Exam
Name___________________________________
1) Suppose national accounting was done by adding up the market values of all outputs of all firms. This
approach would
A) underestimate the value of production in the economy.
B) accurately reflect the value of production in the economy.
C) overestimate the value of production in the economy.
D) obtain gross national product.
E) obtain gross domestic product.
2) In Shoetown, a rancher takes $0 worth of inputs and produces animal skins, which he sells to the tanner for
$400. The tanner then sells leather to the shoemaker for $700, and the shoemaker then sells $1 200 worth of
shoes. The value added by the tanner is
A) $400.
B) $0.
C) $1200.
D) $300.
E) $500.
3) The change in the countryʹs capital stock during a year is equal to
A) capital consumption allowance.
B) net investment.
C) gross investment.
D) gross fixed investment.
E) net change in inventories plus capital consumption allowance.
4) Suppose that in 2000, Canada Cars Corporation produced $20 million worth of cars and trucks but was able to
sell only $16 million worth. Is the remaining $4 million increase in inventories part of GDP for 2000?
1. Yes, since changes in inventories are part of consumption expenditures.
2. Yes, since they are part of the economyʹs output in 2000.
3. Yes, since changes in inventories are part of actual investment.
E) both 2 and 3
A) 1 only
B) 2 only
C) 3 only
D) both 1 and 2
The table below shows the total output and prices for an economy that produces only two goods, potatoes and oil. Data is provided for the
years 1998 and 2008.
Quantities Produced Potatoes
Oil
(kilograms) (barrels)
1998
2008
1000
1100
50
65
Prices Potatoes
Oil
($/kilogram)
($/barrel)
4
6
55
60
TABLE 20-4
5) Refer to Table 20-4. What is the real GDP for 1998 if 2008 is the base year?
A) $10 500
B) $6750
C) $9000
D) $7975
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E) $20 100
Answer Key
Testname: SAMPLE QUESTIONS_CHAP20
1) C
Topic: 20.1. national output and value added
2) D
Topic: 20.1. national output and value added
3) B
Topic: 20.2a. GDP from the expenditure side
4) E
Topic: 20.2a. GDP from the expenditure side
5) C
Topic: 20.3b. real/nominal GDP and the GDP deflator
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Exam
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