Macroecon chapter 5

Question 1

Approaches to measure GDP (3)

Answer 1

• Value added
• Expenditure
• Income

Question 2

Value added approach formula

Answer 2

GDP = Y = ∈VA of industries in the country during 1 year = TR-TC

Question 3

Expenditure approach formula

Answer 3

Y = C+I+G+(X-iM)

Question 4

Main contributor to Canadian GDP

Answer 4

Bank/finance industry

Question 5

Difference between GDP and GNP

Answer 5

GDP: based on geography
GNP: based on nationality

Question 6

Income approach

Answer 6

GDP = Y = ∈ Income of production factor = factor of income (wages-interest- Business profit) + indirect taxes - subsidies + depreciation

Question 7

TR meaning

Answer 7

Total revenue sale of final good

Question 8

TC meaning

Answer 8

Total cost of intermediate good

Question 9

Net income formula

Answer 9

Gross income - depreciation

Question 10

GDP deflator formula

Answer 10

(nominal GDP / real GDP) x 100

Question 11

Meaning of change in GDP deflator

Answer 11

Price change of GDP items (C, I, Nx)

Question 12

Difference between CPI and GDP deflator

Answer 12

CPI: Price change of consumer good
GDP deflator: Price change on goods produced

Question 13

Is the usage of per capita as an indicator of living standard efficient?

Answer 13

No

Question 14

Is the contribution of GDP measurable?

Answer 14

Yes

Question 15

Double counting

Answer 15

Error in estimating GDP by adding all sales of all firms

Question 16

Capital Stock

Answer 16

The economy’s total quantity of capital goods

Question 17

Fixed investment

Answer 17

Creation of new capital goods

Question 18

GDP deflator

Answer 18

Changes in prices for all the goods and services produced in an economy

Question 19

Outside the market economic activities (5)

Answer 19

• Illegal activities
• Underground economy
• Home production, Volunteering, Leisure
• Free products in the digital world
• Economic “Bads”