Question 1

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.  TABLE 20-6
-Refer to Table 20-6.If 2005 is the base year,the GDP deflator in 2015 was

Accepted Answer

To calculate the GDP deflator, we need to first calculate nominal and real GDP for both 2005 and 2015.

Nominal GDP for 2005 = ($5 x 50) + ($20 x 100) = $2,550
Nominal GDP for 2015 = ($10 x 100) + ($40 x 200) = $8,000

Real GDP for 2005 = ($5 x 50) + ($20 x 100) = $2,550
Real GDP for 2015 = ($10 x 50) + ($40 x 100) = $2,500

Now, we can calculate the GDP deflator:
GDP deflator for 2005 = (nominal GDP for 2005 / real GDP for 2005) x 100
= (2550 / 2550) x 100
= 100

GDP deflator for 2015 = (nominal GDP for 2015 / real GDP for 2015) x 100
= (8000 / 2500) x 100
= 320

To convert the GDP deflator to a more easily interpretable index where the base year has a value of 100, we need to divide both the 2005 and 2015 GDP deflators by the 2005 GDP deflator and multiply by 100:

GDP deflator for 2005 = 100
GDP deflator for 2015 = (320 / 100) x 100
= 320

Therefore, the correct answer is D) 131.67.

Question 2

One major reason that GDP is an inaccurate measure of the ʺquality of lifeʺ is that

Accepted Answer

GDP only accounts for the total value of goods and services produced in a country, and does not include factors such as work-life balance and access to leisure time. This means that a nation with a high GDP may still have issues with quality of life, such as high stress levels and lack of time for leisure activities.

Question 3

The table below shows total output for an economy over 2 years.  TABLE 20-5
-Refer to Table 20-5.The nominal Gross Domestic Product in 2016 was

Accepted Answer

The answer of The table below shows total output for...

Question 4

The table below shows total output for an economy over 2 years.  TABLE 20-5
-Refer to Table 20-5.The implicit GDP deflator in 2016,when 2015 is used as the base year,was approximately

Accepted Answer

The answer of The table below shows total output for...

Question 5

Consider Canadaʹs GDP deflator and Consumer Price Index (CPI).Now suppose the prices of the following goods and services increased.Which is likely to have a larger direct effect on the CPI than the GDP deflator?

Accepted Answer

Consumer electronics are more likely to have a larger direct effect on the CPI than the GDP deflator because they are a larger part of the typical household budget and are typically purchased more frequently than the other goods and services listed.

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.  TABLE 20-6
-Refer to Table 20-6.What is the real GDP for 2015 if 2005 is the base year?

Accepted Answer

The answer of The table below shows the total output...

Question 7

One reason that real GDP tends to overstate the economic well-being of the countryʹs residents is that it ignores

Accepted Answer

Real GDP only measures the market value of final goods and services produced within a country in a given period of time. It does not take into account negative externalities or social costs such as pollution that may result from production. Therefore, real GDP tends to overstate the economic well-being of the country's residents as it doesn't consider the negative impact on their health and environment.

Question 8

The table below shows total output for an economy over 2 years.  TABLE 20-5
-Refer to Table 20-5.Assume the output of all three goods is consumed in the country,and there are no imported goods and services.If 2015 is used as the base year,then the consumer price index ( CPI)in 2016 was approximately

Accepted Answer

The answer of The table below shows total output for...

Question 9

The table below shows total output for an economy over 2 years.  TABLE 20-8
-Refer to Table 20-8.The implicit GDP deflator in 2015 (using 2014 as the base year)is

Accepted Answer

The answer of The table below shows total output for...

Question 10

Consider Canadaʹs GDP deflator and Consumer Price Index (CPI).Now suppose the prices of the following goods and services increased.Which is likely to have a larger effect on the GDP deflator than the CPI?

Accepted Answer

The GDP deflator measures the prices of all goods and services produced domestically, including forest products, which are a significant part of Canada's economy. The CPI measures the prices of goods and services consumed by households, which would include items like bananas, chocolate, Hollywood movies, and consumer electronics, but would not directly account for the price changes in raw materials or export goods like forest products. Therefore, an increase in the price of forest products would have a larger effect on the GDP deflator than on the CPI.

Question 11

The table below shows total output for an economy over 2 years.  TABLE 20-8
-Refer to Table 20-8.The implicit GDP deflator in 2015 (using 2015 as the base year)is

Accepted Answer

The implicit GDP deflator for a base year is always 100, because the nominal GDP equals the real GDP in the base year, making the deflator (nominal GDP/real GDP)*100 equal to 100.

Question 12

The table below shows total output for an economy over 2 years.  TABLE 20-8
-Refer to Table 20-8.The real GDP in 2015,expressed in 2014 prices,was

Accepted Answer

To calculate real GDP, we need to use the base year's prices. In this case, the base year is 2014. To find the real GDP in 2015, we need to multiply the output in 2015 by the 2014 price level. This gives us:
Real GDP in 2015 = Output in 2015 x (2014 Price Level/100)
Real GDP in 2015 = 1400 x (90/100)
Real GDP in 2015 = 1260
Therefore, the answer is D) $1260.

Question 13

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.  TABLE 20-6
-Refer to Table 20-6.What is the real GDP for 2005 if 2015 is the base year?

Accepted Answer

Real GDP for a given year is calculated using the prices from the base year. In this case, the base year is 2015. To find the real GDP for 2005, we multiply the quantities of goods and services produced in 2005 by their prices in 2015. The calculation would show that the real GDP for 2005, using 2015 prices, is $9000.

Question 14

Which of the following statements about the underground economy and how it relates to GDP is correct?

Accepted Answer

The answer of Which of the following statements about the...

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

Nominal GDP is calculated by summing the current year prices of goods and services. In 2015, the calculation would be (100 units of Good X * $10/unit) + (50 units of Good Y * $12/unit) = $1000 + $760 = $1760.

Question 16

Which of the following is included in current calculations of GDP?

Accepted Answer

Computers produced domestically and exported count towards GDP as they are domestically produced goods sold abroad.

Answer: E
 Welfare payments are included in government spending, which is a component of GDP.

Question 17

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

Accepted Answer

GDP only includes market activities, but there are many non-market activities that contribute to economic activity, such as unpaid household work, volunteer work, and informal transactions. Therefore, GDP is an incomplete measure of economic activity.

Question 18

Measures of GDP may understate the economic well-being of people in developing countries if those countries tend to

Accepted Answer

Developing countries often have a large share of non-market activities, such as subsistence agriculture, that are not reflected in GDP measures. As a result, measures of GDP may understate the economic well-being of people in those countries.

Question 19

The table below shows total output for an economy over 2 years.  TABLE 20-5
-Refer to Table 20-5.The real GDP in 2016,expressed in 2015 prices,was

Accepted Answer

The answer of The table below shows total output for...

Question 20

The table below shows total output for an economy over 2 years.  TABLE 20-5
-Refer to Table 20-5.If 2015 is the base year,the GDP deflator in 2015 was

Accepted Answer

The GDP deflator is calculated as Nominal GDP/Real GDP x 100. In the base year, real GDP is equal to nominal GDP, so the GDP deflator is 100.

Quiz 20: The Measurement of National Income

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. TABLE 20-6 -Refer to Table 20-6.If 2005 is the base year,the GDP deflator in 2015 was

One major reason that GDP is an inaccurate measure of the ʺquality of lifeʺ is that

The table below shows total output for an economy over 2 years. TABLE 20-5 -Refer to Table 20-5.The nominal Gross Domestic Product in 2016 was

The table below shows total output for an economy over 2 years. TABLE 20-5 -Refer to Table 20-5.The implicit GDP deflator in 2016,when 2015 is used as the base year,was approximately

Consider Canadaʹs GDP deflator and Consumer Price Index (CPI) .Now suppose the prices of the following goods and services increased.Which is likely to have a larger direct effect on the CPI than the GDP deflator?

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. TABLE 20-6 -Refer to Table 20-6.What is the real GDP for 2015 if 2005 is the base year?

One reason that real GDP tends to overstate the economic well-being of the countryʹs residents is that it ignores

The table below shows total output for an economy over 2 years. TABLE 20-5 -Refer to Table 20-5.Assume the output of all three goods is consumed in the country,and there are no imported goods and services.If 2015 is used as the base year,then the consumer price index ( CPI) in 2016 was approximately

The table below shows total output for an economy over 2 years. TABLE 20-8 -Refer to Table 20-8.The implicit GDP deflator in 2015 (using 2014 as the base year) is

Consider Canadaʹs GDP deflator and Consumer Price Index (CPI) .Now suppose the prices of the following goods and services increased.Which is likely to have a larger effect on the GDP deflator than the CPI?

The table below shows total output for an economy over 2 years. TABLE 20-8 -Refer to Table 20-8.The implicit GDP deflator in 2015 (using 2015 as the base year) is

The table below shows total output for an economy over 2 years. TABLE 20-8 -Refer to Table 20-8.The real GDP in 2015,expressed in 2014 prices,was

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. TABLE 20-6 -Refer to Table 20-6.What is the real GDP for 2005 if 2015 is the base year?

Which of the following statements about the underground economy and how it relates to GDP is correct?

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

Which of the following is included in current calculations of GDP?

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

Measures of GDP may understate the economic well-being of people in developing countries if those countries tend to

The table below shows total output for an economy over 2 years. TABLE 20-5 -Refer to Table 20-5.The real GDP in 2016,expressed in 2015 prices,was

The table below shows total output for an economy over 2 years. TABLE 20-5 -Refer to Table 20-5.If 2015 is the base year,the GDP deflator in 2015 was