Chapter 20: The Measurement of National Income

How does Statistics Canada measure GDP?

By adding the value in dollar terms of all the final goods and services produced domestically

Which is the largest component of GDP in Canada?

Consumption

In the circular flow model, who supplies factors of production in exchange for income?

Households

Which of these is not a shortcoming of GDP as a measure of welfare?

It only counts final goods and services and not intermediate goods.

Which of these terms have approximately the same value when measuring macroeconomic activity?

Production and income

Which measure of GDP represents changes in the quantity of goods and services produced in the economy, holding prices constant?

Real GDP

Which of the following goods and services would be excluded from personal consumption expenditures according to StatsCan?

A new house

Which of these tends to be the final stage of a nation's economic development?

Services

Gross domestic product is best defined as the:

market value of all final goods and services produced in a country during a period of time; usually a year

If Canadians worked sixty-hour work weeks:

the GDP would increase but the well-being of the typical person would not necessarily be higher

The GDP is a measure of the:

the market value of the final goods and services produced within a country in a given time period

The flow of funds from __________ into the financial system makes it possible for government and firms to borrow.

households

The GDP per capita is computed by dividing a country's:

real GDP by its population

National income accounting focuses on the relationship between income and:

real GDP in the short run

Because the focus of long-run economic growth is on the standard of living of the average person, we measure the standard of living in terms of:

real GDP per capita

Real GDP is:

the value of goods and services evaluated at base year prices

Which of the following are not counted as final goods and used in the GDP calculation?

Intermediate goods

Both the CPI and the GDP deflator are measures of the average prices for the economy, yet they differ in several ways. Which of these statements is correct?

The CPI includes goods produced in prior years, as well as imported goods, which the GDP deflator does not.

The total national income actually received by a country's residents is:

smaller than the value of GDP

Which of the following variables is not used to compute GDP from the income side?

consumption

As the value of a country's real GDP increases, the country is likely to (regarding pollution):

devote more resources to pollution reduction

Which of these is a function that the financial system provides for savers and borrowers?

Matching savers and borrowers

In the classical model, when households save:

business investment will offset that savings

Which of the following is included in the economist's definition of investment?

The purchase of new machines, factories, or houses