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1 | |
The purpose of National Income Accounting is: |
| | A) | To help economists assess the health of the entire economy |
| | B) | To help economists determine if the economy has grown, remained constant, or declined. |
| | C) | To help economists formulate policies to help maintain the health of the economy |
| | D) | All of the above |
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2 | |
Canadian GDP is a measure of... |
| | A) | The total market value of all goods and services produced in Canada in a given year, by Canadian resources only. |
| | B) | The total market value of all final goods and services produced in Canada in a given year, by Canadian resources only. |
| | C) | The total market value of all final goods and services produced in Canada in a given year, by either Canadian or foreign resources. |
| | D) | The total market value of all final goods and services produced by Canadian nationals within a given year, whether inside or outside Canada |
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3 | |
A country produces only two goods-Good X and Good Y. In year 1, the country produces 400 units of good X and 500 units of good Y. In year 2, the country produces 500 units of good X and 400 units of good Y. If the price of good X (Px) is $2/unit, while the price of good Y (Py) is $3/unit, then... |
| | A) | In year 1, the total market value of this country's output is $2,200 |
| | B) | In year 2, the total market value of this country's output is $2,200 |
| | C) | In year 2, the total market value of this country's output is $2,300 |
| | D) | None of the above is correct. |
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4 | |
Which of the following would be considered an intermediate good in the Canadian economy? |
| | A) | A household purchase of a new refrigerator |
| | B) | A businessman purchases a new suit. |
| | C) | A bakery purchases several bags of flour. |
| | D) | A student purchases textbooks for the upcoming term. |
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5 | |
If Statistics Canada included "intermediate goods" in its calculation of Gross Domestic Product (GDP), then... |
| | A) | The actual value of GDP would be understated |
| | B) | The actual value of GDP would be overstated because "the value of final goods already includes the value of any intermediate goods used to produce them." |
| | C) | The value of GDP would be correctly stated. |
| | D) | None of the above |
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6 | |
Clarice produces and sells Shepherd's Pie, a home style recipe that has a number of ingredients, including potatoes, ground beef, and corn. To produce 1 kg of Shepherd's Pie, Clarice must purchase $2.00 worth of potatoes, $3.50 worth of ground beef, and $1.50 worth of corn. In addition, electricity costs must be incurred to bake the final product. If Clarice can sell a kilogram of Shepherd's Pie for $12, what is her "Value Added"? |
| | A) | $8.00 |
| | B) | $7.00 |
| | C) | $12.00 |
| | D) | $5.00 |
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7 | |
Suppose that during a given year, Clarice sells 200 kg of Shepherd's Pie. What amount would be recorded for Gross Domestic Product (GDP) as a result of these sales? |
| | A) | $3800 |
| | B) | $1400 |
| | C) | $2400 |
| | D) | $1000 |
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8 | |
Which of the following transactions would be counted as part of Canadian GDP for the year 2000? |
| | A) | $10,000 worth of welfare received by Alex from the Ontario Government in the year 2000 |
| | B) | $10,000 worth of stocks purchased by Helena during the year. |
| | C) | A 1992 Volkswagen Jetta, which is purchased by James for $3,500 in the year 2000 |
| | D) | None of the above |
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9 | |
A good that is consumed slowly over a long period of time is called... |
| | A) | A durable consumer good |
| | B) | A non-durable consumer good |
| | C) | A long-lasting good |
| | D) | None of the above |
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10 | |
The construction of a new condominium complex in downtown Toronto by a private company would be recorded as _______ in the GDP accounts |
| | A) | Personal consumption spending (C) |
| | B) | Government Spending (G) |
| | C) | Gross Investment (Ig) |
| | D) | Imports (M) |
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11 | |
Which of the following categories makes up the greatest percentage of the income approach to measuring GDP? |
| | A) | Corporation profits before taxes |
| | B) | Wages, salaries and supplementary labour income |
| | C) | Interest and miscellaneous investment income |
| | D) | Accrued net income of farm operators from farm production |
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12 | |
Canadian GNP is ____ Canadian GDP because... |
| | A) | Less than; there is a lot of foreign investment in Canada, and GNP does not include the contribution to Canadian output of foreign residents |
| | B) | Greater than; GNP includes the contribution to Canadian output of foreign residents, but GDP does not. |
| | C) | Equal to; both GNP and GDP are equal measures. |
| | D) | None of the above |
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13 | |
Which of the following is correct regarding Disposable Income (DI)? |
| | A) | As income tax rates fall, disposable income increases |
| | B) | For a given amount of disposable income, as savings (s) increase, consumption Ó decreases. |
| | C) | The bulk of a household's disposable income is spent on consumption goods. |
| | D) | All of the Above |
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14 | |
According to the Circular Flow of Income and Expenditures, the four sources of expenditure include... |
| | A) | Households, businesses, banks, and foreign countries |
| | B) | Households, businesses, Canadian Government, and the Stock Markets |
| | C) | Households, businesses, Canadian Government, and foreign countries. |
| | D) | None of the above |
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15 | |
A given country produces only one good, good X. The following table has been devised showing units of good X output and the price per unit of good X:
| Yr. | Units | Price/unit | | 1 | 100 | $8 | | 2 | 120 | 12 | | 3 | 165 | 16 | | 4 | 140 | 22 |
Suppose that year 1 has a price index equal to 100, and is thus the base year. What is the economy's nominal GDP in year 2? |
| | A) | $800 |
| | B) | $1440 |
| | C) | $640 |
| | D) | $1000 |
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16 | |
Suppose that Canada experiences an increase in inflation of about 2% between 2000 and 2001. If the actual quantity of goods and services produced remains unchanged during this period, what can we conclude about the values of Real GDP and Nominal GDP? |
| | A) | Both Real and Nominal GDP have increased |
| | B) | Real GDP has increased, while Nominal GDP has decreased |
| | C) | Nominal GDP has increased, while Real GDP is unchanged |
| | D) | Real GDP has decreased, while Nominal GDP is unchanged. |
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17 | |
In Canada, in 1995, Nominal GDP was $799.1 billion, while the GDP price index was 105.1. What, approximately was Canada's Real GDP in 1995? |
| | A) | $760 billion |
| | B) | $840 billion |
| | C) | $690 billion |
| | D) | None of the above |
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18 | |
During the base year (1992), Canada's CPI has a value of... |
| | A) | 50 |
| | B) | 100 |
| | C) | 150 |
| | D) | 200 |
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19 | |
Suppose that a small economy produces 3 goods only: Bananas, coffee, and personal computers. In 1992 (the economy's base year), this economy produced 5000 kilograms of bananas, 10000 kilograms of coffee, and 100 personal computers. Assume that this economy produced the same market basket during the current year. During the base year (1992), bananas were $0.50 per kilogram, coffee was $5.00 per kilogram, while personal computers cost $3,000 each. During the current year (2001), bananas cost $1.50 per kilogram, coffee is priced at $10.00 per kilogram, while personal computers cost $2900 each. The value of this economy's CPI for 2001 will be... |
| | A) | 105.6 |
| | B) | 109.7 |
| | C) | 112.8 |
| | D) | 115.0 |
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20 | |
Consider the above question. What is the inflation rate for this economy from 1992-2001? |
| | A) | 5.6% |
| | B) | 12.8% |
| | C) | 9.7% |
| | D) | 15% |
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21 | |
Country A experienced an increase in its CPI from 125.2 in January 2000 to 127.6 in December 2000. What was country A's inflation rate for the year 2000? |
| | A) | 1% |
| | B) | 0.9% |
| | C) | 2.4% |
| | D) | 1.9% |
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22 | |
Which of the following is a major shortcoming of using GDP as an indicator of economic performance? |
| | A) | GDP does not take into account non-market transactions, such as housework, and thus it understates a country's total output. |
| | B) | GDP does not take into account improvements in product quality, only quantity changes. |
| | C) | GDP does not include the so-called underground economy, which involves unreported income. As a result, GDP, as measured by Statistics Canada, understates Canada's total expenditures. |
| | D) | All of the Above |
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23 | |
A CPI reading of 95.0 for a country would indicate that... |
| | A) | The average price level has risen by 5% since the base year |
| | B) | The average price level has fallen by 5% since the base year. |
| | C) | The country has experienced inflation of 5% since the base year |
| | D) | None of the above |
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2002 McGraw-Hill Higher Education