Question 1

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 plants

Question 2

GDP tends to underestimate the productive activity in the economy because it excludes:

Accepted Answer

A)  spending by the government on military goods.
B)  spending by businesses to reduce the level of pollution.
C)  the work done by construction companies to remodel homes.
D)  the personal labour time homeowners spend on home repairs.

Question 3

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.

Question 4

Value added refers to:

Accepted Answer

A)  any increase in GDP which has been adjusted for adverse environmental effects.
B)  the excess of gross investment over net investment.
C)  the difference between the value of a firm's output and the value of the inputs it has purchased from others.
D)  the portion of any increase in GDP which is caused by inflation as opposed to an increase in real output.

Question 5

The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($940) ; personal consumption expenditures ($4,920) ; imports ($170) ; exports ($133) ; gross investment ($640) .What is GDP in this economy?

Accepted Answer

A)  $6,463 billion
B)  $6,500 billion
C)  $6,537 billion
D)  $6,633 billion

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)  $1,500

Question 7

As defined in national income accounting, investment includes:

Accepted Answer

A)  business expenditures on machinery and equipment.
B)  all consumption.
C)  imports, but not exports.
D)  all nonfood items.

Question 8

Real GDP is:

Accepted Answer

A)  the nominal value of all goods and services produced in the economy.
B)  the nominal value of all goods and services produced in the domestic economy corrected for inflation or deflation.
C)  that aggregate output which is produced when the economy is operating at full employment.
D)  always greater than nominal GDP.

Question 9

The current GDP price index used by Statistics Canada is referred to as the chain-weighted index, because by using both the previous year prices and current prices it links each year to the prior year.

Accepted Answer

A) True 
 B)False

Question 10

Which of the following is a final good or service?

Accepted Answer

A)  diesel fuel bought for a delivery truck
B)  fertilizer purchased by a farm supplier
C)  a haircut
D)  Chevrolet windows purchased by a General Motors assembly plant

Question 11

The GDP is the:

Accepted Answer

A)  monetary value of all final goods and services produced within a nation in a particular year.
B)  national income minus all non-income charges against output.
C)  monetary value of all economic resources used in producing a year's output.
D)  monetary value of all goods and services, final and intermediate, produced in a specific year.

Question 12

If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

Accepted Answer

A) True 
 B)False

Question 13

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.

Question 14

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.

Question 15

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 bonds

Question 16

Net investment refers to:

Accepted Answer

A)  the amount of machinery and equipment used up in producing GDP in a specific year.
B)  the difference between the market value and book value of outstanding capital stock.
C)  gross domestic investment less net exports.
D)  gross investment less consumption of fixed capital.

Question 17

The GDP tends to:

Accepted Answer

A)  overstate economic welfare because it does not include certain non-market activities such as the productive work of housewives.
B)  understate economic welfare because it includes expenditures undertaken to offset or correct pollution.
C)  understate economic welfare because it does not take into account increases in leisure.
D)  overstate economic welfare because it does not reflect improvements in product quality.

Question 18

An economy is enlarging its stock of capital goods:

Accepted Answer

A)  when net investment exceeds gross investment.
B)  when gross investment exceeds replacement investment.
C)  whenever gross investment is positive.
D)  when replacement investment exceeds gross investment.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

The value added by firms A-E from the production of the product described below is:

Accepted Answer

A)  $3,000
B)  $3,800
C)  $6,500
D)  $10,300

Exam 7: B: Measuring the Economys Output

The GDP tends to:

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The GDP is the:

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As defined in national income accounting, investment includes:

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Net investment refers to:

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If real GDP is 50 and nominal GDP is 100, the GDP price index is 200.

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The gross domestic product of Canada measures aggregate output produced:

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The value added by firms A-E from the production of the product described below is:

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The following are national income account data for a hypothetical economy in billions of dollars: government purchases ($940) ; personal consumption expenditures ($4,920) ; imports ($170) ; exports ($133) ; gross investment ($640) .What is GDP in this economy?

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Which would be considered an investment according to economists?

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The current GDP price index used by Statistics Canada is referred to as the chain-weighted index, because by using both the previous year prices and current prices it links each year to the prior year.

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

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GDP tends to underestimate the productive activity in the economy because it excludes:

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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:

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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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Real GDP is:

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An economy is enlarging its stock of capital goods:

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

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Value added refers to:

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

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Which of the following is a final good or service?

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