Question 1

The gross domestic product of Canada measures aggregate output produced:

Accepted Answer

A)  within Canada's borders.
B)  by all Canadian companies.
C)  by all Canadian citizens only.
D)  by Canadian companies and citizens only.E) None of the above
F) B) and C) A

Question 2

In an economy, the value of inventories rose from $100 billion in 2016 to $150 billion in 2017.In calculating the total investment for 2017, national income accountants would:

Accepted Answer

A)  decrease it by $50 billion.
B)  increase it by $50 billion.
C)  decrease it by $100 billion.
D)  increase it by $150 billion.E) B) and C)
F) None of the above

Question 3

GDP includes:

Accepted Answer

A)  neither intermediate nor final goods.
B)  both intermediate and final goods.
C)  intermediate, but not final, goods.
D)  final, but not intermediate, goods.E) A) and B)
F) All of the above

Question 4

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

Accepted Answer

A)  $422
B)  $467
C)  $417
D)  $402E) A) and D)
F) B) and D) A

Question 5

An increase in inventories during 2022:

Accepted Answer

A)  will result in gross investment being higher than net investment by the amount of the inventory increase.
B)  should be ignored while calculating GDP for 2022.
C)  should be subtracted from GDP calculated for 2022.
D)  should be included in GDP calculated for 2022.E) All of the above
F) C) and D)

Question 6

A business buys $5,000 worth of resources to produce a product.The business makes 100 units of the product and each of them sells for $65.The value added by the business to these products is:

Accepted Answer

A)  $5,000
B)  $6,500
C)  $1,000
D)  $1,500E) C) and D)
F) All of the above

Question 7

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

Question 8

By summing the dollar value of all market transactions in the economy we would:

Accepted Answer

A)  be determining the market value of all resources used in the production process.
B)  obtain a sum substantially larger than the GDP.
C)  be determining value added for the economy.
D)  be measuring GDP.E) C) and D)
F) B) and D)

Question 9

Which would be considered an investment according to economists?

Accepted Answer

A)  the purchase of newly-issued shares of stock in Microsoft
B)  the construction of a new computer chip factory by Intel
C)  the purchase of shares of stock by Fidelity, a mutual fund company
D)  the sale of government bonds by the nation's central bankE) B) and C)
F) All of the above

Question 10

If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock:

Accepted Answer

A)  may have either increased or decreased.
B)  increased by $65 billion.
C)  increased by $55 billion.
D)  decreased by $55 billion.E) B) and C)
F) A) and D)

Question 11

Which of the following of the countries listed and using Image 7.1 Global Perspective, which country had the highest GDP in 2016?

Accepted Answer

A)  Japan
B)  Germany
C)  France
D)  United KingdomE) A) and B)
F) A) and C)

Question 12

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 D)
F) All of the above D

Question 13

Net exports are negative when:

Accepted Answer

A)  a nation's imports exceed its exports.
B)  the economy's stock of capital goods is declining.
C)  depreciation exceeds domestic investment.
D)  a nation's exports exceed its imports.E) A) and C)
F) None of the above

Question 14

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

Question 15

Suppose ZZZ Corporation issues new common stock worth $25 million in 2020.It uses $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result, there is an increase in gross investment by:

Accepted Answer

A)  $7 million.
B)  $25 million.
C)  $18 million.
D)  $11 million.E) A) and D)
F) None of the above

Question 16

GDP by the expenditure approach is equal to:

Accepted Answer

A)  C + Ig+ G + Xn.
B)  C + Ig+ G - Xn.
C)  C + In+ G + Xn.
D)  C + In+ G - Xn.E) B) and D)
F) B) and C)

Question 17

Gross private domestic investment exceeds depreciation in an economy experiencing expanding production capacity.

Accepted Answer

A) True 
 B)False

Question 18

In an economy experiencing persistent deflation:

Accepted Answer

A)  potential GDP will necessarily exceed actual GDP.
B)  changes in nominal GDP may either overstate or understate changes in real GDP.
C)  changes in nominal GDP understate changes in real GDP.
D)  changes in nominal GDP overstate changes in real GDP.E) A) and B)
F) A) and C)

Question 19

Transfer payments are:

Accepted Answer

A)  excluded when calculating GDP because they only reflect inflation.
B)  excluded when calculating GDP because they do not reflect current production.
C)  included when calculating GDP because they are a category of investment spending.
D)  included when calculating GDP because they increase the spending of recipients.E) A) and B)
F) A) and C)

Question 20

Money spent on the purchase of a new house is included in the GDP as a part of:

Accepted Answer

A)  the consumption of private fixed capital.
B)  personal consumption expenditures.
C)  personal saving.
D)  investment.E) B) and D)
F) A) and C)

Exam 7: Part B: Measuring the Economys Output

The gross domestic product of Canada measures aggregate output produced:

Correct AnswerverifiedA

In an economy, the value of inventories rose from $100 billion in 2016 to $150 billion in 2017.In calculating the total investment for 2017, national income accountants would:

Correct AnswerverifiedShow Answer

GDP includes:

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

An increase in inventories during 2022:

Correct AnswerverifiedShow Answer

A business buys $5,000 worth of resources to produce a product.The business makes 100 units of the product and each of them sells for $65.The value added by the business to these products is:

Correct AnswerverifiedShow Answer

The GDP deflator or price index equals:

Correct AnswerverifiedShow Answer

By summing the dollar value of all market transactions in the economy we would:

Correct AnswerverifiedShow Answer

Which would be considered an investment according to economists?

Correct AnswerverifiedShow Answer

If in some year gross investment was $120 billion and net investment was $65 billion, then in that year the country's capital stock:

Correct AnswerverifiedShow Answer

Which of the following of the countries listed and using Image 7.1 Global Perspective, which country had the highest GDP in 2016?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedD

Net exports are negative when:

Correct AnswerverifiedShow Answer

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:

Correct AnswerverifiedShow Answer

Suppose ZZZ Corporation issues new common stock worth $25 million in 2020.It uses $18 million of the proceeds to replace obsolete equipment in its factory and $7 million to repay bank loans.As a result, there is an increase in gross investment by:

Correct AnswerverifiedShow Answer

GDP by the expenditure approach is equal to:

Correct AnswerverifiedShow Answer

Gross private domestic investment exceeds depreciation in an economy experiencing expanding production capacity.

Correct AnswerverifiedShow Answer

In an economy experiencing persistent deflation:

Correct AnswerverifiedShow Answer

Transfer payments are:

Correct AnswerverifiedShow Answer

Money spent on the purchase of a new house is included in the GDP as a part of:

Correct AnswerverifiedShow Answer

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