Question 1

Why are illegal activities,unreported activities,and non-market activities excluded from GDP?

Accepted Answer

Illegal activities, unreported activities, and non-market activities are often difficult to measure, making it impossible to accurately include them in the calculation of GDP. Furthermore, these activities may represent illicit or hidden economic transactions that may not contribute to a society's overall well-being. Therefore, they are typically excluded from GDP calculations.

Question 2

Consider Canada's 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 goods that are more likely to be included in the basket of goods used to calculate the CPI, which measures the prices of goods and services purchased by households. On the other hand, lumber, car parts, aircraft engines, and engineering services are more likely to be used in production and not directly purchased by households, therefore having less direct effect on the CPI but still affecting the GDP deflator.

Question 3

Which of the following is excluded from GDP?

Accepted Answer

Illegal activities, including the production and sale of illegal drugs, are not included in GDP calculations.

Question 4

A country's computed GDP deflator
1)excludes the changes in the price of imported goods;
2)is less relevant than the measured CPI for the typical consumer;
3)is set to be equal to 100 in its base year.

Accepted Answer

The answer of A country's computed GDP deflator
1)excludes the changes...

Question 5

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

Accepted Answer

GDP includes exports as they contribute to the economy of the country.

Answer: None of the remaining choices. 
 GDP only includes goods and services that are exchanged for money in the market. Therefore, the value of a vintage automobile purchased from the previous owner, volunteer work, the value of vegetables consumed by the home gardener, and welfare payments are not included in the current calculations of GDP.

Question 6

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

Accepted Answer

Real GDP only measures market-based activities and ignores any negative externalities or costs associated with production, such as pollution. This means that it can overstate the economic well-being of a country's residents if there are significant negative externalities that are not included in the calculation.

Question 7

One major reason that GDP is an inaccurate measure of the "quality of life" is that

Accepted Answer

GDP only measures the monetary value of all goods and services produced within a country's borders, but it does not account for non-monetary measures that contribute to quality of life, such as leisure time, environmental quality, and overall well-being. By ignoring the value of leisure, GDP can overstate the benefits of long work hours and overconsumption, which can have negative effects on economic, social, and environmental sustainability in the long-term.

Question 8

Consider Canada's 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

Forest products are more likely to have a larger effect on the GDP deflator than the CPI as they are included in the production of goods and services and their price increase will be reflected in the overall output price level. The CPI only measures the prices of goods and services purchased by consumers, and forest products may not necessarily be a significant part of a typical consumer's basket of goods.

Question 9

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

Real GDP = (Nominal GDP) / (GDP deflator/100)
Real GDP = 3800 / (152/100)
Real GDP = 3800 / 1.52
Real GDP = 2500

Question 10

FIGURE 20-1
-Refer to Figure 20-1.Nominal GDP increased by approximately ________% between 2000 and 2005.

Accepted Answer

Nominal GDP increased by approximately 45% between 2000 and 2005, as indicated by the data in Figure 20-1.

Question 11

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

Accepted Answer

GDP only includes market activities, but many developing countries have a large share of nonmarket activities such as subsistence farming and unpaid household work. These activities contribute to the well-being of a country's population, but they are not reflected in GDP. Therefore, measures of GDP may understate the economic well-being of people in developing countries.

Question 12

Statistics Canada excludes from GDP the value of goods and services exchanged "under the counter" because

Accepted Answer

Goods and services exchanged "under the counter" are difficult to measure and therefore satisfactory methods for measuring them have not been developed. As a result, they are excluded from GDP.

Question 13

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

Accepted Answer

GDP only measures market activities, not non-market activities such as caring for children or elderly family members, volunteer work, and illegal activities. This can lead to an underestimate of the true level of economic activity in a country.

Question 14

FIGURE 20-1
-Refer to Figure 20-1.Which of the following years was used as the base year for constructing real GDP?

Accepted Answer

The answer of  FIGURE 20-1
-Refer to Figure 20-1.Which of...

Question 15

Using GDP as a measure of the economic well-being of a country can be criticized for ignoring non-market and other activities.However,it remains useful because

Accepted Answer

Despite its limitations, GDP remains a useful measure because it provides a good indication of the change in economic activity from one year to the next. This can help policymakers make decisions about monetary and fiscal policy, as well as provide insight into overall economic trends. However, it is important to also consider other measures of economic well-being, such as environmental sustainability and quality of life, to fully understand the health of an economy.

Question 16

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 17

FIGURE 20-1
-Refer to Figure 20-1.Real GDP increased by approximately ________% between 2000 and 2005.

Accepted Answer

Real GDP increased from approximately $10 trillion in 2000 to approximately $11.7 trillion in 2005, which is an increase of approximately 17%.

Quiz 20: The Measurement of National Income

Why are illegal activities,unreported activities,and non-market activities excluded from GDP?

Consider Canada's 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?

Which of the following is excluded from GDP?

A country's computed GDP deflator 1) excludes the changes in the price of imported goods; 2) is less relevant than the measured CPI for the typical consumer; 3) is set to be equal to 100 in its base year.

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

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

One major reason that GDP is an inaccurate measure of the "quality of life" is that

Consider Canada's 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?

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

FIGURE 20-1 -Refer to Figure 20-1.Nominal GDP increased by approximately ________% between 2000 and 2005.

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

Statistics Canada excludes from GDP the value of goods and services exchanged "under the counter" because

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

FIGURE 20-1 -Refer to Figure 20-1.Which of the following years was used as the base year for constructing real GDP?

Using GDP as a measure of the economic well-being of a country can be criticized for ignoring non-market and other activities.However,it remains useful because

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

FIGURE 20-1 -Refer to Figure 20-1.Real GDP increased by approximately ________% between 2000 and 2005.