Question 1

Which of the following best defines Gross Domestic Product (GDP)?

Accepted Answer

The market value of all final goods and services produced within a country in a given time period.

Question 2

Which equation correctly represents the expenditure approach to calculating GDP?

Accepted Answer

$$GDP = C + I + G + (X - M)$$

Question 3

If a country’s nominal GDP in 2023 is $$462$$ million and its real GDP in 2023 (using 2012 prices) is $$300$$ million, what does this indicate?

Accepted Answer

There has been inflation between 2012 and 2023.

Question 4

Which of the following is NOT included in the calculation of GDP?

Accepted Answer

Household production such as home-cooked meals

Question 5

Why is GDP referred to as 'gross' domestic product?

Accepted Answer

Because it is measured before deducting depreciation of capital.

Question 6

Which of the following best describes the difference between nominal GDP and real GDP?

Accepted Answer

Nominal GDP is measured at current prices, while real GDP is measured at base-year prices.

Question 7

Suppose in 2023, the following data is given: $$C = 1,579$$ billion, $$I = 541$$ billion, $$G = 706$$ billion, $$X = 500$$ billion, $$M = 513$$ billion. What is the value of GDP using the expenditure approach?

Accepted Answer

Question 8

Which of the following is a limitation of using real GDP as a measure of economic well-being?

Accepted Answer

It excludes the value of leisure time and environmental quality.

Question 9

If gross investment in a year is $$500$$ million and depreciation is $$120$$ million, what is net investment?

Accepted Answer

$$380$$ million

Question 10

Which of the following best describes the business cycle?

Accepted Answer

A periodic but irregular up-and-down movement of total production and other measures of economic activity.

Question 11

In the income approach to measuring GDP, which of the following must be added to factor incomes to arrive at GDP at basic prices?

Accepted Answer

Indirect taxes less subsidies

Question 12

If real GDP per person increases over time, what does this most likely indicate?

Accepted Answer

The average standard of living is rising.

Question 13

Which of the following is an example of an expenditure that would be included in the 'Investment' component of GDP?

Accepted Answer

A firm buying new machinery for its factory.

Question 14

Which of the following would cause GDP to increase, all else equal?

Accepted Answer

An increase in exports.

Question 15

If the value of exports is $$200$$ billion and the value of imports is $$250$$ billion, what is the value of net exports?

Accepted Answer

$$-50$$ billion

Question 16

Which of the following is true about chained-dollar real GDP?

Accepted Answer

It values production at prices of adjacent years and averages the growth rates.

Question 17

Which of the following transactions would be counted in Canada’s GDP?

Accepted Answer

A Canadian household pays for a haircut at a local salon.

Question 18

If real GDP in 2018 is $$120$$ million and the growth rate in 2019 is $$8\%$$, what is real GDP in 2019?

Accepted Answer

$$130$$ million

Question 19

Which of the following is a turning point in the business cycle?

Accepted Answer

Peak

Question 20

Which of the following is a reason why GDP at basic prices may not equal GDP at market prices?

Accepted Answer

The existence of indirect taxes and subsidies.

Monitoring the Value of Production: GDP (Gross Domestic Product)

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