Download practice GDP - Columbia College

ECONOMICS 101
COLUMBIA COLLEGE
Practice GDP
A. Multiple choice
1. Gross Domestic Product is the sum of annual purchases
a. Of new and used goods.
b. By all consumers, business firms, government agencies, and foreigners (net of sales to residents of Canada.)
c. Of final goods by all consumers, business firms, government agencies, and foreigners (net of sales to residents
of Canada.)
d. All of the above.
2. total expenditure for new final goods equals total output of new final goods in the income and product accounts
a. because no one will produce what cannot be sold.
b. Because prices will rise or fall to clear the market.
c. Because unsold goods are assumed to be purchased by the firms that produced them and added to their
inventories of finished goods.
d. Only at equilibrium.
3. Which of the following statements is true?
a. Final goods and services produced abroad by Canadians are part of Canadian GDP.
b. Final goods and services produced in Canada by foreigners are part of the foreign country's GDP.
c. Final goods and services produced in Canada by foreigners are part of Canada's GDP.
d. Final goods and services produced in Canada by foreigners are imports.
e. Final goods and services produced in Canada by foreigners are exports.
4. Which of the following is counted as investment in national income accounting?
a. building a new factory
b. buying an existing house
c. purchasing corporate stocks and bonds
d. depositing money in a commercial bank
5. Which of the following would be an example of a consumption expenditure?
a. More spending by the government on children's programs.
b. An increase in welfare payments to single mothers.
c. The purchase of a new car by the IPSCO steel company.
d. The purchase of a new car by the Singh household.
e. All of the above.
6. The value of intermediate goods is not counted in GDP
a. to keep from including goods that reduce society's welfare.
b. because of the tremendous difficulty in keeping track of all the intermediate goods produced in an economy as
large as that of Canada.
c. because they are only sold in factor markets.
d. to avoid counting their value twice and overstating the value of GDP.
e. because they are not consumed in the current year.
7. Which of the following would not be included in GDP for 2011?
a. A car produced in 2011 and held in inventory until 2012.
b. A car produced in 2011 and sold in 2012.
c. The value of all cars produced in 2011.
d. A car produced in January of 2011 and sold in November of 2011.
e. A car produced in 2010 and sold in 2011.
8. Which of the following adds to Canadian GDP?
a. I shovel my own driveway.
b. I sell my used Honda.
c. The production and sale of flour to a bakery.
d. The purchase of a CD made in China.
e. The ice cream I buy from my grocery store.
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Question 9 to 10 are based on the following statement: "Statistic Canada announced that it is shifting from 1997 to
2002 as the base year for calculating the nation's real GDP and price index." Suppose the price level increases every
year. In the new official figures (2002=base year), compared to the old official figures (1997=base year),
9. the 1997 real GDP is
a) smaller b) unchanged
c) larger
d) not enough information to tell
10. the 1997 nominal GDP is
a) smaller
b) unchanged
c) larger
d) not enough information to tell
11. The expenditure approach measures GDP by adding together
a. wages, salaries and supplementary labour income, and other factor incomes.
b. wages, salaries and supplementary labour income, other factor income, subsidies paid by the government,
indirect taxes paid, and income of nonfarm unincorporated businesses.
c. compensation of employees, rental income, corporate profits, net interest, proprietors' income, indirect taxes
paid, and capital consumption expenditures, and by subtracting subsidies paid by the government.
d. the total expenditures of consumers, firms, net exporters, and by governments at all levels.
e. the total expenditures of consumers and firms.
12. A reduction in inventory is
a.
not considered in the national income accounts
b.
entered as positive investment in the national accounts
c.
entered as negative investment in the national accounts
d.
entered as a depreciation item in the national accounts
13. Over the past few decades, Canadians have chosen to cook less at home and eat more at restaurants. How has this
practice affected GDP?
a. It has increased measured GDP.
b. It has reduced measured GDP.
c. It has not affected measured GDP.
d. It has had an ambiguous effect on GDP.
14. How are intermediate goods accounted for when calculating GDP?
a. The value of all intermediate goods is included in GDP.
b. The value of intermediate goods is included in GDP only if they were produced in the previous year.
c. The value of intermediate goods is included in GDP only if they are purchased by firms rather than households.
d. The value of intermediate goods is not included in GDP unless they are part of inventory.
15. Which of the following is counted in Canadian GDP?
a. goods and services produced by Canadian citizens working in the U.S.
b. American intermediate goods used in the production of Canadian final goods
c. Canadian final goods and services purchased by the American government
d. American final goods and services purchased by the Canadian government
B. The following information comes from a simple economy with only three goods:
Year
1998
1999
2000
Quantity
8
6
10
Item A
Price
3
5
8
Quantity
9
10
8
Item B
Price
4
5
5
Quantity
9
11
8
Item C
Price
6
7
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Calculate the following figures (using 1998 as the base year).
Nominal GDP 1998 = __________________
Nominal GDP 1999 = __________________
Real GDP 1999 = __________________
Real GDP 2000 = __________________
Nominal growth rate from 1998 to 1999 = ___________________
Real growth rate from 1999 to 2000 = ___________________
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