Q: If nominal GDP in 2022 is $$\8$$,000$$ and real GDP in 2022 (using 2012 as the base year) is $$\$$7,000$$, what is the GDP deflator for 2022?

$$GDP\ deflator = \frac{8,000}{7,000} \times 100 = 114.3$$

Question 1

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

Accepted Answer

The market value of all final goods and services produced within a country during a period of time, typically one year.

Question 2

Why are only final goods and services included in the calculation of GDP?

Accepted Answer

To avoid double-counting the value of goods and services.

Question 3

Suppose a Canadian company produces cars in Mexico and sells them in the United States. How is this production counted in GDP statistics?

Accepted Answer

It is included in Mexican GDP because the production occurs in Mexico.

Question 4

Which of the following transactions would be included in this year's Canadian GDP?

Accepted Answer

A Canadian family purchases a new car manufactured in Ontario this year.

Question 5

Which formula correctly represents the expenditure approach to calculating GDP in macroeconomic models?

Accepted Answer

$$Y = C + I + G + NX$$

Question 6

If nominal GDP in 2022 is $$\8$$,000$$ and real GDP in 2022 (using 2012 as the base year) is $$\$$7,000$$, what is the GDP deflator for 2022?

Accepted Answer

$$GDP\ deflator = \frac{8,000}{7,000} 	imes 100 = 114.3$$

Question 7

Which of the following is NOT a shortcoming of GDP as a measure of well-being?

Accepted Answer

GDP includes the value of household production.

Question 8

A country has the following data for a given year: Compensation of employees: $$\500$ billion, Gross operating surplus: $$\$$250$$ billion, Gross mixed income: $$\100$ billion, Taxes less subsidies: $$\$$80$$ billion, Statistical discrepancy: $$\10$ billion. What is the country's GDP using the income approach?

Accepted Answer

$$\940$ billion

Question 9

Which of the following best explains why the legalization of recreational cannabis in Canada in 2018 affected GDP measurements?

Accepted Answer

Legalization shifted previously unreported economic activity into the formal economy, making it count toward official GDP.

Question 10

If real GDP increases from $$\1$$,000$$ billion to $$\$$1,050$$ billion from one year to the next, but nominal GDP increases from $$\1$$,000$$ billion to $$\$$1,100$$ billion, what can be inferred about the price level?

Accepted Answer

The price level has increased.

Question 11

Which of the following is included in the calculation of gross fixed capital formation in the expenditure approach to GDP?

Accepted Answer

A business purchases new machinery for its factory.

Question 12

Suppose Canada imports more goods and services than it exports in a given year. How does this affect net exports in the GDP calculation?

Accepted Answer

Net exports will be negative, reducing GDP.

Question 13

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

Accepted Answer

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

Question 14

Which of the following is an example of household production that is NOT included in GDP?

Accepted Answer

A parent cooks dinner for their family at home.

Question 15

If the GDP deflator increases from 108.8 to 109.0 between two years, what is the percentage increase in the price level?

Accepted Answer

$$\frac{109.0 - 108.8}{108.8} 	imes 100 = 0.18\%$$

Question 16

Which of the following is a reason why GDP per capita is not a perfect measure of well-being?

Accepted Answer

It does not account for differences in the value of leisure across countries.

Question 17

Which of the following would be considered part of the informal economy and therefore omitted from official GDP statistics?

Accepted Answer

A person is paid cash to paint a neighbor's house and does not report the income.

Question 18

If Statistics Canada finds a statistical discrepancy between the income and expenditure approaches to GDP, how is this discrepancy handled?

Accepted Answer

The discrepancy is split in half, with one half added to the lower estimate and one half subtracted from the higher estimate.

Question 19

Which of the following best describes the business cycle?

Accepted Answer

Alternating periods of economic expansion and economic recession.

Measuring Total Production and Income: GDP and Related Concepts

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