$$\frac{30 \times 2}{4} = 15$$ hamburgers

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 in a given period of time.

Question 2

Suppose a Canadian company produces cars in Canada and sells them to the United States. How is this transaction reflected in Canada's GDP?

Accepted Answer

It increases net exports and GDP.

Question 3

Which of the following transactions would NOT be included in the calculation of current GDP?

Accepted Answer

A consumer purchases a used car from a neighbor.

Question 4

If the price of a hot dog is $$2 and the price of a hamburger is 4$$, then 30 hot dogs contribute as much to GDP as how many hamburgers?

Accepted Answer

$$\frac{30 	imes 2}{4} = 15$$ hamburgers

Question 5

Which of the following is the correct formula for GDP using the expenditure approach?

Accepted Answer

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

Question 6

A Canadian buys a pair of shoes made in Italy. How do the Canadian national income accounts treat this transaction?

Accepted Answer

Net exports fall, while GDP does not change.

Question 7

Which of the following is the largest component of GDP in most economies?

Accepted Answer

Consumption

Question 8

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

Accepted Answer

A tire sold to a car manufacturer for use in a new car.

Question 9

A Canadian university student moves to Japan to teach English after graduation. Her salary is included in:

Accepted Answer

Only in Japan's GDP.

Question 10

Which of the following best explains why GDP is considered the best single measure of a society's economic well-being?

Accepted Answer

It measures the market value of all final goods and services produced, reflecting both income and expenditure.

Question 11

Which of the following would be counted as investment in the calculation of GDP?

Accepted Answer

A business purchases new machinery for its factory.

Question 12

If a firm produces a good in December but does not sell it until January, in which period is the good counted in GDP?

Accepted Answer

In December, when it is produced.

Question 13

Which of the following is NOT included in the calculation of GDP using the income approach?

Accepted Answer

Transfer payments such as unemployment benefits.

Question 14

A government pays salaries to public school teachers. In the calculation of GDP, this is included as:

Accepted Answer

Government purchases

Question 15

Which of the following best describes the circular-flow diagram in macroeconomics?

Accepted Answer

It shows the flow of goods and services and the flow of money between households and firms.

Question 16

If a Canadian firm buys a new computer from a local manufacturer to use in its business, how is this transaction reflected in GDP?

Accepted Answer

Investment increases, and GDP increases.

Question 17

Which of the following is an example of a government purchase included in GDP?

Accepted Answer

The government builds a new highway.

Question 18

Suppose Debbie spends $200 to buy her husband dinner at the finest restaurant in Toronto. How does this affect GDP and its components?

Accepted Answer

Consumption and GDP both rise by $200.

Question 19

Which of the following best explains why used goods are not included in current GDP?

Accepted Answer

They were already counted in GDP when they were first produced.

Question 20

If a Canadian citizen owns a factory in Haiti, the value of the factory's production is included in:

Accepted Answer

Haiti's GDP.

Measuring a Nation's Income: Gross Domestic Product (GDP) and Its Components

Study Guide - Practice Questions