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ECON 1010 Study Guide - Midterm Guide: Aggregate Supply, Severance Package, Tax RateExam

Course Code
ECON 1010
Study Guide

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Name: Safa Rafi
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers
the question.
1) The circular flow diagram illustrates the expenditures made by
A) firms and households.
B) households, firms, governments and the rest of the world.
C) f actor markets, households and investors.
D) g oods markets, financial markets factor markets and export markets.
E) s avings, income tax, and exporters.
2) I n which of the following situations is the rest of the world's savings being used to finance
investment in Canada?
A) Supply exceeds demand.
B) I nvestment exceeds household savings.
C) Investment exceeds national savings..
D) N et taxes exceed national savings.
E) I mports exceed exports.
3) S tock and bond sales are not included in GDP because they
A) r epresent corporate production.
B) r epresent indebtedness.
C) a re monetary and, therefore, not real.
D) do not represent goods and services produced.
E) d o not occur in the year in which the production represented by them takes place.

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4) A hypothetical economy produced four final goods during the year: plates, TVs, bicycles,
and computers. Forty plates were produced and sold for $10 each. Five TVs were produced and
sold for $300 each. Fifty bicycles were produced and sold for $100 each. Three computers were
produced and sold for $750 each. With this information, one could determine
A) n et domestic product for this economy.
B) w hether resources had been fully employed in this economy.
C) n et investment for this economy.
D) g ross investment for this economy.
E) total income for this economy.
Use the table below to answer the following question(s).
Table 20.1 Data From Eastland
Wages, salaries, and supplementary labour income: 800
Farm income: 80
Government expenditures on goods and services: 240
Capital consumption: 240
Gross private domestic investment: 400
Personal income taxes net of transfer payments: 140
Corporate profits: 80
Indirect taxes: 120
Net exports: 80
Consumption expenditures: 640
Interest and miscellaneous investment income: 100
5) F rom the information given in Table 20.1, determine which one of the following figures
represents gross domestic product.
A) $ 1,290. B) $ 1,100. C) $ 1,280. D) $ 1,360. E) $ 1,120.

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6) W hich one of the following statements concerning GDP is false?
A) Intermediate goods and final goods are both included when GDP is calculated.
B) O nly goods and services produced during the given time period are included.
C) N ominal GDP corrected for the rate of inflation is real GDP.
D) G DP measures only current production.
E) G DP can be calculated using current prices or base year prices.
7) W hich one of the following people would be counted as unemployed in Canada?
A) C hristos has been laid off from his job a month ago, and has not been looking for a new
job as he is waiting for a severance package from his former employer.
B) Veena is not working, but she is looking for a full-time job.
C) S haron is a college student with a job.
D) B enoit who was laid off when his firm closed down 2 months ago and has not been looking
for work as he is going back to school.
E) K athy has stopped looking for work since she was unable to find a suitable job during a
one-month search.
8) C ounting involuntary part-time workers as unemployed would
A) r aise the natural rate of unemployment.
B) n ot change the actual unemployment rate.
C) r aise the full employment rate.
D) raise the measured unemployment rate.
E) lower the measured unemployment rate.
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