1) Total value added in an economy is equal to the value of
A) all final goods produced.
B) all final and intermediate goods produced.
C) all inputs and outputs in the economy.
D) all profits of all firms in the economy.
E) the sum of the value of primary, intermediate and final goods.
2) Suppose national accounting was done by adding up the market values of all outputs of all firms. This approach would
A) accurately reflect the value of production in the economy.
B) obtain gross domestic product.
C) obtain gross national product.
D) underestimate the value of production in the economy.
E) overestimate the value of production in the economy.
3) In national-income accounting, "double counting"
A) occurs when the value of some output is omitted in the calculation of national income.
B) means that pre-tax and after-tax GDP will be different.
C) occurs when the value of output is counted more than once in the calculation of national income.
D) means that consumption will always be less than GDP.
E) leads to an underestimation of GDP in any given period.
4) All goods and services produced by one firm but used as inputs into a further stage of production are called
A) value added.
B) intermediate goods.
C) national income goods.
D) final goods.
E) consumption goods.
5) In national-income accounting, the value of intermediate products
A) should always be counted as part of GDP in the expenditure approach.
B) should be subtracted from the value of final goods in determining a firm's total value added.
C) should be added to the value of other inputs in determining a firm's contribution to GDP.
D) must equal the value added by the firm.
E) is counted as factor income in the calculation of GDP from the income side.
6) 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 $1200 worth of shoes. The value added from these transactions is
A) $ 800.
B) $1000.
C) $1200.
D) $2300.
E) $2500.
7) 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 $1200 worth of shoes. The value added by the tanner is
A) $0.
B) $300.
C) $400.
D) $500.
E) $1200.
8) Suppose a Canadian firm imports $5000 worth of frisbees from China and sells them for $10 000. The effect on GDP would be
A) to decrease the value of GDP by $15 000.
B) to increase the value of GDP by $15 000.
C) to increase the value of GDP by $10 000.
D) to increase the value of GDP by $5000.
E) No effect on GDP since the frisbees were produced outside of Canada.
9) Consider a firm producing skateboards in one factory. In determining this firm's value added, we would start with its total revenue and subtract the cost of (among other things)
1) salaries to the firm's cleaning staff;
2) electricity used in the factory;
3) the wood used for the base of the skateboards.
A) 1 and 2
B) 2 and 3
C) 1 and 3
D) 1 only
E) 3 only
10) In Canada, the measurement of national income and national product is conducted by
A) the Department of Finance.
B) the Bank of Canada.
C) the Treasury Board.
D) statisticians in universities.
E) Statistics Canada.
