Question 1

In a typical year which of the following measures of aggregate output and income is likely to be the smallest?

Accepted Answer

A)   gross domestic product
B)   net domestic income
C)   disposable income
D)   personal income

Question 2

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 3

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

Accepted Answer

A) True 
 B)False

Question 4

Suppose nominal GDP was $360 billion in 2002 and $450 billion in 2012.The appropriate price index was 100 in 2002 and 120 in 2012.It can be concluded that between 2002 and 2012 real GDP:

Accepted Answer

A)   increased by about $15 billion.
B)   decreased by about $32 billion.
C)   increased by about $90 billion.
D)   increased by about $117 billion.

Question 5

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 6

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.

Question 7

Net exports are a negative number when:

Accepted Answer

A)   a nation's imports of goods and services fall.
B)   a nation's imports of goods and services rise.
C)   a nation's exports of goods and services are greater than its imports.
D)   a nation's imports of goods and services are greater than its exports.

Question 8

Disposable income differs from personal income by:

Accepted Answer

A)   personal taxes.
B)   personal saving.
C)   transfer payments.
D)   personal consumption expenditures.

Question 9

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion,the GDP price index for that year is:

Accepted Answer

A)   100
B)   200
C)   240
D)   300

Question 10

The Chain-weighted index links each year to the previous year through:

Accepted Answer

A)   the use of nominal GDPs in prior years.
B)   the use of both the prior year prices and current year prices.
C)   the use of real GDPs in prior years.
D)   the use of base year implicit price index.

Question 11

If nominal GDP is 150 and the GDP price index is 200,real GDP is 75.

Accepted Answer

A) True 
 B)False

Question 12

Setup Corporation buys $100,000 of sand,rock,and cement to produce ready-mix concrete.It sells 10,000 cubic yards of concrete at $30 a cubic yard.The value added by Setup Corporation is:

Accepted Answer

A)   $200,000
B)   $100,000
C)   $300,000
D)   zero dollars.

Question 13

The term "final goods and services" refers to:

Accepted Answer

A)   goods and services which are unsold and therefore added to inventories.
B)   goods and services whose value has been adjusted for changes in the price level.
C)   goods and services purchased by ultimate users,as opposed to resale or further processing.
D)   the excess of Canadians exports over Canadians imports.

Question 14

Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

Accepted Answer

A)   net investment for a business.
B)   profit and cost.
C)   value added from the economic activity.
D)   surplus or deficit from the economic activity.

Question 15

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.

Question 16

(GDP figures are in billions of dollars. ) 
 
-Refer to the above table.What was real GDP in Year 2?

Accepted Answer

A)   $4,820 billion
B)   $4,875 billion
C)   $4,911 billion
D)   $5,320 billion

Question 17

-For the above economy,the real GDP in year 3 is:

Accepted Answer

A)   $520
B)   $485
C)   $576
D)   $480

Question 18

If depreciation exceeds gross investment:

Accepted Answer

A)   the economy's stock of capital may be either growing or shrinking.
B)   the economy's stock of capital is shrinking.
C)   the economy's stock of capital is growing.
D)   net investment is zero.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

Refer to the information below.The capital consumption allowance:
All figures are in billions of dollars.

Accepted Answer

A)   cannot be calculated.
B)   is $23.
C)   is $14.
D)   is $32.

Exam 7: Measuring the Economys Output

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

Suppose nominal GDP was $360 billion in 2002 and $450 billion in 2012.The appropriate price index was 100 in 2002 and 120 in 2012.It can be concluded that between 2002 and 2012 real GDP:

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Refer to the information below.The capital consumption allowance: All figures are in billions of dollars.

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If nominal GDP is 150 and the GDP price index is 200,real GDP is 75.

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Net exports are a negative number when:

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

Correct AnswerverifiedShow Answer

When an economy's production capacity is expanding:

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Subtracting the purchase of intermediate products from the value of the sales of final products determines the amount of:

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

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The Chain-weighted index links each year to the previous year through:

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In a typical year which of the following measures of aggregate output and income is likely to be the smallest?

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Value added refers to:

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The term "final goods and services" refers to:

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Transfer payments are:

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If depreciation exceeds gross investment:

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-For the above economy,the real GDP in year 3 is:

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Setup Corporation buys $100,000 of sand,rock,and cement to produce ready-mix concrete.It sells 10,000 cubic yards of concrete at $30 a cubic yard.The value added by Setup Corporation is:

Correct AnswerverifiedShow Answer

If real GDP in a particular year is $80 billion and nominal GDP is $240 billion,the GDP price index for that year is:

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(GDP figures are in billions of dollars. ) -Refer to the above table.What was real GDP in Year 2?

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Disposable income differs from personal income by:

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