Question 4: (10 points)

a) Define GDP.

b) In Canada, many children receive day-care from commercial providers. In parts of Africa, day-care commercial providers are often unknown as children are almost all cared for by relatives. How would this difference affect comparisons of GDP per person?

c) Explain why the HDI might be better than real GDP as a measure of economic welfare.

d) Suppose that Canadian mining companies purchase German-made ore trucks at a reduced price. By itself what will this do to the GDP deflator and the consumer price index?

Question 8: (10 points)

a) What is the consumer price index used for?

b) How does a rise in consumer price index affect a typical family?

c) What does the "substitution bias" in the consumer price index refer to? d) What is difference between the GDP deflator and the consumer price index?