Lec3 iC Questions

Question 1

Nominal GDP in Canada in 2023 was $2,933 billion, while in 2022, it was $2,850 billion. What was the growth rate of nominal GDP in Canada in 2023?
(Answer as a percentage to 1 decimal point)

Answer 1

Growth Rate = ((GDP in 2023 - GDP in 2022)/(GDP in 2022)) X 100
Growth Rate = (2,933 - 2,850)/2,850) X 100
Growth Rate = 2.9%

Question 2

Which of the following counts positively when measuring GDP from the expenditure side?

a) A household purchase of corporate stock
b) An increase in the value of corporate stock held by a household
c) A decrease in a company’s inventory
d) The replacement of a broken delivery vehicle for a company

Answer 2

d) The replacement of a broken delivery vehicle for a company

Question 3

A Canadian buys a new car produced in South Korea. What is the impact of this purchase on Canadian GDP?

a) An increase in Canadian GDP
b) No change in Canadian GDP
c) A decrease in Canadian GDP
d) None of the above

Answer 3

b) No change in Canadian GDP

Question 4

A clothing company imports $10,000 in material from Vietnam, spends $5,000 in Canada finishing the product, and sells the final product for $20,000. What is the overall impact of the company on Canadian GDP?
(Answer to the nearest dollar)

Answer 4

Final Sale Value = $20,000
Imported Materials = $10,000 (subtracted from GDP)
Value added in Canada = Final Sale Value - Imports
($5,000 isn’t considered because it is not counted in the final sale)

$20,000 - $10,000
= $10,000

Question 5

Which of the following would lead to measured GDP overstating average household well-being?

a) Negative effects of pollution are ignored
b) Home production of goods is not included
c) The sale of illegal goods is not included
d) Inequality in the distribution of income is ignored

Answer 5

a) Negative effects of pollution are ignored
d) Inequality in the distribution of income is ignored

Question 6

An economy produces 100 cars worth $25,000 each and 1,000 computers worth $1,000 each. What is the nominal GDP of this economy?
(Answer to the nearest dollar)

Answer 6

(100 X 25,000) + (1,000 X 1,000) = $3,500,000

Question 7

In one year, an economy produces 100 cars worth $25,000 each and 1,000 computers worth $1,000 each. In the next year, the economy produces 120 cars that now sell for $30,000 each and 1,000 computers that sell for $800 each. What is the growth rate of nominal GDP for this economy?
(Answer to 1 decimal point)

Answer 7

Growth Rate = ((GDP in Y2 - GDP in Y1)/(GDP in Y1)) X 100

Y1: (100 X 25,000) + (1,000 X 1,000) = $3,500,000
Y2: (120 X 30,000) + (1,000 X 800) = $4,400,000

GR = ((4,400,000 - 3,500,000) / 3,500,000) X 100
GR = 25.7%

Question 8

In one year, an economy produces 100 cars worth $25,000 each and 1,000 computers worth $1,000 each. In the next year, the economy produces 120 cars that now sell for $30,000 each and 1,000 computers that sell for $800 each. What is the growth rate of real GDP for this economy?
(Answer to 1 decimal point)

Answer 8

Growth Rate = ((Real GDP in Y2 - Real GDP in Y1)/(Real GDP in Y1)) X 100

Average Price (Car) = (25,000 + 30,000)/2
= $27,500

Average Price (Computer) = (1,000 + 800)/2
= $900

Y1: (100 X 27,500) + (1,000 X 900) = $3,650,000
Y2: (120 X 27,500) + (1,000 X 900) = $4,200,000

GR = ((4,200,000 - 3,650,000) / 3,650,000) X 100
GR = 15.1%

Question 9

Real GDP (measured in 2017 dollars) in Canada in 2022 was $2,349 billion, while in 2023, it was $2,385 billion. What was the growth rate of real GDP in Canada in 2023?
(Answer to 1 decimal point)

Answer 9

Growth Rate = ((GDP in 2023 - GDP in 2022)/(GDP in 2022)) X 100
Growth Rate = ((2,385 - 2,349)/2,349)X100
Growth Rate = 1.5%

Question 10

Which of the following is NOT included when measuring GDP in Canada from the expenditure side?

a) Government pays salaries of teachers in public school
b) A Canadian buys 1,000 shares in a Canadian company
c) A visitor from England pays for a hotel room
d) An American company buys farm equipment produced in Canada
e) None of the above (all of these are included in GDP)

Answer 10

b) A Canadian buys 1,000 shares in a Canadian company

Question 11

If an economy has a growth rate of nominal GDP of 6.4% and prices have increased by 3.8%, what is the growth rate of real GDP?
(Answer to 1 decimal point)

Answer 11

%Δ in Real GDP = %Δ in Nominal GDP - %Δ in prices

= 6.4% - 3.8%
= 2.6%