Deck 6: Measuring Economic Performance

Question 1

Which of the following is included in GDP?

A)the value of lawn care service provided by a sixteen-year-old boy as part of his weekly chores
B)the revenue from the sale of a two-year old car
C)the revenues from a sale of land
D)the fees charged for a stock broker's services

Answer 1

the fees charged for a stock broker's services

Question 2

Which of the following purchases is NOT included in the calculated GDP?

A)a newly-constructed home
B)lumber used to build a four-bedroom home
C)a meal at Burger King
D)a bottle of Canadian wine

Answer 2

lumber used to build a four-bedroom home

Question 3

How is GDP defined?

A)as the national income after taxes
B)as the total value of all final goods and services plus intermediate goods and services produced domestically within a given period
C)as the total value of all consumer expenditures within a given period
D)as the value of all final goods and services produced domestically within a given period

Answer 3

as the value of all final goods and services produced domestically within a given period

Question 4

What does GDP measure?

A)the value of all final goods and services produced domestically within a given period
B)the value of all goods and services sold in an economy within a given period
C)the value of all intermediate goods produced domestically within a given period
D)the value of the government's domestic product

Question 5

What is included in the calculation of GDP?

A)only goods purchased by consumers in a given year
B)intermediate products but not final products
C)final products but not intermediate products
D)manufactured goods but not services

Question 6

What do final goods or services used to compute GDP refer to?

A)the factors of production used to produce output
B)the sum of all wages paid to labourers
C)the goods and services purchased by the ultimate users
D)the value of outstanding shares of stock of manufacturing firms

Question 7

Which of the following best describes intermediate products?

A)goods that are purchased by the ultimate user
B)domestically produced goods that are not directly reflected in a nation's GDP
C)domestically produced goods that are reflected directly in a nation's GDP
D)imported retail products

Question 8

Which of the following purchases is an example of an intermediate product?

A)tires by Ford Motor Company to put on the CEO's Lincoln
B)by Enrique as inventory at his repair shop
C)tires by Ford Motor Company to put on its Ford Explorers
D)tires by Cheryl to put on her 1983 Mercedes

Question 9

What does GDP calculate?

A)the total revenue received by corporations for goods produced during a given period
B)the market value of all final goods and services produced during a given period
C)the value of a nation's total assets
D)the total dollar value of all sales transactions of final goods and services during a given period

Question 10

Which of the following is NOT part of GDP?

A)the value of a new home built and purchased during the year
B)the value of shares of Royal Bank of Canada stock bought and sold during the year
C)the value of long-distance telephone services rendered during the year
D)the value of new furniture produced during the year

Question 11

Which of the following accurately describes GDP?

A)the sum of all currency and coins in circulation
B)the value of all final goods and services produced by a government within a given period
C)the value of all final goods and services produced anywhere in the world by a nation's firms within a given period
D)the value of all final goods and services produced domestically within a given period

Question 12

Which of the following examples would NOT be counted as a final good for inclusion in GDP?

A)a sheet of antique leaded glass bought by a home renovator from a construction recycler
B)a sheet of glass purchased by General Motors for the side window of a new car
C)a piece of glass bought by a consumer to fix a broken window
D)a sheet of glass produced this year and ending up in the inventory of a retail hardware store

Question 13

What does GDP NOT directly include?

A)the value of services rendered during a period
B)the value of intermediate goods sold during a period
C)the value of goods produced domestically and sold abroad
D)the value of final goods and services produced, but not sold, during a period

Question 14

Which of the following is included in GDP calculations?

A)the university tuition paid to enrol in a course
B)a cheque for $50 received on your birthday
C)sales revenue received from a yard sale
D)cash income received by a self-employed landscaper that is not reported to the Canada Revenue Agency

Question 15

Which of the following is an example of an intermediate good?

A)a pair of jeans sold by a clothing retailer
B)cloth sold to a suit manufacturer
C)a used Ford Mustang sold from one neighbour to another
D)a share of Walmart stock

Question 16

What is the term for goods and services that are used in the production of other goods and services?

A)gross domestic goods
B)intermediate goods
C)ultimate goods
D)final goods

Question 17

Which of the following products is NOT included in current Canadian GDP?

A)a Washington State apple
B)a Ford Mustang produced last year and sold this year
C)an Okanagan apple
D)a physical examination at a Newfoundland health clinic

Question 18

Which of the following is NOT included in GDP calculations?

A)the value of 500 shares of Bell Canada stock sold to an investor
B)the value of a haircut
C)the value of high-definition television sets produced, but not sold, during the year
D)the value of an accountant's services

Question 19

Which of the following is NOT included in GDP?

A)the payments for a chiropractor's services
B)the fees for legal services rendered by your lawyer
C)the replacement of brake pads on your six-year-old vehicle
D)the cash income paid to a day labourer that is not reported to the tax authorities

Question 20

Which of the following examples would be included in the calculated GDP?

A)A clothing manufacturer buys fabric from a textile producer.
B)Suzanne buys a love seat and chair for $85 at the yard sale on the corner.
C)Mr. Kelly buys a used lawn mower from his neighbour, Mr. Templeton.
D)A local ice cream store sells $17 000 worth of cones and sundaes on July 1.

Question 21

What is the definition of consumption?

A)the purchase of goods and services by foreign buyers
B)the purchase of goods and services by business firms
C)the purchase of goods and services by government
D)the purchase of goods and services by households

Question 22

What is the largest component of consumption expenditures?

A)nondurables
B)durables
C)residential structures
D)services

Question 23

Which of the following is NOT considered part of the services category under the expenditure approach to GDP accounting?

A)commercial airline transportation
B)sporting events
C)haircuts
D)privately owned jets

Question 24

Under the expenditure approach to GDP accounting,what category includes changes in inventories?

A)consumption
B)government purchases
C)net exports
D)investment

Question 25

What is the largest single expenditure component of GDP?

A)government purchases
B)net exports
C)investment
D)consumption

Question 26

Which of the following are most likely to be classified by economists as consumer durable goods?

A)stocks and bonds
B)automobiles, furniture, and CD players
C)drugs, toys, magazines, and books
D)food and clothing

Question 27

Which of the following is NOT counted as a part of GDP?

A)the purchase of 100 shares of Apple stock by your grandmother
B)the purchase of a loaf of bread by a consumer
C)the unsold additions to inventory at a furniture store
D)the purchase of a snowplough by the city of Winnipeg

Question 28

How do declines in business inventories enter national income accounts?

A)negatively, in the net export category
B)negatively, in the investment category
C)positively, in the profits category
D)negatively, in the consumption category

Question 29

Which of the following is NOT a subcategory of consumption spending?

A)consumer services
B)consumer nondurable goods
C)consumer investment
D)consumer durable goods

Question 30

How is the expenditure method of measuring GDP calculated?

A)by adding up I + G + X
B)by adding up the final goods and services purchased domestically during a given period
C)by adding up domestic production of final goods and services for consumers, firms, government, and the international sector (through net exports)
D)by adding up the total expenditure of all firms incurred in the production of goods and services

Question 31

Which of the following is NOT part of Canadian GDP?

A)the salary of the premier of Nova Scotia
B)the value of a Ford Mustang car produced in the Canada and sold in the United States
C)the value of a Whitehorse lawyer's services
D)the value of a Toyota car imported from Japan

Question 32

What category of GDP generally includes residential construction?

A)government expenditures
B)net exports
C)consumption
D)investment

Question 33

Which of the following are included in the investment category under the expenditure approach to GDP accounting?

A)bonds
B)stocks
C)durable goods
D)additions to business inventories

Question 34

In recent years,approximately what percentage of GDP does consumption represent?

A)52 percent
B)58 percent
C)62 percent
D)67 percent

Question 35

What does the expenditure approach to GDP accounting include?

A)investment
B)dividends and interest
C)depreciation
D)stock and bond purchases

Question 36

How are net exports calculated?

A)exports plus imports minus tariffs
B)imports minus exports
C)exports plus imports
D)exports minus imports

Question 37

Which of the following are NOT included in the investment category under the expenditure approach to GDP accounting?

A)additions to inventory
B)factory buildings
C)newly constructed houses
D)stocks and bonds

Question 38

What is the difference between GDP using the income approach and GDP using the expenditure approach a result of?

A)statistical discrepancies
B)transfer payments
C)depreciation
D)net exports

Question 39

Which of the following is NOT included in the investment category under the expenditure approach to GDP accounting?

A)newly constructed houses
B)additions to inventory
C)stocks issued by Canadian corporations
D)machines and tools

Question 40

What does the expenditure measure of GDP accounting add together?

A)consumption, interest, government purchases, and net exports
B)consumption, investment, government purchases, and net exports
C)wages and salaries, profits, government purchases, and net exports
D)wages and salaries, rent, interest, and profit

Question 41

What expenditure category of GDP would include the services rendered by a sergeant with the Royal Canadian Mounted Police?

A)government purchases
B)net exports
C)consumption
D)investment

Question 42

Under the expenditure approach to GDP accounting,which of the following is NOT included in government purchases?

A)submarines purchased by the government
B)welfare payments
C)the civil service payroll
D)salaries of senators

Question 43

Under the expenditure approach,what component of Canadian GDP could possibly be negative?

A)government purchases
B)investment
C)consumption
D)net exports

Question 44

Which of the following is included in the investment component of GDP?

A)the sale of shares of Canadian Tire stock
B)the purchase of a refrigerator by a household
C)the construction of a new steel mill
D)the funds put into a registered retirement savings accounts

Question 45

Using the expenditure approach to GDP accounting,which of the following purchases is included in the investment category?

A)additional inventory before the Christmas season
B)corporate stocks
C)corporate bonds
D)government bonds

Question 46

Which of the following is NOT a payment made to households in exchange for the use of factors of production?

A)rent
B)wages
C)taxes
D)interest

Question 47

Which of the following is one result of a nation's imports exceeding its exports?

A)National savings will exceed investment.
B)Net exports will be positive.
C)GDP will be less than the sum of consumption, investment, and government purchases.
D)GDP will be greater than the sum of consumption, investment, and government purchases.

Question 48

GDP equals $1.1 trillion.If consumption equals $690 billion,investment equals $200 billion,and government spending equals $270 billion,what can we conclude about the value of exports and imports for the country?

A)Net exports equal zero.
B)Exports exceed imports by $140 billion.
C)Exports exceed imports by $40 billion.
D)Imports exceed exports by $40 billion.

Question 49

What is NOT in included in the expenditure approach to GDP accounting?

A)transfer payments
B)investment
C)government purchases
D)imports

Question 50

Capital,entrepreneurship,land,and labour are needed to produce goods and services.What are the respective payments for each of these factors of production?

A)profits, interest, rent, and wages and salaries
B)profits, rent, wages and salaries, and interest
C)interest, profits, wages and salaries, and rent
D)interest, profits, rent, and wages and salaries

Question 51

What expenditure category of Canadian GDP would account for French perfume that is purchased in Canada?

A)consumption
B)investment
C)net exports
D)government purchases

Question 52

GDP equals $1.2 trillion.If consumption equals $690 billion,investment equals $200 billion,and government spending equals $260 billion,what can we conclude about the value of exports and imports for the country?

A)Imports exceed exports by $50 billion.
B)Exports exceed imports by $50 billion.
C)Imports exceed exports by $150 billion.
D)Exports exceed imports by $150 billion.

Question 53

Which of the following is the most volatile GDP category under the expenditure approach?

A)government purchases
B)wages and salaries
C)consumption
D)investment

Question 54

What expenditure category of GDP would include the purchase of a new scanner by a computer graphics business?

A)investment
B)government purchases
C)net exports
D)consumption

Question 55

Under the expenditure approach to GDP accounting,which of the following do government purchases NOT include?

A)federal government purchases of computers
B)provincial government purchases of plumbing services
C)Canada Pension Plan benefit payments to retirees
D)the salaries of parliamentary staff

Question 56

What does a negative amount of net exports in the GDP expenditures accounting mean?

A)Exports are less than imports.
B)Imports are less than exports.
C)Net exports have declined from the previous period.
D)The sum of this period's exports and imports has declined from the previous period.

Question 57

What is the term for the measure of the income earned by owners of factors of production used in making final goods and services?

A)gross domestic income
B)net domestic income at factor cost
C)retained earnings
D)personal income

Question 58

What is subtracted from GDP to determine net domestic income?

A)transfer payments and net exports
B)inventory accumulation and depreciation
C)net indirect taxes and depreciation
D)net exports and net indirect taxes

Question 59

When your mother buys a kilogram of Swiss chocolate,what expenditure category of GDP would account for it?

A)government purchases
B)investment
C)consumption
D)net exports

Question 60

If Canada imported $1.5 billion worth of goods and services and sold $2.9 billion worth of goods and services outside its borders,what would its net exports equal?

A)$-4.4 billion
B)$-1.4 billion
C)$1.4 billion
D)$4.4 billion

Question 61

What does disposable income measure?

A)the income households have from investment income such as dividends and capital gains
B)the market value of total output
C)the income households have to spend after paying taxes
D)the income households have to spend before paying taxes

Question 62

What is the term for household income after taxes?

A)national income
B)disposable income
C)gross national product
D)gross domestic product

Question 63

Which of the following is NOT considered a factor payment?

A)rent
B)interest
C)transfer payments
D)wages

Question 64

What is the Consumer Price Index used for?

A)to monitor changes in the level of real GDP
B)to track changes in the stock market
C)to track changes in the level of wholesale prices in the economy
D)to monitor changes in the cost of living of typical households

Question 65

What does net domestic income at factor cost measure?

A)aggregate income minus the statistical discrepancy
B)GDP minus depreciation
C)the income earned by owners of factors of production used in making final goods and services
D)the income received by persons after taxes

Question 66

What is the term for the total income received by households and noncorporate businesses?

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

Question 67

What is depreciation?

A)It is an indirect business tax.
B)It is income earned but not received.
C)It is income received but not earned.
D)It is an allowance for the replacement of capital.

Question 68

What does personal income measure?

A)aggregate income minus the statistical discrepancy
B)GDP minus depreciation
C)the income earned by owners of factors of production used in making final goods and services
D)the total amount of income received by households before taxes

Question 69

By how much is gross domestic product greater than net domestic income at factor cost?

A)by net imports and direct business taxes
B)by direct business taxes and appreciation
C)by net exports and indirect business taxes
D)by indirect business taxes and depreciation

Question 70

What is personal income?

A)It is earned income.
B)It is income that is not reported to the government.
C)It is income that is calculated by subtracting indirect taxes and personal taxes from GDP.
D)It is income that includes transfer payment.

Question 71

If individuals were paid for their household production,what would be the effect on GDP?

A)GDP would not change, but net domestic income would increase.
B)GDP would not change, but net domestic income would decrease.
C)GDP would decrease.
D)GDP would increase.

Question 72

How is nominal GDP defined?

A)the base-year market value of domestic production of intermediate goods
B)the current-year market value of all final goods and services produced domestically during a given period
C)the current-year market value of domestic production of intermediate goods
D)the base-year market value of all final goods and services produced domestically during a given period

Question 73

What is the largest source of income?

A)profits
B)interest
C)rent
D)wages

Question 74

Which of the following statements about the Consumer Price Index is the most accurate?

A)When it increases, the average family has to spend less to maintain their standard of living.
B)When it increases, the average family has to spend more to maintain their standard of living.
C)It is a broader measure of inflation than is the GDP deflator.
D)When it increases, the standard of living of the average family does not change.

Question 75

What is the CPI a measure of?

A)the overall price of stocks on the Toronto Stock Exchange
B)the overall price of goods and services bought by a typical consumer
C)the overall price of inputs purchased by a typical producer
D)the overall price of goods and services produced in the economy

Question 76

What type of factor payment accounted for approximately half of Canadian GDP by type of income in 2010?

A)investment income
B)interest income
C)corporate profits before taxes
D)wages and salaries

Question 77

What price index is probably most relevant to households trying to evaluate their changing financial position over time?

A)the Raw Materials Price Index
B)the Intermediate Products Price Index
C)the GDP deflator
D)the Consumer Price Index

Question 78

What does the Consumer Price Index (CPI)measure changes in prices of?

A)certain goods and services purchased for consumption purposes
B)goods produced abroad but sold in Canada
C)all the goods and services included in the gross domestic product
D)certain important commodities, including wheat, crude oil, and tin

Question 79

For the economy as a whole,what is the relationship between income and expenditures?

A)Expenditures exceed income because of taxes.
B)Expenditures exceed income because of the government budget deficit.
C)Income exceeds expenditures because of saving.
D)Income equals expenditures.

Question 80

What is the difference between CPI and GDP tracking?

A)CPI tracks price changes in all consumer goods and services, while the GDP deflator tracks price changes in all capital goods and services.
B)CPI tracks price changes in all consumer goods and services, while the GDP deflator tracks price changes in all intermediate goods and services.
C)CPI tracks price changes in a basket of goods and services, while the GDP deflator tracks price changes in all goods and services.
D)CPI tracks price changes in a basket of goods and services, while the GDP deflator tracks price changes in all final goods and services.