933 net investment was minus $208 million. This meant that:

Accepted Answer

A)   gross investment exceeded depreciation by $208 million.
B)   the economy was expanding in that year.
C)   the production of 1933's GDP used up more capital goods than were produced in that year.
D)   the economy produced no capital goods at all in 1933.E) B) and D)
F) A) and B)

Question 18

Profits of private corporations are divided into:

Accepted Answer

A)   corporate income taxes, dividends and undistributed corporate profits.
B)   corporate income taxes, investment and distributed corporate profits.
C)   dividends, distributed and undistributed corporate profits.
D)   supplementary labour income, dividends, and distributed corporate profits.E) None of the above
F) A) and B)

Question 19

Gross investment refers to:

Accepted Answer

A)   private investment minus public investment.
B)   net investment plus replacement investment.
C)   net investment after it has been "inflated" for changes in the price level.
D)   net investment plus net exports.E) A) and B)
F) A) and C)

Question 20

Refer to the information below. GDP is: All figures are in billions of dollars.

Accepted Answer

A)   $422.
B)   $467.
C)   $417.
D)   $402.E) None of the above
F) All of the above

Exam 5: Measuring the Economys Output

Consider the following data for a hypothetical economy: The economy's real GDP has declined between years:

Correct AnswerverifiedShow Answer

Gross investment refers to:

Correct AnswerverifiedShow Answer

If nominal GDP rises:

Correct AnswerverifiedShow Answer

In calculating GDP, governmental transfer payments, such as welfare payments, are:

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

A nation's gross domestic product (GDP) by the expenditure approach:

Correct AnswerverifiedShow Answer

Refer to the information below. GDP is: All figures are in billions of dollars.

Correct AnswerverifiedShow Answer

Assume that the size of the underground economy increases both absolutely and relatively over time. As a result:

Correct AnswerverifiedShow Answer

Profits of private corporations are divided into:

Correct AnswerverifiedShow Answer

National income accountants can avoid multiple counting by:

Correct AnswerverifiedShow Answer

The term "real GDP" refers to:

Correct AnswerverifiedShow Answer

A price index is:

Correct AnswerverifiedShow Answer

In calculating GDP, national income accountants:

Correct AnswerverifiedShow Answer

Net income from farms and unincorporated businesses is defined as:

Correct AnswerverifiedShow Answer

The amount of after-tax income received by households is measured by:

Correct AnswerverifiedShow Answer

To calculate the real GDP, Statistics Canada has started to consider both the quantities and prices in the base year and the following year and then average the two.

Correct AnswerverifiedShow Answer

In 1933 net investment was minus $208 million. This meant that:

Correct AnswerverifiedShow Answer

The following are national income account data for a hypothetical economy in billions of dollars: gross investment ($320) ; imports ($35) ; exports ($22) ; personal consumption expenditures ($2,460) ; and, government purchases ($470) . What is GDP in this economy?

Correct AnswerverifiedShow Answer

All expenditures on new construction are included as investment in calculating GDP.

Correct AnswerverifiedShow Answer

In an economy experiencing a declining production capacity:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified