Question 1

When calculating GDP from the expenditure side,"actual consumption expenditures" includes

Accepted Answer

A)  the purchase of a new house.
B)  American tourists travelling to and spending in Canada.
C)  increases in automobile inventories.
D)  the construction of an apartment building.
E)  the monthly rental of an apartment.

Question 2

When calculating GDP from the income side,which of the following is included in non-factor payments?

Accepted Answer

A)  wages and salaries
B)  GST
C)  income tax
D)  bond interest
E)  business profits

Question 3

When computing GDP from the expenditure side,which of the following items is excluded from the government component?

Accepted Answer

A)  employment-insurance benefits
B)  salaries to Canadian Forces officers
C)  costs of Parliamentary Committees
D)  rental of office space by the government
E)  operating costs of the Canadian Coast Guard

Question 4

Suppose national accounting was done by adding up the market values of all outputs of all firms.This approach would

Accepted Answer

A)  accurately reflect the value of production in the economy.
B)  obtain gross domestic product.
C)  obtain gross national product.
D)  underestimate the value of production in the economy.
E)  overestimate the value of production in the economy.

Question 5

In macroeconomics,the term "capital goods" refers to

Accepted Answer

A)  the financial resources necessary to start a firm.
B)  man-made factors of production,such as tools,machines,and factory buildings.
C)  money.
D)  stocks and bonds.
E)  all factors of production.

Question 6

The table below shows the total output and prices for an economy that produces only two goods,potatoes and oil.Data is provided for the years 2005 and 2015.
Quantities Produced Prices
  TABLE 20-6
-Refer to Table 20-6.If 2005 is the base year,the GDP deflator in 2015 was

Accepted Answer

A)  59.1.
B)  85.7.
C)  100.
D)  131.67.
E)  159.1.

Question 7

Total value added in an economy is equal to the value of

Accepted Answer

A)  all final goods produced.
B)  all final and intermediate goods produced.
C)  all inputs and outputs in the economy.
D)  all profits of all firms in the economy.
E)  the sum of the value of primary,intermediate and final goods.

Question 8

The table below shows total output for an economy over 3 years.
  * millions of dollars
** real GDP measured in millions of 2007 dollars
TABLE 20-7
-Refer to Table 20-7.The growth rate of real output from 2014 to 2015 is

Accepted Answer

A)  1.03%.
B)  1.84%.
C)  3.25%.
D)  3.41%.
E)  4.27%.

Question 9

The table below shows the total output and prices for an economy that produces only two goods,potatoes and oil.Data is provided for the years 2005 and 2015.
Quantities Produced Prices
  TABLE 20-6
-Refer to Table 20-6.What is the real GDP for 2005 if 2015 is the base year?

Accepted Answer

A)  $6750
B)  $7975
C)  $9000
D)  $10 500
E)  $20 100

Question 10

The table below shows total output for an economy over 3 years.
  * millions of dollars
** real GDP measured in millions of 2007 dollars
TABLE 20-7
-Refer to Table 20-7.The real GDP in 2014,expressed in 2007 prices,was

Accepted Answer

A)  $773 585.
B)  $798 000.
C)  $800 000.
D)  $869 200.
E)  $900 000.

Question 11

A farmer raises free-range chickens,which he sells to a company for $1000.That company sells the "processed" chickens to a grocery store for $1600,which in turn produces roasted chickens which are sold to the public for $2400.Based on this information,the value of total output is equal to

Accepted Answer

A)  $1400.
B)  $1600.
C)  $2400.
D)  $4000.
E)  $5000.

Question 12

How does net domestic income differ from gross domestic product? Net domestic income is GDP minus

Accepted Answer

A)  that part of it not actually paid to households,plus transfer payments to households.
B)  that part of it not actually paid to households,minus personal income taxes paid by households.
C)  that part of it not actually paid to households,plus transfer payments to households,minus personal taxes paid by households.
D)  replacement investment.
E)  the sum of corporate,personal and sales taxes paid to the government.

Question 13

In national-income accounting,government expenditures on the salaries of civil servants are included at

Accepted Answer

A)  their imputed market value.
B)  the market value of the goods and services they produce.
C)  their after-tax salaries.
D)  their pre-tax salaries,or factor incomes.
E)  opportunity cost.

Question 14

Transfer payments are excluded from the government component in the calculation of GDP because

Accepted Answer

A)  they do not represent the purchase of a good or a service.
B)  they are not counted as income by any economic agent.
C)  they do not generate additional income in the economy.
D)  it is difficult to assess the market value of a transfer payment.
E)  they are small enough to ignore when computing the national accounts.

Question 15

The table below shows total output for an economy over 2 years.
  TABLE 20-8
-Refer to Table 20-8.The nominal Gross Domestic Product in 2015 was

Accepted Answer

A)  $1760.
B)  $1500.
C)  $1300.
D)  $1260.
E)  $410.

Question 16

In national-income accounting,"double counting"

Accepted Answer

A)  occurs when the value of some output is omitted in the calculation of national income.
B)  means that pre-tax and after-tax GDP will be different.
C)  occurs when the value of output is counted more than once in the calculation of national income.
D)  means that consumption will always be less than GDP.
E)  leads to an underestimation of GDP in any given period.

Question 17

One major reason that GDP is an inaccurate measure of the true level of economic activity is that

Accepted Answer

A)  people frequently buy things they do not want.
B)  it is statistically very inaccurate.
C)  it does not include non-market activities.
D)  it cannot be adjusted for changes in prices.
E)  it includes net exports.

Question 18

If nominal GDP in some year is $3800 and the GDP deflator for the same year is 152,then the real GDP for that year is

Accepted Answer

A)  $2280.
B)  $2500.
C)  $3500.
D)  $3800.
E)  $5776.

Question 19

The term "investment" in macroeconomics means

Accepted Answer

A)  the total amount of capital goods in the country.
B)  the production of goods for immediate consumption.
C)  the same thing as profits.
D)  the production of goods not for immediate consumption use.
E)  money spent in markets for financial capital.

Question 20

In national-income accounting,changes in inventories are

Accepted Answer

A)  classified as part of current actual investment.
B)  included under actual consumption expenditures.
C)  referred to as intermediate goods.
D)  described as actual fixed investment.
E)  not included in the national accounts.

Exam 20: The Measurement of National Income

The term "investment" in macroeconomics means

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How does net domestic income differ from gross domestic product? Net domestic income is GDP minus

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One major reason that GDP is an inaccurate measure of the true level of economic activity is that

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In macroeconomics,the term "capital goods" refers to

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In national-income accounting,changes in inventories are

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The table below shows the total output and prices for an economy that produces only two goods,potatoes and oil.Data is provided for the years 2005 and 2015. Quantities Produced Prices TABLE 20-6 -Refer to Table 20-6.If 2005 is the base year,the GDP deflator in 2015 was

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When computing GDP from the expenditure side,which of the following items is excluded from the government component?

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Transfer payments are excluded from the government component in the calculation of GDP because

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In national-income accounting,government expenditures on the salaries of civil servants are included at

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Total value added in an economy is equal to the value of

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Suppose national accounting was done by adding up the market values of all outputs of all firms.This approach would

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The table below shows total output for an economy over 3 years. * millions of dollars ** real GDP measured in millions of 2007 dollars TABLE 20-7 -Refer to Table 20-7.The growth rate of real output from 2014 to 2015 is

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A farmer raises free-range chickens,which he sells to a company for $1000.That company sells the "processed" chickens to a grocery store for $1600,which in turn produces roasted chickens which are sold to the public for $2400.Based on this information,the value of total output is equal to

Correct AnswerverifiedShow Answer

When calculating GDP from the income side,which of the following is included in non-factor payments?

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When calculating GDP from the expenditure side,"actual consumption expenditures" includes

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In national-income accounting,"double counting"

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The table below shows total output for an economy over 3 years. * millions of dollars ** real GDP measured in millions of 2007 dollars TABLE 20-7 -Refer to Table 20-7.The real GDP in 2014,expressed in 2007 prices,was

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The table below shows the total output and prices for an economy that produces only two goods,potatoes and oil.Data is provided for the years 2005 and 2015. Quantities Produced Prices TABLE 20-6 -Refer to Table 20-6.What is the real GDP for 2005 if 2015 is the base year?

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If nominal GDP in some year is $3800 and the GDP deflator for the same year is 152,then the real GDP for that year is

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The table below shows total output for an economy over 2 years. TABLE 20-8 -Refer to Table 20-8.The nominal Gross Domestic Product in 2015 was

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