Question 1

What is the largest source of income?

Accepted Answer

A)  profits
B)  interest
C)  rent
D)  wagesE) C) and D)
F) A) and B)

Question 2

Jerry purchases drywall supplies and paint at the local Rona for $200 and uses them to do home repairs at Bill's house.Bill pays Jerry $600 in cash for his services,which Jerry neglects to report.By how much do these transactions affect GDP?

Accepted Answer

A)  $0
B)  $200
C)  $400
D)  $600E) B) and C)
F) A) and B)

Question 3

Nominal GDP is $10 000 billion in 2008,but real GDP is only $9000 billion.What is the GDP deflator equal to?

Accepted Answer

A)  The GDP deflator is equal to 90.
B)  The GDP deflator is equal to 100.
C)  The GDP deflator is equal to 111.
D)  The GDP deflator is equal to 119.E) All of the above
F) B) and C)

Question 4

What is included in the underground economy?

Accepted Answer

A)  only illegal sources of unreported income
B)  both legal and illegal sources of reported income
C)  both legal and illegal sources of unreported income
D)  payments that are reported to the governmentE) B) and D)
F) C) and D)

Question 5

Which of the following accurately describes GDP?

Accepted Answer

A)  the sum of all currency and coins in circulation
B)  the value of all final goods and services produced by a government within a given period
C)  the value of all final goods and services produced anywhere in the world by a nation's firms within a given period
D)  the value of all final goods and services produced domestically within a given periodE) A) and B)
F) A) and D)

Question 6

What is the Consumer Price Index used for?

Accepted Answer

A)  to monitor changes in the level of real GDP
B)  to track changes in the stock market
C)  to track changes in the level of wholesale prices in the economy
D)  to monitor changes in the cost of living of typical householdsE) A) and B)
F) None of the above

Question 7

Under the expenditure approach to GDP accounting,which of the following is NOT included in government purchases?

Accepted Answer

A)  submarines purchased by the government
B)  welfare payments
C)  the civil service payroll
D)  salaries of senatorsE) A) and C)
F) C) and D)

Question 8

Which of the following are included in the investment category under the expenditure approach to GDP accounting?

Accepted Answer

A)  bonds
B)  stocks
C)  durable goods
D)  additions to business inventoriesE) A) and D)
F) B) and D)

Question 9

Real GDP per capita increases if the population grows at a rate faster than real GDP.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following examples would NOT be counted as a final good for inclusion in GDP?

Accepted Answer

A)  a sheet of antique leaded glass bought by a home renovator from a construction recycler
B)  a sheet of glass purchased by General Motors for the side window of a new car
C)  a piece of glass bought by a consumer to fix a broken window
D)  a sheet of glass produced this year and ending up in the inventory of a retail hardware storeE) B) and C)
F) B) and D)

Question 11

Which of the following is NOT considered a factor payment?

Accepted Answer

A)  rent
B)  interest
C)  transfer payments
D)  wagesE) C) and D)
F) All of the above

Question 12

What calculation gives the best indication of economic well-being?

Accepted Answer

A)  real GDP divided by the population
B)  nominal GDP divided by the number of workers
C)  real GDP divided by the number of workers
D)  nominal GDP divided by the populationE) B) and C)
F) None of the above

Question 13

Which of the following is included in GDP?

Accepted Answer

A)  the value of lawn care service provided by a sixteen-year-old boy as part of his weekly chores
B)  the revenue from the sale of a two-year old car
C)  the revenues from a sale of land
D)  the fees charged for a stock broker's servicesE) None of the above
F) A) and D)

Question 14

Which of the following actions will lead to GDP underestimating the true output of the economy?

Accepted Answer

A)  Gretchen begins an accounting and bookkeeping service in her home, accepting cash as payment, which is not reported to tax authorities.
B)  David accepts a position as an economist with the Bank of Canada.
C)  James begins drawing Canada Pension Plan benefits upon his retirement.
D)  Mary begins a catering business.E) B) and C)
F) B) and D)

Question 15

In what way does nominal GDP differ from real GDP?

Accepted Answer

A)  Nominal GDP tends to increase when total production of output in the economy increases, while real GDP does not.
B)  Nominal GDP is measured in base-year prices, while real GDP is measured in current-year prices.
C)  Nominal GDP is measured in current-year prices, while real GDP is measured in base-year prices.
D)  Nominal GDP does not exclude taxes paid to the government, while real GDP does.E) All of the above
F) A) and B)

Question 16

In the simple circular flow model of the economy,total expenditures on goods and services equal total household income.

Accepted Answer

A) True 
 B)False

Question 17

Which of the following purchases is an example of an intermediate product?

Accepted Answer

A)  tires by Ford Motor Company to put on the CEO's Lincoln
B)  by Enrique as inventory at his repair shop
C)  tires by Ford Motor Company to put on its Ford Explorers
D)  tires by Cheryl to put on her 1983 MercedesE) C) and D)
F) None of the above

Question 18

What is the definition of consumption?

Accepted Answer

A)  the purchase of goods and services by foreign buyers
B)  the purchase of goods and services by business firms
C)  the purchase of goods and services by government
D)  the purchase of goods and services by householdsE) None of the above
F) All of the above

Question 19

What is personal income?

Accepted Answer

A)  It is earned income.
B)  It is income that is not reported to the government.
C)  It is income that is calculated by subtracting indirect taxes and personal taxes from GDP.
D)  It is income that includes transfer payment.E) All of the above
F) C) and D)

Question 20

In recent decades in Canada,expenditures on services have been growing faster than expenditures on goods.

Accepted Answer

A) True 
 B)False

Exam 6: Measuring Economic Performance

Which of the following is NOT considered a factor payment?

Correct AnswerverifiedShow Answer

Jerry purchases drywall supplies and paint at the local Rona for $200 and uses them to do home repairs at Bill's house.Bill pays Jerry $600 in cash for his services,which Jerry neglects to report.By how much do these transactions affect GDP?

Correct AnswerverifiedShow Answer

What is the definition of consumption?

Correct AnswerverifiedShow Answer

In what way does nominal GDP differ from real GDP?

Correct AnswerverifiedShow Answer

Which of the following is included in GDP?

Correct AnswerverifiedShow Answer

What calculation gives the best indication of economic well-being?

Correct AnswerverifiedShow Answer

Which of the following actions will lead to GDP underestimating the true output of the economy?

Correct AnswerverifiedShow Answer

Nominal GDP is $10 000 billion in 2008,but real GDP is only $9000 billion.What is the GDP deflator equal to?

Correct AnswerverifiedShow Answer

Which of the following accurately describes GDP?

Correct AnswerverifiedShow Answer

Real GDP per capita increases if the population grows at a rate faster than real GDP.

Correct AnswerverifiedShow Answer

Which of the following are included in the investment category under the expenditure approach to GDP accounting?

Correct AnswerverifiedShow Answer

In recent decades in Canada,expenditures on services have been growing faster than expenditures on goods.

Correct AnswerverifiedShow Answer

In the simple circular flow model of the economy,total expenditures on goods and services equal total household income.

Correct AnswerverifiedShow Answer

What is personal income?

Correct AnswerverifiedShow Answer

Which of the following examples would NOT be counted as a final good for inclusion in GDP?

Correct AnswerverifiedShow Answer

What is included in the underground economy?

Correct AnswerverifiedShow Answer

Under the expenditure approach to GDP accounting,which of the following is NOT included in government purchases?

Correct AnswerverifiedShow Answer

What is the largest source of income?

Correct AnswerverifiedShow Answer

Which of the following purchases is an example of an intermediate product?

Correct AnswerverifiedShow Answer

What is the Consumer Price Index used for?

Correct AnswerverifiedShow Answer

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