Question 1

A distinguishing characteristic of public transfer payments is that:

Accepted Answer

A)   they are used to subsidize the major transportation carriers to reduce transportation costs.
B)   they are counted as part of government purchases in the calculation of the gross domestic product.
C)   there is a tax on the amount of the subsidy above a certain income level.
D)   the recipients make no contribution to current production in return for them.E) A) and B)
F) B) and C)

Question 2

Refer to the information below. The gross domestic product for this economy is: All figures are in billions.

Accepted Answer

A)   $584.
B)   $592.
C)   $609.
D)   $636.E) A) and D)
F) None of the above

Question 3

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) A) and D)

Question 4

GDP is the total market value of:

Accepted Answer

A)   all expenditures on natural resources, labor, and capital goods in an economy in a given year.
B)   all expenditures on consumption, investment, and net exports in an economy in a given year.
C)   all intermediate goods and services produced in an economy in a given year.
D)   all final goods and services produced in an economy in a given year.E) B) and D)
F) B) and C)

Question 5

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 2 is the base year, the price index for year 3 is:

Accepted Answer

A)   120.
B)   125.
C)   133.
D)   150.E) A) and B)
F) B) and C)

Question 6

When an economy's production capacity is expanding:

Accepted Answer

A)   nominal GDP, but not necessarily real GDP, is rising.
B)   net exports is always a positive amount.
C)   disposable income exceeds personal income.
D)   gross investment exceeds depreciation.E) None of the above
F) B) and C)

Question 7

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) All of the above
F) A) and D)

Question 8

GDP data are criticized as being inaccurate measures of economic welfare because:

Accepted Answer

A)   they do not take into account changes in the amount of leisure.
B)   they do not take into account changes in product quality.
C)   they do not take into account the adverse effects of economic activity on the environment.
D)   of all of the above considerations.E) A) and C)
F) A) and D)

Question 9

A price index is 100 times the ratio of real GDP to nominal GDP.

Accepted Answer

A) True 
 B)False

Question 10

GDP measured using current prices is called:

Accepted Answer

A)   nominal GDP.
B)   real GDP.
C)   constant GDP.
D)   deflated GDP.E) A) and C)
F) None of the above

Question 11

The GDP figure by the income approach will be identical to the GDP by the expenditure approach if we add to the Net Domestic income:

Accepted Answer

A)   the capital consumption allowances and the investment income.
B)   the capital consumption allowances and the interest payments to the owners of capital.
C)   the indirect taxes and the capital consumption allowances.
D)   profits of the corporations and the capital consumption allowances.E) All of the above
F) A) and C)

Question 12

GDP tends to overstate economic well-being because it takes into account:

Accepted Answer

A)   improvements in product quality over time.
B)   expenditures undertaken to correct pollution.
C)   illegal activities of individuals and businesses.
D)   nonmarket activities, such as the productive work of homemakers.E) A) and B)
F) A) and C)

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

An example of an intermediate good or service would be:

Accepted Answer

A)   bricks bought by a homeowner for constructing a patio.
B)   sacks of groceries bought by a dentist for his family.
C)   a car bought by a household for commuting to work.
D)   a desk bought by an accountant for her office.E) A) and C)
F) C) and D)

Question 15

Net exports are:

Accepted Answer

A)   that portion of consumption and investment goods sent to other countries.
B)   exports plus imports.
C)   exports less imports.
D)   imports less exports.E) B) and D)
F) B) and C)

Question 16

Some of the production of an economy creates pollution. As a result:

Accepted Answer

A)   nominal GDP is greater than real GDP.
B)   real GDP is greater than nominal GDP.
C)   GDP tends to understate social welfare.
D)   GDP tends to overstate social welfare.E) B) and C)
F) A) and B)

Question 17

Refer to the information below. Net investment: All figures are in billions.

Accepted Answer

A)   cannot be determined from the data given.
B)   is $45.
C)   is $53.
D)   is $72.E) All of the above
F) C) and D)

Question 18

The fact that nominal GDP has risen faster than real GDP:

Accepted Answer

A)   suggests that the base year of the GDP price index has been shifted.
B)   tells us nothing about what has happened to the price level.
C)   suggests that the general price level has fallen.
D)   suggests that the general price level has risen.E) A) and C)
F) B) and C)

Question 19

Answer the question(s)  based on the following data, using year 1 as the base year. All dollars are in billions.
 
-Refer to the above data. Real GDP in year 2 was approximately:

Accepted Answer

A)   $3,245 billion.
B)   $3,271 billion.
C)   $3,295 billion.
D)   $3,402 billion.E) A) and D)
F) None of the above

Question 20

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 2 is the base year, the percentage increase in real GDP from year 2 to year 4 is:

Accepted Answer

A)   40 percent.
B)   60 percent.
C)   100 percent.
D)   80 percent.E) B) and C)
F) A) and D)

Exam 5: Measuring the Economys Output

The GDP figure by the income approach will be identical to the GDP by the expenditure approach if we add to the Net Domestic income:

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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 2 is the base year, the percentage increase in real GDP from year 2 to year 4 is:

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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 2 is the base year, the price index for year 3 is:

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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:

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GDP tends to overstate economic well-being because it takes into account:

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GDP measured using current prices is called:

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GDP data are criticized as being inaccurate measures of economic welfare because:

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A price index is 100 times the ratio of real GDP to nominal GDP.

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The fact that nominal GDP has risen faster than real GDP:

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Some of the production of an economy creates pollution. As a result:

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Net exports are:

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When an economy's production capacity is expanding:

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Net Domestic Income at the factor cost refers to the:

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A distinguishing characteristic of public transfer payments is that:

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An example of an intermediate good or service would be:

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Answer the question(s) based on the following data, using year 1 as the base year. All dollars are in billions. -Refer to the above data. Real GDP in year 2 was approximately:

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Refer to the information below. The gross domestic product for this economy is: All figures are in billions.

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Refer to the information below. Net investment: All figures are in billions.

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GDP is the total market value of:

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

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