Question 1

Suppose that the total market value of all final goods and services produced in a particular country in a given year is $500 billion,and the total market value of final goods and services sold is $450 billion.We can conclude that:

Accepted Answer

A)  inventories have increased by $50 billion
B)  GDP is $450 billion
C)  GNI is $450 billion
D)  inventories have fallen by $50 billion
E)  GDP is $50 billion

Question 2

Depreciation can be determined indirectly by:

Accepted Answer

A)  adding income taxes to DI
B)  subtracting net investment from gross investment
C)  subtracting net investment from GDP
D)  adding net investment to gross investment
E)  subtracting net investment income to the rest of the world from GDP

Question 3

When an economy's capital stock is expanding:

Accepted Answer

A)  GNI, but not necessarily GDP, is rising
B)  net exports is a positive amount
C)  GNI exceeds GDP
D)  GDP exceeds GNI
E)  gross investment exceeds depreciation

Question 4

The term "final products" refers to:

Accepted Answer

A)  products that are unsold and, therefore, added to inventories
B)  products whose value has been adjusted for inflation
C)  products to be purchased by ultimate users that are not intended for resale or further processing
D)  consumer products, as opposed to investment products
E)  investment products, as opposed to consumer products

Question 5

If depreciation exceeds gross investment,it can be concluded that:

Accepted Answer

A)  GDP is rising, but GNI is declining
B)  net investment is negative
C)  the economy is importing more than it is exporting
D)  the economy's capital stock is expanding
E)  GNI is declining, but GDP is rising

Question 6

In year 1,Trailblazer Bicycle Company produced a mountain bike that was delivered to a retail outlet in November of that year.The bicycle was sold to E.Z.Ryder in March of year 2.This bicycle is counted as:

Accepted Answer

A)   consumption in year 1 and as negative investment in year 2
B)   negative investment in year 1 and as investment in year 2
C)   consumption in year 1 and as investment in year 2
D)   investment in year 1 and as negative investment in year 2
E)   investment in both year 1 and year 2

Question 7

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:

Accepted Answer

A)  $110
B)  $30
C)  $40
D)  $70
E)  -$40

Question 8

Professor Shields grows tomatoes in her garden for her family and friends.This activity is:

Accepted Answer

A)  excluded from GDP because it is not a productive activity
B)  excluded from GDP to avoid double counting
C)  excluded from GDP because an intermediate product is involved
D)  included in GDP because it reflects production
E)  excluded from GDP because no money changes hands

Question 9

In calculating GDP,national income accountants:

Accepted Answer

A)  treat inventory changes as an adjustment to personal consumption expenditures
B)  ignore inventories because they do not represent final products
C)  subtract increases in inventories or add decreases in inventories
D)  add increases in inventories or subtract decreases in inventories
E)  subtract increases in inventories but ignore decreases in inventories

Question 10

The amount of after-tax income received by households is measured by:

Accepted Answer

A)  GDP
B)  personal consumption expenditures
C)  GNI
D)  GDP plus transfer payments
E)  DI

Question 11

The value of Canadian imports is:

Accepted Answer

A)  added to exports when calculating GDP, because imports indicate spending by Canadians
B)  subtracted from exports when calculating GDP, because imports do not require spending by Canadians
C)  subtracted from exports when calculating GDP, because imports do not involve production in Canada
D)  added to exports when calculating GDP, because imports do not involve production in Canada
E)  ignored when calculating GDP, since imports do not represent spending by Canadians

Question 12

National income accountants can avoid double counting by:

Accepted Answer

A)  including government transfer payments in their calculations
B)  counting both intermediate and final products
C)  counting only final products
D)  counting only intermediate products
E)  subtracting taxes from their calculations

Question 13

GDP tends to:

Accepted Answer

A)  overstate economic well-being, because it does not include certain nonmarket activities such as the productive work of homemakers
B)  understate economic well-being, because it includes expenditures to reduce or eliminate pollution
C)  understate economic well-being, because it does not take into account increases in leisure
D)  overstate economic well-being, because it does not reflect improvements in product quality
E)  fairly reflect economic well-being at all times

Question 14

Gross investment refers to:

Accepted Answer

A)  depreciation minus net investment
B)  net investment minus depreciation
C)  net investment after it has been adjusted for investment income paid to foreigners
D)  net investment plus net exports
E)  net investment plus depreciation

Question 15

GDP may be defined as:

Accepted Answer

A)  the monetary value of all final goods and services produced within a nation in a given year
B)  GNI minus all non-income charges against output
C)  the monetary value of the capital stock used in the production of a year's output
D)  the monetary value of all goods and services, both final and intermediate, produced in a given year
E)  the total monetary earnings of households supplying resources in the Canadian economy

Question 16

A nation's capital stock will decline when:

Accepted Answer

A)  gross investment exceeds net investment
B)  net investment is positive, but less than gross investment
C)  gross investment exceeds depreciation
D)  depreciation exceeds gross investment
E)  gross investment is positive, but less than net investment D

Question 17

If intermediate goods and services were included in GDP,then:

Accepted Answer

A)  GDP would not have to be adjusted for net exports
B)  GNI would exceed GDP
C)  GDP would be overstated
D)  GDP would be understated
E)  GDP would have to be adjusted for depreciation

Question 18

Which of the following is a final product?

Accepted Answer

A)  diesel fuel bought for a delivery truck
B)  a haircut
C)  fertilizer purchased by a farm supplier
D)  Prius windows purchased by a Toyota assembly plant
E)  expenditures on stationery by an insurance company B

Question 19

The main difference between GDP and GNI is that GNI excludes:

Accepted Answer

A)  net international income to the rest of the world
B)  depreciation of fixed capital
C)  transfer payments
D)  government purchases
E)  net exports A

Question 20

In the treatment of Canadian exports and imports,national income accountants:

Accepted Answer

A)  subtract exports, but add imports, in calculating GDP
B)  subtract both exports and imports in calculating GDP
C)  add both exports and imports in calculating GDP
D)  add exports and ignore imports in calculating GDP
E)  add exports, but subtract imports, in calculating GDP

Exam 8: Measures of Economic Activity

Suppose that the total market value of all final goods and services produced in a particular country in a given year is $500 billion,and the total market value of final goods and services sold is $450 billion.We can conclude that:

Correct AnswerverifiedShow Answer

Depreciation can be determined indirectly by:

Correct AnswerverifiedShow Answer

When an economy's capital stock is expanding:

Correct AnswerverifiedShow Answer

The term "final products" refers to:

Correct AnswerverifiedShow Answer

If depreciation exceeds gross investment,it can be concluded that:

Correct AnswerverifiedShow Answer

In year 1,Trailblazer Bicycle Company produced a mountain bike that was delivered to a retail outlet in November of that year.The bicycle was sold to E.Z.Ryder in March of year 2.This bicycle is counted as:

Correct AnswerverifiedShow Answer

Assume a manufacturer of stereo speakers purchases $40 worth of components for each speaker.The completed speaker sells for $70.The value added by the manufacturer for each speaker is:

Correct AnswerverifiedShow Answer

Professor Shields grows tomatoes in her garden for her family and friends.This activity is:

Correct AnswerverifiedShow Answer

In calculating GDP,national income accountants:

Correct AnswerverifiedShow Answer

The amount of after-tax income received by households is measured by:

Correct AnswerverifiedShow Answer

The value of Canadian imports is:

Correct AnswerverifiedShow Answer

National income accountants can avoid double counting by:

Correct AnswerverifiedShow Answer

GDP tends to:

Correct AnswerverifiedShow Answer

Gross investment refers to:

Correct AnswerverifiedShow Answer

GDP may be defined as:

Correct AnswerverifiedShow Answer

A nation's capital stock will decline when:

Correct AnswerverifiedD

If intermediate goods and services were included in GDP,then:

Correct AnswerverifiedShow Answer

Which of the following is a final product?

Correct AnswerverifiedB

The main difference between GDP and GNI is that GNI excludes:

Correct AnswerverifiedA

In the treatment of Canadian exports and imports,national income accountants:

Correct AnswerverifiedShow Answer

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D

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B

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A

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