Question 1

GDP is published by Statistics Canada as part of the
A) GDP Statistical Review.
B) Labour Force Statistics.
C) National Income and Expenditure Accounts (NIEA).
D) Survey of Current Business.
E) Current Population Survey.

Accepted Answer

GDP is published by Statistics Canada as part of the National Income and Expenditure Accounts (NIEA).

Question 2

The income approach to calculating GDP includes
A) consumer spending.
B) exports of income earned.
C) net interest income.
D) government surpluses.
E) investment.

Accepted Answer

The income approach to calculating GDP includes net interest income, which refers to the interest earned on investments minus the interest paid on loans. The other choices listed (consumer spending, exports of income earned, government surpluses, and investment) are not specific components of the income approach.

Question 3

Pamela's bakery produces 500 loaves of bread in a given year. Pamela pays $100 for flour and yeast, pays $600 in wages, pays $50 in interest on an existing loan, and pays $100 in taxes to the government. One of Pamela's bread slicing machines, which cost $75 each, wears out over the course of the year and must be scrapped. Pamela's profit for the year equals $75. Pamela's bread, therefore, sells for
A) $0.50 per loaf.
B) $1.00 per loaf.
C) $2.00 per loaf.
D) $1.50 per loaf.
E) cannot tell, insufficient information.

Accepted Answer

To find the selling price per loaf, we calculate the total cost and add the profit. Total costs are $100 (flour and yeast) + $600 (wages) + $50 (interest) + $100 (taxes) + $75 (depreciation of the machine) = $925. Adding the profit of $75 gives $1000. Dividing $1000 by 500 loaves gives a selling price of $2.00 per loaf.

Question 4

Intermediate goods are
A) irrelevant in the overall economy.
B) purchased by consumers.
C) goods that are produced and used as inputs into the production process.
D) sold to foreigners.
E) not a consumption good.

Accepted Answer

Intermediate goods are goods that are produced and used as inputs into the production process. They are not sold directly to consumers, but rather are used in the production of final goods and services. Therefore, choice C is the best answer. Choices A, B, D, and E are all incorrect because they do not accurately define what intermediate goods are.

Question 5

Value added is equal to the value of a firm's production minus
A) all of its costs of production.
B) labour costs.
C) investment expenditures.
D) intermediate goods used in production.
E) costs of production.

Accepted Answer

Value added is calculated by subtracting the cost of intermediate goods used in production from the total value of a firm's production. This is because the value of the intermediate goods has already been accounted for in the production process and should not be double-counted in the final value of the product or service.

Question 6

The product approach to calculating GDP values government production at
A) market prices.
B) its cost of production.
C) its estimated value to society.
D) the total amount of taxes it collects.
E) its intermediate costs.

Accepted Answer

Government production is valued at its cost of production because it often does not have a market price.

Question 7

Suppose that the government collects $3 million in taxes, pays $2 million in Employment Insurance benefits, pays $0.5 million in interest on the national debt, and pays workers $1 million to sit at their desks and work as little as possible. The government's contribution to GDP is
A) $0.
B) $1 million.
C) $1.5 million.
D) $3 million.
E) $3.5 million.

Accepted Answer

The government's contribution to GDP is the value of goods and services it produces, which in this case is the $1 million paid to workers, as it represents government spending on services. Other payments like interest and benefits are transfers, not production.

Question 8

The three approaches to measuring GDP are called the
A) accounting approach, the income approach, and the expenditure approach.
B) product approach, the cost approach, and the expenditure approach.
C) product approach, the income approach, and the expenditure approach.
D) accounting approach, the statistical approach, and the income approach.
E) accounting approach, the statistical approach, and the product approach.

Accepted Answer

The three approaches to measuring GDP are indeed the product approach, the income approach, and the expenditure approach. Options A and B have an incorrect approach listed, while options D and E have a non-existent or incorrect approach listed.

Question 9

Approaches to measuring GDP include
A) cost approach.
B) GDP approach.
C) income approach.
D) trade approach.
E) value-subtracted approach.

Accepted Answer

The income approach is one of the three primary methods to measure GDP, alongside the production (or output) approach and the expenditure approach.

Question 10

The expenditure approach to calculating GDP includes
A) wage income.
B) investment.
C) all forms of taxation.
D) the sum of government spending on goods and services, transfer payments, and interest on the national debt.
E) corporate profits.

Accepted Answer

The expenditure approach to GDP includes consumption, investment, government spending on goods and services, and net exports. Investment is part of this calculation.

Question 11

Gross domestic product is defined as
A) the value of all goods produced in the economy in a given time period within the borders of Canada.
B) the market value of all goods and services produced in the economy during a given time period within the borders of Canada.
C) the total market value of the final goods and services produced during a given time period within the borders of Canada.
D) the total market value of all the intermediate goods and services produced in the economy for a given time period within the borders of Canada.
E) the market value of all goods and services produced by Canadian residents domestically and abroad.

Accepted Answer

The answer of Gross domestic product is defined as
A) the...

Question 12

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is
A) $900.
B) $1,000.
C) $1,100.
D) $1,800.
E) $2,000.

Accepted Answer

Jim's contribution to GDP is the total value of the flowers produced and sold, which is $1,100. This is because GDP is measured by the market value of all final goods and services produced within a country in a given period.

Question 13

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is
A) $100.
B) $200.
C) $400.
D) $800.
E) $1,000.

Accepted Answer

The answer of Jim's Nursery produces and sells $1,100 worth...

Question 14

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's contribution to GDP is
A) $15,000.
B) $20,000.
C) $30,000.
D) $45,000.
E) $60,000.

Accepted Answer

The answer of Acme Steel Co. produces 1,000 tons of...

Question 15

The income approach to calculating GDP is
A) the sum of all business income earned.
B) the sum of all consumer income earned.
C) all the spending on goods and services earned by consumer's income.
D) the sum of all incomes earned from production.
E) net of taxes.

Accepted Answer

The income approach to calculating GDP is the sum of all incomes earned from production, including wages, salaries, profits, and rental income. This approach measures the total amount of income generated by all factors of production contributing to the GDP.

Question 16

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is
A) $0.
B) $2,000.
C) $3,000.
D) $15,000.
E) $25,000.

Accepted Answer

Acme's revenue from steel production is $30 x 1,000 = $30,000. 
Acme's total costs are $10,000 + $15,000 + $2,000 = $27,000. 
Acme's profit is revenue minus total costs, which is $30,000 - $27,000 = $3,000. Therefore, the correct answer is C.

Question 17

The income-expenditure identity is best paraphrased as
A) all spending generates income.
B) all profits are used for investment spending.
C) on average, consumers cannot save.
D) on average, government can spend no more than what it collects in income taxes.
E) all income is spent.

Accepted Answer

The income-expenditure identity states that in an economy, the total spending (expenditure) is equal to the total income generated. This means that all spending in the economy ultimately generates income for someone.

Question 18

The value of a producer's output minus the value of all intermediate goods used in the production of that output is called the producer's
A) net output.
B) accounting profit.
C) value added.
D) profit margin.
E) costs of production.

Accepted Answer

Value added represents the incremental value created by the producer in the production process. It is the difference between the value of the final product and the cost of all intermediate goods used in its production.

Question 19

The expenditure approach to calculating GDP includes
A) consumption.
B) intermediate goods.
C) wage income.
D) net factor payments.
E) taxes.

Accepted Answer

The expenditure approach to calculating GDP includes consumption, investment, government spending, and net exports. Intermediate goods, wage income, net factor payments, and taxes are not directly included in this approach.

Question 20

The expenditure approach is calculated as
A) C + I + G.
B) C + I + X.
C) C + I + G + NX.
D) C + I + NX.
E) the value approach.

Accepted Answer

The expenditure approach is calculated as C (consumption) + I (investment) + G (government spending) + NX (net exports). This approach measures the total spending in the economy and helps to determine the gross domestic product (GDP) of a country.

Quiz 2: Measurement

GDP is published by Statistics Canada as part of the

The income approach to calculating GDP includes

Intermediate goods are

Value added is equal to the value of a firm's production minus

The product approach to calculating GDP values government production at

Suppose that the government collects $3 million in taxes, pays $2 million in Employment Insurance benefits, pays $0.5 million in interest on the national debt, and pays workers $1 million to sit at their desks and work as little as possible. The government's contribution to GDP is

The three approaches to measuring GDP are called the

Approaches to measuring GDP include

The expenditure approach to calculating GDP includes

Gross domestic product is defined as

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's contribution to GDP is

Jim's Nursery produces and sells $1,100 worth of flowers. Jim uses no intermediate inputs. He pays his workers $700 in wages, pays $100 in taxes and pays $200 in interest on a loan. Jim's profit is

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's contribution to GDP is

The income approach to calculating GDP is

Acme Steel Co. produces 1,000 tons of steel. Steel sells for $30 per ton. Acme pays wages of $10,000. Acme buys $15,000 worth of coal, which is needed to produce the steel. Acme pays $2,000 in taxes. Acme's profit is

The income-expenditure identity is best paraphrased as

The value of a producer's output minus the value of all intermediate goods used in the production of that output is called the producer's

The expenditure approach to calculating GDP includes

The expenditure approach is calculated as