Question 1

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

Accepted Answer

A Canadian company produces wheat and sells it to a bakery in the same year.

Question 2

Suppose Canada legalizes a previously illegal $1 billion marijuana industry. What is the immediate effect on Canada's GDP, assuming all other factors remain constant?

Accepted Answer

Canada's GDP will increase by $1 billion.

Question 3

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

Accepted Answer

Nominal GDP can change due to changes in both prices and quantities, while real GDP only reflects changes in quantities.

Question 4

A car is produced in 2022 but sold as a new car in 2023. In which year's GDP is the car included?

Accepted Answer

2022

Question 5

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

Accepted Answer

$$GDP = C + I + G + NX$$

Question 6

If a Canadian citizen works in the United States and sends their income back to Canada, how is this income treated in GDP and GNP calculations?

Accepted Answer

It is included in Canada's GNP but not in GDP.

Question 7

Which of the following best explains why the sale of second-hand goods is excluded from GDP calculations?

Accepted Answer

The sale of second-hand goods is simply a transfer of ownership and does not represent new production.

Question 8

A bakery buys flour for $$1,000, uses it to bake bread, and sells the bread for 2$$,500. What is the value added by the bakery to GDP?

Accepted Answer

$$1,500$$

Question 9

Which of the following is NOT a limitation of using GDP as a measure of national well-being?

Accepted Answer

GDP includes non-monetary measures such as household work.

Question 10

Suppose a country has the following data for a given year: Consumption ($$C$$) = $$500$$ billion, Investment ($$I$$) = $$200$$ billion, Government Expenditure ($$G$$) = $$300$$ billion, Exports = $$100$$ billion, Imports = $$150$$ billion. What is the country's GDP using the expenditure approach?

Accepted Answer

$$950$$ billion

Question 11

Which of the following best describes the relationship between GDP and GNP?

Accepted Answer

$$GNP = GDP -$$ income earned by foreigners within the country $$+$$ income earned by citizens abroad

Question 12

If a country has net exports ($$NX) $$less than zero, what does this indicate about its economy?

Accepted Answer

The country is running a trade deficit and is a net borrower.

Question 13

Which of the following is included in the 'Investment' ($$I) $$component of GDP?

Accepted Answer

A firm building a new factory

Question 14

A Canadian company produces cars in Canada using foreign workers. How is the value of these cars treated in GDP and GNP calculations?

Accepted Answer

Included in Canada's GDP but not in GNP

Question 15

Which of the following best explains why GDP is measured using the value of final goods and services rather than the value of all goods and services produced?

Accepted Answer

To avoid double counting the value of intermediate goods

Question 16

Suppose the government provides a $$500$$ subsidy to a car manufacturer, reducing the final price of a car from $$15,500 to$$ $$15,000. $$How would the removal of this subsidy affect the GDP calculation for the car?

Accepted Answer

GDP would remain unchanged, but the final price of the car would increase by $$500$$

Question 17

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 18

If the price of all goods and services in an economy doubles but the quantity produced remains the same, what happens to nominal GDP and real GDP?

Accepted Answer

Nominal GDP doubles, real GDP remains unchanged

Question 19

Which of the following is an example of a non-monetary activity that is excluded from GDP calculations?

Accepted Answer

A household member cooking dinner for their family

Question 20

A country has the following data: Factor income = $$800$$ billion, Indirect taxes = $$100$$ billion, Subsidies = $$20$$ billion, Depreciation = $$30$$ billion. What is the GDP using the income approach?

Accepted Answer

$$910$$ billion

Measuring the Economy’s Performance: Gross Domestic Product (GDP)

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