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Chapter 20

# ECON 1010 Chapter Notes - Chapter 20: Net Domestic Product, Final Good, Bell Canada

Department
Economics
Course Code
ECON 1010
Professor
John Paschakis
Chapter
20

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University of Lethbridge — Department of Economics
ECON 1012 — Introduction to Microeconomics
Instructor: Michael G. Lanyi
Chapter 20 — Measuring GDP
1)
Gross domestic product is
A)
the market value of all the intermediate goods and services produced in a country during a given time
period.
B)
the final value of all goods produced in a country in a given time period.
C)
the market value of all goods and services produced in a country during a given time period.
D)
E)
the market value of all the final goods and services produced in a country during a given time period.
Topic:
Gross Domestic Product
2)
In calculating GDP, economists use the value of final goods and services because
A)
final goods can be exported to other countries.
B)
by using final goods and services, they avoid double counting.
C)
intermediate goods are imported from other countries.
D)
GDP is underestimated if intermediate goods are used instead.
E)
none of the above.
Topic:
Gross Domestic Product
3)
Which of the following statements is true?
A)
Final
goods and services produced in Canada by foreigners are part of the foreign country's GDP.
B)
Final
goods and services produced in Canada by foreigners are part of Canada's GDP.
C)
Final
goods and services produced in Canada by foreigners are exports.
D)
Final
goods and services produced in Canada by foreigners are imports.
E)
Final
Topic:
Gross Domestic Product
4)
The circular flow diagram illustrates the expenditures made by
A)
households and investors only.
B)
households, firms, governments, and the rest of the world.
C)
households and firms only.
D)
firms, households, and governments only.
E)
households only.
Topic:
Gross Domestic Product
5)
In the circular flow model,
A)
firms are sellers of goods and services in goods markets.
B)
households are sellers of factor services in goods markets.
C)
firms are sellers of the factors in factor markets.
D)
households are buyers of goods and services in the factor markets.
E)
firms are buyers of goods and services in final markets.
Topic:
Gross Domestic Product
1

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6)
The circular flow model is used to
A)
show the real flows and money flows between different sectors of the economy.
B)
explain how the prices of factors are determined.
C)
show how nominal GDP is distinct from real GDP.
D)
show the effects of inflation in a simple economy.
E)
show the stocks of various sectors of the economy.
Topic:
Gross Domestic Product
7)
The purchasers in the goods and services market are
A)
households and firms only.
B)
households and government only.
C)
households, firms, government, and those who import our goods.
D)
households and net exporters only.
E)
households, firms, and government only.
Topic:
Gross Domestic Product
8)
Of the following items, which one would be considered as investment in the
National Income and Expenditure
Accounts?
A)
T
he purchase of a Canadian government bond.
B)
T
he purchase of 100 shares of Bell Canada stock on the Toronto Stock Exchange.
C)
T
he purchase of a new van by a potter who packs it with his wares and travels to art shows on weekends.
D)
T
he purchase of a 100
-
year
-
old house that was put on the protected historic sites list.
E)
A
ll of the above.
Topic:
Gross Domestic Product
9)
Complete the following sentence. Net exports equals
A)
exports plus imports.
B)
exports minus imports.
C)
imports minus exports.
D)
exports divided by imports.
E)
foreign borrowing by residents of Canada minus domestic borrowing by nonresidents of Canada.
Topic:
Gross Domestic Product
10)
In the
National Income and Expenditure Accounts
, government expenditure refers to spending on goods and
services by
A)
federal and provincial governments only.
B)
federal, provincial, and local governments.
C)
the federal government and local governments only. Provincial government expenditures are included in
provincial GDP calculations.
D)
the federal government only. Provincial and local government expenditures are included in provincial
GDP calculations.
E)
provincial and local governments only.
Topic:
Gross Domestic Product
2

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11)
Which one of the following is an expenditure flow from households to firms?
A)
G
oods and services.
B)
L
oans.
C)
P
ayments for goods and services.
D)
P
ayments for factor services.
E)
F
actor services.
Topic:
Gross Domestic Product
12)
Which one of the following is an income flow from firms to households?
A)
P
ayments for factor services.
B)
G
oods and services.
C)
L
oans.
D)
F
actor services.
E)
P
ayments for goods and services.
Topic:
Gross Domestic Product
13)
Which one of the following flows from firms to households?
A)
Factor
services.
B)
L
oans.
C)
P
ayments for goods and services.
D)
P
ayments for loans.
E)
G
oods and services.
Topic:
Gross Domestic Product
14)
For the aggregate economy, income equals
A)
expenditure, but these are not generally equal to GDP.
B)
expenditure equals GDP only if there is no government or foreign sectors.
C)
GDP, but expenditure is generally less than these.
D)
expenditure equals GDP only if there is no depreciation.
E)
expenditure equals GDP.
Topic:
Gross Domestic Product
15)
Which one of the following is
false
?
A)
X
-
M
=
Y
-
C
-
I
-
G
B)
Y
-
C
-
I
-
G
-
X
+
M
=
0
C)
Y
=
C
+
I
+
G
+
X
-
M
D)
Y
+
M
=
C
+
I
+
G
+
X
E)
Y
=
C
+
I
+
G
+
M
-
X
Topic:
Gross Domestic Product
16)
Which one of the following is
true
?
A)
Y
=
C
+
S
+
I
B)
Y
=
C
+
I
+
G
+
X
-
M
C)
I
+
G
+
X
=
Y
+
I
+
M
D)
Y
=
C
+
I
+
G
+
M
-
X
E)
Y
+
M
=
C
+
I
+
G
Topic:
Gross Domestic Product
3

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