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Test Bank for Chapter 20 Measuring GDP and Economic Growth [Parkin/Bade, Economics: Canada in the Global Environment, 8e] Verified Solutions9,88 €
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Parkin/Bade, Economics: Canada in the Global Environment, 8e
Chapter 20 Measuring GDP and Economic Growth
20.1 Gross Domestic Product
1) Gross domestic product is
A) the final value of all goods produced in a country in a given time period.
B) the market value of all goods and services produced in a country during a given time period.
C) the market value of all the final goods and services produced in a country during a given time
period.
D) the average value of output produced in a country in a given time period.
E) the market value of all the intermediate goods and services produced in a country during a
given time period.
Answer: C
Diff: 3 Type: MC
Topic: Gross Domestic Product
2) In calculating GDP, economists use the value of final goods and services because
A) by using final goods and services, they avoid double counting.
B) final goods can be exported to other countries.
C) intermediate goods are imported from other countries.
D) GDP is underestimated if intermediate goods are used instead.
E) none of the above.
Answer: A
Diff: 3 Type: MC
Topic: Gross Domestic Product
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.
Answer: C
Diff: 3 Type: MC
Topic: Gross Domestic Product
4) The circular flow diagram illustrates the expenditures made by
A) households only.
B) households and firms only.
C) households and investors only.
D) firms, households, and governments only.
E) households, firms, governments, and the rest of the world.
Answer: E
Diff: 1 Type: MC
Topic: Gross Domestic Product
Parkin/Bade, Economics: Canada in the Global Environment, 8e
5) In the circular flow model,
A) households are sellers of factor services in goods markets.
B) households are buyers of goods and services in the factor markets.
C) firms are sellers of the factors in factor markets.
D) firms are sellers of goods and services in goods markets.
E) firms are buyers of goods and services in final markets.
Answer: D
Diff: 1 Type: MC
Topic: Gross Domestic Product
6) The purchasers in the goods markets are
A) households and government only.
B) households and firms only.
C) households and net exporters only.
D) households, firms, and government only.
E) households, firms, government, and those who import our goods.
Answer: E
Diff: 1 Type: MC
Topic: Gross Domestic Product
7) Of the following items, which one would be considered as investment in the National Income
and Expenditure Accounts?
A) The purchase of a new van by a potter who packs it with his wares and travels to art shows on
weekends.
B) The purchase of 100 shares of Bell Canada stock on the Toronto Stock Exchange.
C) The purchase of a 100-year-old house that was put on the protected historic sites list.
D) The purchase of a Canadian government bond.
E) All of the above.
Answer: A
Diff: 1 Type: MC
Topic: Gross Domestic Product
8) Complete the following sentence. Net exports equals
A) exports divided by imports.
B) exports plus imports.
C) exports minus imports.
D) imports minus exports.
E) foreign borrowing by residents of Canada minus domestic borrowing by nonresidents of
Canada.
Answer: C
Diff: 1 Type: MC
Topic: Gross Domestic Product
Parkin/Bade, Economics: Canada in the Global Environment, 8e
9) Which one of the following is an expenditure flow from households to firms?
A) goods and services
B) factor services
C) payments for goods and services
D) payments for factor services
E) loans
Answer: C
Diff: 1 Type: MC
Topic: Gross Domestic Product
10) Which one of the following is an income flow from firms to households?
A) goods and services
B) factor services
C) payments for goods and services
D) payments for factor services
E) loans
Answer: D
Diff: 1 Type: MC
Topic: Gross Domestic Product
11) Which one of the following flows from firms to households?
A) goods and services
B) factor services
C) payments for goods and services
D) payments for loans
E) loans
Answer: A
Diff: 1 Type: MC
Topic: Gross Domestic Product
12) For the aggregate economy, income equals
A) expenditure, but these are not generally equal to GDP.
B) GDP, but expenditure is generally less than these.
C) expenditure equals GDP.
D) expenditure equals GDP only if there is no government or foreign sectors.
E) expenditure equals GDP only if there is no depreciation.
Answer: C
Diff: 2 Type: MC
Topic: Gross Domestic Product
Source: Study Guide
Parkin/Bade, Economics: Canada in the Global Environment, 8e
13) Which one of the following is false?
A) Y = C + I + G + M - X
B) Y - C - I - G - X + M = 0
C) X - M = Y - C - I - G
D) Y + M = C + I + G + X
E) Y = C + I + G + X - M
Answer: A
Diff: 3 Type: MC
Topic: Gross Domestic Product
14) Which one of the following is true?
A) Y = C + I + G + M - X
B) I + G + X = Y + I + M
C) Y = C + S + I
D) Y + M = C + I + G
E) Y = C + I + G + X - M
Answer: E
Diff: 3 Type: MC
Topic: Gross Domestic Product
15) Which of the following is not correct?
A) Investment is the purchase of new plant, equipment, and buildings and the additions to
inventories.
B) Net investment equals gross investment minus depreciation.
C) Depreciation decreases the value of a firm's capital.
D) Gross investment is the amount by which the value of capital increases.
E) Gross investment is the total amount spent buying new capital and replacing depreciated
capital.
Answer: D
Diff: 2 Type: MC
Topic: Gross Domestic Product
16) Suppose the economy's capital increases over the year. It must be true that
A) net investment was greater than gross investment.
B) net investment was positive.
C) depreciation was greater than net investment.
D) depreciation was greater than gross investment.
E) depreciation is less than zero.
Answer: B
Diff: 2 Type: MC
Topic: Gross Domestic Product
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