Macroeconomics Quiz

If the size of the underground economy increases over time: a) Real GDP will rise more rapidly than per capita real GDP b) GDP will increasingly tend to understate the level of output through time c) GDP will increasingly tend to overstate the level of output through time d) The accuracy of GDP will be unaffected through time e) Per capita real GDP will rise more rapidly than real GDP

GDP will increasingly tend to understate the level of output through time

GDP can be calculated by adding

Gross investment, government purchases, consumption and net exports

Cost-of living adjustment clauses (COLAs): a) Make the effect of inflation more harmful for some workers b) Apply only to younger workers c) Cause workers to experience significant changes in real income d) Apply only to nonunionized workers e) Minimize the impact of inflation for affected workers

Minimize the impact of inflation for affected workers

The term "final products" refers to: 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

Products to be purchased by ultimate users that are not intended for resale or further processing

The growth of GDP may understate economic well-being if the: a) Distribution of income becomes increasingly unequal b) Quality of products and services improve c) Environment deteriorates because of air pollution d) Population increases e) Amount of leisure decreases

Quality of products and services improve

The value of Canadian imports is: 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

Subtracted from exports when calculating GDP, because imports do not involve production in Canada

What does "value added" refer to?

The difference between the value of a business's output and the value of the resources that it has purchased from others

GDP may be defined as: a) The monetary value of all final goods and services produced within a nation in a given year b) GNP 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

The monetary value of all final goods and services produced within a nation in a given year

Which of the following is an intermediate product? a) The purchase of gasoline for a holiday to Florida b) The purchase of a pizza by a hungry student c) The purchase of a family TV d) The purchase of roller blades by a teacher e) The purchase of pencils by a politician who is writing her memoirs

The purchase of pencils by a politician who is writing her memoirs

BGF Corporation buys $100,000 of sand, rock, and cement to produce ready-to-mix concrete. It sells 10,000 cubic meters of concrete at $30 per cubic meter. The value added by BGF corporation is:

$200,000

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:

$30

Which of the following is a final product? a) Diesel fuel bought for a delivery truck b) A haircut c) Fertilizer purchased by a farmer supplier d) Prius windows purchased by a Toyota assembly plant e) Expenditures on stationery by an insurance company

A haircut

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

Add exports but subtract imports in calculating GDP

Which of the following is least likely to be hurt by unanticipated inflation? a) A disabled labourer who is living off accumulated savings b) An owner of a small business with high debts c) A secretary d) A retired steelworker with a partially indexed pension e) An unskilled worker who makes an unindexed wage

An unskilled worker who makes an unindexed wage

How do you calculate inflation with the consumer price index?

CPI 2 - CPI 1 / CPI 1 X 100

National income accountants can avoid double counting by:

Counting only final products

Real GDP measures: a) Current output in current dollars b) Current output in constant dollars from a given year c) GDP per person in current dollars d) GDP per person in constant dollars form a given year e) Current output adjusted to take account of price differences between countries

Current output in constant dollars from a given year

During the period of unanticipated deflation: a) Debtors gain, because they repay their debts with dollars of diminished value b) People with partially indexed incomes suffer c) Income is redistributed away from savers d) People on unindexed incomes are hurt e) Debtors lose, because they repay their debts with dollars of greater value

Debtors lose, because they repay their debts with dollars of greater value

If the consumer price index falls from 120 to 116 in a particular year, the economy has experienced:

Deflation of 3.33%

Macroeconomics approaches the study of economics from the viewpoint of: a) Individual producers b) Governmental Units c) Specific product and resource markets d) Individual consumers e) Entire economic sectors

Entire economic sectors

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

Excluded from GDP because no money changes hands

Net exports may be defined as: a) The portion of domestic products sent to other countries b) Exports plus imports c) Exports minus imports d) Imports minus exports e) Exports minus net investment income to the rest of the world

Exports minus imports

GDP includes: a) Neither intermediate nor final products b) Both intermediate and final products c) Intermediate, but not final products d) Final, but not intermediate products e) All natural resources

Final, but not intermediate products