51) An example of an item that would be excluded from a measure of GDP from the expenditure side is
A) the purchase of windows by an automobile assembly plant.
B) fertilizer purchased by Farmer Jones to increase crop yields.
C) the purchase of a tattoo for Mary Smith’s ankle.
D) government pension payments to a retired person.
E) a new truck purchased by a furniture-delivery company.
52) In national-income accounting, what does the term Ia represent?
A) actual net investment
B) actual net investment minus depreciation
C) actual gross investment (including depreciation)
D) actual inventory investment
E) actual fixed investment minus depreciation
53) When calculating GDP from the expenditure side, how do net exports enter the equation?
A) They are NOT included because they do not represent an expenditure by Canadians.
B) They may or may not be included depending on whether they are for final or intermediate goods.
C) They are included as a separate category.
D) They are included but as part of C, I, or G.
E) They are included only if it is a positive number.
54) Suppose a Canadian firm imports $1000 worth of bananas and sells them for $2000. The effect on Canadian GDP would be
A) to decrease the value of GDP by $3000.
B) to increase the value of GDP by $3000.
C) to increase the value of GDP by $2000.
D) to increase the value of GDP by $1000.
E) no effect on GDP since the bananas were produced outside Canada.
55) When calculating GDP from the expenditure side, which of the following is true of the investment component, Ia?
A) it excludes expansions of existing factories
B) it only includes business fixed investment
C) it includes the transfer of houses between individuals
D) it includes changes in inventories
E) it only includes decumulation of inventories
56) When calculating GDP from the expenditure side, which of the following is true of the government purchases component, Ga?
A) it excludes government investment expenditure
B) it is based on the government’s planned spending
C) it includes employment insurance and employment benefits
D) it excludes transfer payments
E) it only includes federal government expenditures
57) Refer to Table 20-1. What is the value of GDP from the expenditure side?
A) $1982.60
B) $1986.00
C) $2010.00
D) $2285.20
E) $2584.40
58) Refer to Table 20-2. What is the value of GDP, as calculated from the expenditure side?
A) $3936
B) $3904
C) $3866
D) $3784
E) $3708
59) If a firm’s depreciation exceeds its gross investment, then its
A) capital stock will be shrinking.
B) capital stock will be growing.
C) gross investment will be negative.
D) net investment will be positive.
E) depreciation cannot exceed gross investment.
60) In national-income accounting, which of the following transactions by households is considered to be an investment expenditure?
A) the purchase of an iPhone
B) the purchase of a government bond
C) the purchase of a Guaranteed Investment Certificate (GIC)
D) payment for the construction of a custom-built new home
E) the purchase of an imported car
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