Question 1

Which of the following transactions would be included in the calculation of Canada's GDP for the current year?

Accepted Answer

A Canadian bakery sells $200 worth of bread to local consumers.

Question 2

Suppose a Canadian farmer imports $$1 in seeds, sells 5 in $$wheat to a baker, the baker sells 10 loaves to a grocer for $$3 each, and the grocer sells 10 loaves to consumers for 5 $$each. What is the total contribution to GDP from these transactions?

Accepted Answer

$50

Question 3

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

Accepted Answer

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

Question 4

If the GDP deflator is calculated as $$ \frac{	ext{Nominal GDP}}{	ext{Real GDP}} 	imes 100 $$, what does a deflator value greater than 100 indicate?

Accepted Answer

Prices have increased since the base year.

Question 5

Which of the following is NOT included in the expenditure approach to calculating GDP?

Accepted Answer

Government transfer payments

Question 6

A Canadian company produces a car in 2017 and sells it to a Canadian dealer for $$28,000. The dealer sells the car to a consumer in 2018 for 31$$,000. What is the contribution to GDP in 2017 and 2018, respectively?

Accepted Answer

$$28,000 in 2017; 3$$,000 in 2018

Question 7

Which of the following best explains why depreciation is added when calculating GDP using the income approach?

Accepted Answer

Depreciation represents the loss in value of physical assets, which is income retained by owners but not counted as profits.

Question 8

Which of the following is an example of an intermediate good?

Accepted Answer

Wheat sold by a farmer to a baker for bread production

Question 9

Suppose a Toronto Apple store receives a made-in-China iPad for $$400 at the border in 2017 and sells it for 600 in 2018. $$What is the contribution to Canadian GDP in 2018?

Accepted Answer

$200

Question 10

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

Accepted Answer

GDP ignores the value of household production and the underground economy.

Question 11

Which of the following would be counted as part of investment in the expenditure approach to GDP?

Accepted Answer

A firm purchases new machinery for its factory.

Question 12

If a Canadian resident works abroad and sends income back to Canada, how is this income treated in GDP and GNP calculations?

Accepted Answer

It is included in GNP but not in GDP.

Question 13

Which of the following best describes frictional unemployment?

Accepted Answer

Unemployment that results from people voluntarily changing jobs or entering the workforce

Question 14

A country has a nominal GDP of $$1,000 billion and a real GDP of 800 $$billion. What is the GDP deflator?

Accepted Answer

$$ \frac{1,000}{800} 	imes 100 = 125 $$

Question 15

Which of the following is NOT a problem with using GDP as a measure of wealth created?

Accepted Answer

GDP includes the value of all final goods and services produced.

Question 16

Which of the following would be considered structural unemployment?

Accepted Answer

A worker loses their job because their skills are no longer in demand due to technological change.

Question 17

If a government builds a new highway, how is this recorded in the GDP calculation?

Accepted Answer

As government investment

Question 18

Which of the following best describes the value-added approach to calculating GDP?

Accepted Answer

Summing the value added by all domestic firms, where value added is sales minus purchases of intermediate goods

Question 19

Which of the following is an example of cyclical unemployment?

Accepted Answer

A factory worker is laid off due to a downturn in the economy.

Question 20

Which of the following is a reason why the unemployment rate may understate the true level of unemployment?

Accepted Answer

It ignores discouraged workers who have stopped looking for work.

GDP: Measuring Total Production and Income & Unemployment

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