Question 1

A macro production possibilities frontier shifts immediately from a change in

Accepted Answer

A macro production possibilities frontier depicts the maximum combination of two goods that can be produced with available resources. A change in the quantity of inputs, such as an increase in labor or capital, would shift the production possibilities frontier outward, increasing the potential for more output of both goods. Changes in the price of inputs or preferences for consumer goods and capital goods would not immediately shift the production possibilities frontier. Unemployment may impact the available resources, but it is not a direct factor in shifting the production possibilities frontier. Therefore, the best choice is D.

Question 2

Disposable income equals aggregate income plus net taxes.

Accepted Answer

Disposable income equals aggregate income minus net taxes.

Question 3

Net exports are $20, consumption spending is $40, government spending is $10 and aggregate income is $100. Therefore, business investment spending is $30.

Accepted Answer

Aggregate income (Y) is equal to the sum of consumption (C), investment (I), government spending (G), and net exports (NX). Given Y = $100, C = $40, G = $10, and NX = $20, we can solve for I: $100 = $40 + I + $10 + $20, which simplifies to I = $30.

Question 4

Government spending on transfer payments is included in economists' use of the letter G.

Accepted Answer

Economists use the letter G to represent government spending on goods and services, not transfer payments. Transfer payments are redistributions of income (like social security or unemployment benefits) and do not directly purchase goods or services.

Question 5

Which shifts a macro production possibilities frontier outward?

Accepted Answer

The answer of Which shifts a macro production possibilities frontier...

Question 6

A macro production possibilities frontier shifts immediately from a change in

Accepted Answer

The macro production possibilities frontier can shift immediately from changes in the quality of inputs, the quantity of inputs, and technology. These factors directly affect an economy's capacity to produce goods and services, thereby shifting the frontier.

Question 7

GDP statisticians for Statistics Canada use a monthly survey of businesses to categorize products and services as intermediate or final.

Accepted Answer

The answer of GDP statisticians for Statistics Canada use a...

Question 8

In calculating Canadian GDP, imports are subtracted from aggregate spending because these products and services are bought by people who live in other countries.

Accepted Answer

Imports are subtracted in the calculation of GDP because they represent spending on goods and services that were produced outside of the country, not because they are bought by people who live in other countries.

Question 9

To calculate Canada's aggregate spending, imports (IM) are subtracted to cancel out the import spending that is included in the categories of consumption (C) and business investment spending (I).

Accepted Answer

This is correct. To avoid double-counting import spending, imports are subtracted from the categories of consumption and investment spending to calculate Canada's aggregate spending.

Question 10

Disposable income equals aggregate income plus transfers minus taxes.

Accepted Answer

Disposable income is the income that households have available for spending after taxes and other deductions have been made. Aggregate income is the total income earned by all households in an economy. Transfers are payments made by the government to individuals or households, such as social security benefits or welfare payments. Taxes are payments made by individuals or households to the government, such as income taxes or sales taxes. Therefore, disposable income equals aggregate income plus transfers minus taxes.

Question 11

Aggregate expenditure is $200. Consumers pay $70 in net taxes and spend $80 on products and services. Disposable income is $130.

Accepted Answer

Aggregate expenditure is equal to disposable income in a closed economy without government spending or international trade. Thus, AE = C + I + G, where C is consumer spending, I is investment spending, and G is government spending. In this scenario, we don't have information on I and G, but we know that C = $80 and net taxes = taxes paid ($70) - transfer payments (0) = $70. Thus, disposable income = $130 (given) = C + net taxes = $80 + $70. Therefore, AE = C + I + G = $80 + I + G = disposable income + net taxes = $130 + $70 = $200. The equality holds, so the statement is true.

Question 12

A phone could be either an intermediate or a final product, depending on whether it is used by businesses or consumers.

Accepted Answer

A phone can be an intermediate product if it is used by businesses as part of their operations or production processes, and a final product when sold to consumers for personal use.

Question 13

Which does not shift a macro production possibilities frontier?

Accepted Answer

Increased unemployment means fewer resources are available for production, therefore the production possibilities frontier would shift inward rather than outward. The other options all involve increasing available resources, which would shift the production possibilities frontier outward.

Question 14

In calculating Canadian GDP, imports are subtracted from aggregate spending because these products and services are produced in other countries.

Accepted Answer

This is true. GDP only includes final goods and services produced within a country's borders, so imports (which are produced in other countries) must be subtracted from aggregate spending to accurately calculate GDP.

Question 15

Businesses usually need to borrow money for investment spending because it takes time before sales revenues flow from newly built factories.

Accepted Answer

Investment spending typically involves building new factories or developing new products, which often takes time before generating sales revenues. In the meantime, businesses may need to borrow money to finance these projects and cover their expenses until the revenues start rolling in.

Question 16

Government transfers are like negative taxes.

Accepted Answer

Government transfers are like negative taxes in the sense that they provide individuals with financial assistance, similar to how taxes collect financial resources from individuals. However, while taxes transfer resources from individuals to the government, transfers transfer resources from the government to individuals.

Question 17

Disposable income equals aggregate income minus net taxes.

Accepted Answer

This is the correct formula for calculating disposable income.

Question 18

Imports must always equal exports.

Accepted Answer

Imports and exports do not always have to be equal, as a country may have a trade deficit (where imports exceed exports) or a trade surplus (where exports exceed imports).

Question 19

Aggregate expenditure is $200. Consumers pay $70 in net taxes and spend $80 on products and services. Disposable income is $50.

Accepted Answer

The given information does not add up correctly. If aggregate expenditure is $200 and consumers spend $80 on products and services, there must be an additional $120 of spending from other sources (such as government or business investment). Additionally, if disposable income is $50 and net taxes are $70, this would imply negative disposable income which is not possible.

Question 20

Which does not shift a macro production possibilities frontier?

Accepted Answer

Increased prices of inputs would not shift a macro production possibilities frontier as it only affects the cost of production but not the physical capacity to produce. The other options would shift the frontier by increasing the potential for production.

Quiz 6: Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

A macro production possibilities frontier shifts immediately from a change in

Disposable income equals aggregate income plus net taxes.

Net exports are $20, consumption spending is $40, government spending is $10 and aggregate income is $100. Therefore, business investment spending is $30.

Government spending on transfer payments is included in economists' use of the letter G.

Which shifts a macro production possibilities frontier outward?

A macro production possibilities frontier shifts immediately from a change in

GDP statisticians for Statistics Canada use a monthly survey of businesses to categorize products and services as intermediate or final.

In calculating Canadian GDP, imports are subtracted from aggregate spending because these products and services are bought by people who live in other countries.

To calculate Canada's aggregate spending, imports (IM) are subtracted to cancel out the import spending that is included in the categories of consumption (C) and business investment spending (I).

Disposable income equals aggregate income plus transfers minus taxes.

Aggregate expenditure is $200. Consumers pay $70 in net taxes and spend $80 on products and services. Disposable income is $130.

A phone could be either an intermediate or a final product, depending on whether it is used by businesses or consumers.

Which does not shift a macro production possibilities frontier?

In calculating Canadian GDP, imports are subtracted from aggregate spending because these products and services are produced in other countries.

Businesses usually need to borrow money for investment spending because it takes time before sales revenues flow from newly built factories.

Government transfers are like negative taxes.

Disposable income equals aggregate income minus net taxes.

Imports must always equal exports.

Aggregate expenditure is $200. Consumers pay $70 in net taxes and spend $80 on products and services. Disposable income is $50.

Which does not shift a macro production possibilities frontier?