Question 1

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 B)
F) All of the above

Question 2

Following is data for a hypothetical economy.The base year is 2002 (Price index = 100) .
 
-Refer to the above data.From 2005 to 2006,prices rose by approximately:

Accepted Answer

A)   2 percent.
B)   4.2 percent.
C)   6 percent.
D)   7 percent.E) All of the above
F) None of the above

Question 3

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

Question 4

In an economy,the value of inventories fell from $75 billion in 2012 to $63 billion in 2013.In calculating total investment for 2013,national income accountants would:

Accepted Answer

A)   decrease it by $75 billion.
B)   increase it by $63 billion.
C)   decrease it by $12 billion.
D)   increase it by $138 billion.E) A) and B)
F) B) and C)

Question 5

(GDP figures are in billions of dollars. ) 
 
-Refer to the above table.What is the GDP price index in Year 1?

Accepted Answer

A)   105.2
B)   108.3
C)   109.6
D)   111.5E) All of the above
F) None of the above

Question 6

GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:

Accepted Answer

A)   public transfer payments to households.
B)   the consumption of fixed capital.
C)   intermediate goods.
D)   the underground economy.E) C) and D)
F) B) and D)

Question 7

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) None of the above
F) A) and C)

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)   $90E) All of the above
F) A) and D)

Question 9

Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.

Accepted Answer

A) True 
 B)False

Question 10

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 total income earned by foreign-supplied and Canadian-supplied factors of
C)   production as wages,interest,rent and profit.
D)   total income earned by Canadian households.E) All of the above
F) None of the above

Question 11

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

Question 12

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) None of the above
F) A) and B)

Question 13

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)   30E) C) and D)
F) All of the above

Question 14

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 B)
F) All of the above

Question 15

The ZZZ Corporation issued $25 million in new common stock in 2012.It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result,investment:

Accepted Answer

A)   of $7 million has occurred.
B)   of $25 million has occurred.
C)   of $18 million has occurred.
D)   has not occurred.E) A) and B)
F) A) and C)

Question 16

The before-tax income received by resource suppliers is measured by disposable income.

Accepted Answer

A) True 
 B)False

Question 17

The table below indicates the price and output data over a five year period for an economy that produces only one good.
 
-Refer to the above data.If year 3 is chosen as the base year,the price index for year 1:

Accepted Answer

A)   is 140.
B)   is 40.
C)   is 167.
D)   is 50.E) B) and D)
F) C) and D)

Question 18

Interest and investment income includes:

Accepted Answer

A)   retained earnings.
B)   interest on bonds and loans of money capital and rental income received by households and inputted rent.
C)   taxes which are levied on the corporations' net earnings.
D)   Interest paid to the households for their investment.E) A) and D)
F) A) and C)

Question 19

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) All of the above

Question 20

Nominal GDP is less than real GDP in an economy in year 1 and year 2.In year 3,nominal GDP is equal to real GDP.In year 4,nominal GDP is slightly greater than real GDP.In year 5,nominal GDP is significantly greater than real GDP.Which year is most likely to be the base year being used to calculate the price index for this economy?

Accepted Answer

A)   2
B)   3
C)   4
D)   5E) All of the above
F) None of the above

Exam 7: Measuring the Economys Output

GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:

Correct Answer
verified

If nominal GDP rises:

Correct Answer
verified

The before-tax income received by resource suppliers is measured by disposable income.

Correct Answer
verified

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:

Correct Answer
verified

In an economy,the value of inventories fell from $75 billion in 2012 to $63 billion in 2013.In calculating total investment for 2013,national income accountants would:

Correct Answer
verified

A nation's gross domestic product (GDP) :

Correct Answer
verified

Net Domestic Income at the factor cost refers to the:

Correct Answer
verified

Interest and investment income includes:

Correct Answer
verified

(GDP figures are in billions of dollars. ) -Refer to the above table.What is the GDP price index in Year 1?

Correct Answer
verified

Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.

Correct Answer
verified

The ZZZ Corporation issued $25 million in new common stock in 2012.It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result,investment:

Correct Answer
verified

Real GDP and nominal GDP differ because the real GDP:

Correct Answer
verified

Correct Answer
verified

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

Correct Answer
verified

Following is data for a hypothetical economy.The base year is 2002 (Price index = 100) . -Refer to the above data.From 2005 to 2006,prices rose by approximately:

Correct Answer
verified

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:

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

The table below indicates the price and output data over a five year period for an economy that produces only one good. -Refer to the above data.If year 3 is chosen as the base year,the price index for year 1:

Correct Answer
verified

Exam 7: Measuring the Economys Output

GDP tends to underestimate the productive activity in the economy because it excludes the value of output from:

Correct AnswerverifiedShow Answer

If nominal GDP rises:

Correct AnswerverifiedShow Answer

The before-tax income received by resource suppliers is measured by disposable income.

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.The nominal GDP for year 3 is:

Correct AnswerverifiedShow Answer

In an economy,the value of inventories fell from $75 billion in 2012 to $63 billion in 2013.In calculating total investment for 2013,national income accountants would:

Correct AnswerverifiedShow Answer

A nation's gross domestic product (GDP) :

Correct AnswerverifiedShow Answer

Net Domestic Income at the factor cost refers to the:

Correct AnswerverifiedShow Answer

Interest and investment income includes:

Correct AnswerverifiedShow Answer

(GDP figures are in billions of dollars. ) -Refer to the above table.What is the GDP price index in Year 1?

Correct AnswerverifiedShow Answer

Government purchases include expenditures for social capital such as schools and highways that have long lifetimes.

Correct AnswerverifiedShow Answer

The ZZZ Corporation issued $25 million in new common stock in 2012.It used $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result,investment:

Correct AnswerverifiedShow Answer

Real GDP and nominal GDP differ because the real GDP:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Following is data for a hypothetical economy.The base year is 2002 (Price index = 100) . -Refer to the above data.From 2005 to 2006,prices rose by approximately:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The table below indicates the price and output data over a five year period for an economy that produces only one good. -Refer to the above data.If year 3 is chosen as the base year,the price index for year 1:

Correct AnswerverifiedShow Answer

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