Question 1

Real GDP uses

Accepted Answer

Real GDP uses constant prices to account for changes in inflation and therefore accurately measures economic output over time.

Question 2

Angela pays Jordan $800 to build a fence for her house. He spends $600 for wood and nails at Home Depot and builds the fence. These events cause nominal GDP to increase by

Accepted Answer

Nominal GDP measures the value of all final goods and services produced within a country in a given period. In this case, the final service is the construction of the fence, valued at $800, which is the amount Angela pays Jordan. The purchase of wood and nails is an intermediate cost and does not directly affect GDP calculation.

Question 3

When nominal GDP is less than real GDP it means

Accepted Answer

When nominal GDP is less than real GDP, it indicates that prices have fallen since the base year used for calculating real GDP. Real GDP is adjusted for inflation and reflects the value of all goods and services produced at constant prices, whereas nominal GDP is not adjusted for inflation and reflects current prices. Therefore, if nominal GDP is less than real GDP, it suggests a decrease in prices since the base year.

Question 4

When real GDP decreases, what could not have happened?

Accepted Answer

If real GDP decreases, it means the total output of goods and services has declined, so increasing quantities produced could not have happened.

Question 5

Alex paid her brother Andy $50 to buy a bottle of Cherry Whiskey liquor. Andy spends $40 on the liquor and keeps the remaining $10 for himself. These events cause nominal GDP to increase by

Accepted Answer

The nominal GDP increases by the amount spent on the liquor, which is $40, as it reflects the market value of the goods produced and sold. The $10 kept by Andy does not contribute to GDP as it is not spent on goods or services.

Question 6

In 2015, the country of Adanac produced 20 kilos of apples and 30 kilos of bananas. Both fruit were used only for final consumption and nothing else was produced. In 2015, a kilo of apples sold for $5 while a kilo of bananas sold for $10. Adanac's nominal GDP in 2015 was

Accepted Answer

Nominal GDP is calculated by adding up the total value of goods and services produced in an economy in a given year. In this case, the only goods produced were 20 kilos of apples and 30 kilos of bananas, which were sold for $5 per kilo and $10 per kilo respectively. Therefore, the nominal GDP of Adanac in 2015 is:

20 kilos of apples x $5 per kilo = $100
30 kilos of bananas x $10 per kilo = $300

Total nominal GDP = $100 + $300 = $400. Thus, the correct answer is D.

Question 7

Which statement about nominal and real GDP is incorrect?

Accepted Answer

Nominal GDP can increase due to inflation, so a higher nominal GDP does not necessarily indicate positive economic growth.

Question 8

When nominal GDP is greater than real GDP it means

Accepted Answer

Nominal GDP is calculated using current market prices and does not adjust for inflation. Real GDP, on the other hand, is adjusted for inflation by using a base year's prices. Therefore, if nominal GDP is greater than real GDP, it means that prices have risen since the year we use as a standard for constant prices.

Question 9

Which statement about nominal and real GDP is incorrect?

Accepted Answer

Canadian real GDP only includes products and services produced within Canada's borders, regardless of the ownership of the businesses that produce them. Therefore, statement B is incorrect.

Question 10

In 2015, the country of Adanac produced 20 kilos of apples and 30 kilos of bananas. Both fruit were used only for final consumption and nothing else was produced. In 2015, a kilo of apples sold for $10 while a kilo of bananas sold for $5. Adanac's nominal GDP in 2015 was

Accepted Answer

Nominal GDP is calculated by multiplying the quantity of each good produced by its price and summing the results. For Adanac in 2015, this is (20 kilos of apples * $10) + (30 kilos of bananas * $5) = $200 + $150 = $350.

Question 11

Which statement about nominal and real GDP is incorrect?

Accepted Answer

Canadian real GDP includes products and services produced within Canada's borders, regardless of who owns the businesses producing those products and services.

Question 12

Real GDP per person is calculated as

Accepted Answer

Real GDP per person is calculated by taking the real GDP and dividing it by the number of people in the country. This gives a measure of the average economic output per person in the country, adjusted for changes in prices over time. Option A correctly reflects this calculation. Option B has the variables in the wrong order, while option C and D involve using nominal GDP, which does not take into account changes in prices. Option E involves multiplying two variables rather than dividing them, and therefore does not give a measure of output per person.

Question 13

The best measure of a country's ability to meet the material needs of its citizens is

Accepted Answer

Real GDP per person takes into account inflation and provides a measure of economic growth adjusted for changes in prices. This measure is considered a better measure of a country's ability to meet the material needs of its citizens than nominal GDP, which does not adjust for changes in prices.

Question 14

Nominal GDP in Canada includes

Accepted Answer

Nominal GDP in Canada includes purchases by Japanese tourists in Canada of product and services made in Canada, since these transactions occur within Canada's borders and involve the consumption of domestically produced goods and services. None of the other options listed involve the consumption of Canadian-produced goods or services, and therefore would not be included in Canadian nominal GDP.

Question 15

Matthew bought an new iPod Touch from a Canadian retailer for $240. It broke later that year. When he complained, the store gave him a new one but charged him a service fee of $60. These two events caused nominal GDP to increase by

Accepted Answer

Nominal GDP is the sum total of all final goods and services produced in a country in a given period of time at their current market prices. In this case, the purchase of the new iPod Touch for $240 increased nominal GDP by $240 as it is a final good. When the store gave him a new one but charged him a service fee of $60, this also contributed to nominal GDP as it is part of the service sector. Therefore, the total increase in nominal GDP is $240 + $60 = $300.

Question 16

When real GDP increases, what could not have happened?

Accepted Answer

Real GDP measures the value of all goods and services produced within a country's borders, adjusted for price changes. An increase in real GDP implies that the quantity of goods and services produced has increased. Therefore, it is not possible for real GDP to increase if the quantities produced are decreasing.

Question 17

The gross domestic product of a country measures the final value of all products and services produced

Accepted Answer

Gross domestic product (GDP) measures the final value of all products and services produced within a country in a specific period of time, usually a year. B, D, and E are incorrect as they suggest measuring GDP since a specific date or the beginning of the country's production history. C is also incorrect as GDP is not measured per hour, but rather over a longer period of time.

Question 18

The currency in Tinyland is called the Oscar. In 2015, nominal GDP was 600 Oscars. Real GDP was 500 constant Oscars. The population was 10 persons. The best measure of material well-being for 2015 is

Accepted Answer

Real GDP per capita is the best measure of material well-being. Real GDP per capita is calculated by dividing real GDP by the population. In this case, 500 constant Oscars divided by 10 persons gives 50 constant Oscars per person. Therefore, choice C is the correct answer.

Question 19

Which statement about nominal and real GDP is incorrect?

Accepted Answer

Real GDP is a measurement of output (flow), not a stock. Nominal GDP is the measurement of output at current market prices, which is a flow variable.

Question 20

Which event increases Canada's nominal GDP?

Accepted Answer

Nominal GDP measures the value of all goods and services produced within a country's borders in current prices. The purchase of fresh Ontario blueberries by a tourist contributes to Canada's GDP as it is a transaction involving a new product within the country. The other options involve illegal activities, second-hand sales, or theft, which do not contribute to GDP.

Quiz 6: Up Around the Circular Flow: Gdp, Economic Growth, and Business Cycles

Real GDP uses

Angela pays Jordan $800 to build a fence for her house. He spends $600 for wood and nails at Home Depot and builds the fence. These events cause nominal GDP to increase by

When nominal GDP is less than real GDP it means

When real GDP decreases, what could not have happened?

Alex paid her brother Andy $50 to buy a bottle of Cherry Whiskey liquor. Andy spends $40 on the liquor and keeps the remaining $10 for himself. These events cause nominal GDP to increase by

In 2015, the country of Adanac produced 20 kilos of apples and 30 kilos of bananas. Both fruit were used only for final consumption and nothing else was produced. In 2015, a kilo of apples sold for $5 while a kilo of bananas sold for $10. Adanac's nominal GDP in 2015 was

Which statement about nominal and real GDP is incorrect?

When nominal GDP is greater than real GDP it means

Which statement about nominal and real GDP is incorrect?

In 2015, the country of Adanac produced 20 kilos of apples and 30 kilos of bananas. Both fruit were used only for final consumption and nothing else was produced. In 2015, a kilo of apples sold for $10 while a kilo of bananas sold for $5. Adanac's nominal GDP in 2015 was

Which statement about nominal and real GDP is incorrect?

Real GDP per person is calculated as

The best measure of a country's ability to meet the material needs of its citizens is

Nominal GDP in Canada includes

Matthew bought an new iPod Touch from a Canadian retailer for $240. It broke later that year. When he complained, the store gave him a new one but charged him a service fee of $60. These two events caused nominal GDP to increase by

When real GDP increases, what could not have happened?

The gross domestic product of a country measures the final value of all products and services produced

The currency in Tinyland is called the Oscar. In 2015, nominal GDP was 600 Oscars. Real GDP was 500 constant Oscars. The population was 10 persons. The best measure of material well-being for 2015 is

Which statement about nominal and real GDP is incorrect?

Which event increases Canada's nominal GDP?