Question 1

Which would be considered an investment according to economists?

Accepted Answer

A)   the buying of shares of Janus mutual funds
B)   the purchase of a new machinery by Ford
C)   the purchase of stock of MacDonald's
D)   the selling of IBM corporate bondsE) B) and D)
F) A) and B)

Question 2

Which of the following is the smallest in terms of dollar amount in Canada?

Accepted Answer

A)   disposable income
B)   personal income
C)   gross domestic product
D)   gross national productE) C) and D)
F) All of the above

Question 3

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

Question 4

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) A) and C)

Question 5

GDP may be defined as:

Accepted Answer

A)   the monetary value of all goods and services (final,intermediate,and non-market) produced in a given year.
B)   total resource income less taxes,saving,and spending on exports.
C)   the economic value of all economic resources used in the production of a year's output.
D)   the market value of all final goods and services produced within country in a specific year.E) A) and B)
F) C) and D)

Question 6

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)   150E) None of the above
F) C) and D)

Question 7

In the treatment of Canadian exports and imports,national income accountants:

Accepted Answer

A)   subtract exports,but add imports,in calculating GDP.
B)   subtract both exports and imports in calculating GDP.
C)   add both exports and imports in calculating GDP.
D)   add exports,but subtract imports,in calculating GDP.E) B) and C)
F) None of the above

Question 8

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

Question 9

Nominal GDP is:

Accepted Answer

A)   the sum of all monetary transactions which occur in the economy in a year.
B)   the sum of all monetary transactions involving final goods and services which occur in the economy in a year.
C)   the amount of production which occurs when the economy is operating at full employment.
D)   money GDP adjusted for inflation.E) B) and D)
F) B) and C)

Question 10

A business buys $7,000 worth of resources to produce a product.The business makes 150 units of the product and each of them sells for $90.The value added by the business to these products is:

Accepted Answer

A)   $13,500
B)   $6,500
C)   $7,000
D)   $6,850E) C) and D)
F) B) and D)

Question 11

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) C) and D)

Question 12

-Refer to the above information.The gross domestic product is:

Accepted Answer

A)   $328
B)   $402
C)   $382
D)   $336E) All of the above
F) B) and D)

Question 13

The GDP deflator or price index equals:

Accepted Answer

A)   gross private domestic investment less the consumption of fixed capital.
B)   gross national product less net foreign factor income earned in the United States.
C)   nominal GDP divided by real GDP.
D)   real GDP divided by nominal GDP.E) A) and C)
F) B) and C)

Question 14

In an economy,the value of inventories fell by $50 billion from Year 1 to Year 2.In calculating total investment for Year 2,national income accountants would increase it by $50 billion.

Accepted Answer

A) True 
 B)False

Question 15

If the per unit prices of the three goods each were $1 in a base year used to construct a GDP price index,then the GDP price index in the current year is:

Accepted Answer

A)   205.5.
B)   255.5.
C)   39.3.
D)   100E) A) and B)
F) B) and C)

Question 16

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,real GDP in year 5 is:

Accepted Answer

A)   $120
B)   $90
C)   $60
D)   $30E) A) and D)
F) A) and C)

Question 17

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

Question 18

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) C) and D)

Question 19

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)   $636E) None of the above
F) All of the above

Question 20

-Refer to the above diagram.The base year used in determining the price indices for this economy:

Accepted Answer

A)   cannot be determined from the information given.
B)   is some year before 1992.
C)   is more recent than 1992.
D)   is 1992.E) A) and D)
F) A) and C)

Exam 7: Measuring the Economys Output

GDP may be defined as:

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The GDP deflator or price index equals:

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The GDP price index:

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Profits of private corporations are divided into:

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In the treatment of Canadian exports and imports,national income accountants:

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In an economy experiencing a declining production capacity:

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If the per unit prices of the three goods each were $1 in a base year used to construct a GDP price index,then the GDP price index in the current year is:

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-Refer to the above information.The gross domestic product 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,real GDP in year 5 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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A business buys $7,000 worth of resources to produce a product.The business makes 150 units of the product and each of them sells for $90.The value added by the business to these products is:

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Which of the following is the smallest in terms of dollar amount in Canada?

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National income accountants can avoid multiple counting by:

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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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Which would be considered an investment according to economists?

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

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In an economy,the value of inventories fell by $50 billion from Year 1 to Year 2.In calculating total investment for Year 2,national income accountants would increase it by $50 billion.

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Nominal GDP is:

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-Refer to the above diagram.The base year used in determining the price indices for this economy:

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