What does the simple circular-flow diagram illustrate?

Question 1 options:

a)

that expenditure generates income so that income and the value of production are equal

b)

that the economy's income exceeds its expenditure

c)

that the expenditure of an economy exceeds its income

d)

that money "flows" from households to firms and not the other way around

Question 2(1 point)

How is GDP computed?

Question 2 options:

a)

Add up the quantities of all final goods and services.

b)

Add up the cost of producing final goods and services.

c)

Use weights determined by a survey regarding how much people value different sorts of goods and services to compute GDP as a weighted average.

d)

Add up the market values of all final goods and services produced within a country in a given period of time.

Question 3(1 point)

Over the past few decades, Canadians have chosen to cook less at home and eat more at restaurants. How has this practice affected GDP?

Question 3 options:

a)

It has increased measured GDP.

b)

It has reduced measured GDP.

c)

It has not affected measured GDP.

d)

It has had an ambiguous effect on GDP.

Question 4(1 point)

How is Canadian GNP calculated from Canadian GDP?

Question 4 options:

a)

by including income earned by foreigners in Canada and excluding income earned by Canadian citizens abroad

b)

by including income earned by Canadian citizens abroad and excluding income earned by foreigners in Canada

c)

by including income earned by foreigners in Canada

d)

by excluding income earned by Canadian citizens abroad

Question 5(1 point)

A German citizen buys an automobile produced in Canada by a Japanese company. What happens as a result?

Question 5 options:

a)

Canadian net exports increase, Canadian GNP and GDP are unaffected, Japanese GNP increases, German net exports decrease, and German GNP and GDP are unaffected.

b)

Canadian net exports, GNP, and GDP increase; Japanese GDP increases; German net exports decrease; and German GDP is unaffected.

c)

Canadian net exports and GDP increase, Japanese GNP increases, German net exports decrease, and German GDP and GNP are unaffected.

d)

Canadian net exports, GNP, and GDP are unaffected; Japanese GNP increases; German net exports decrease; and German GDP and GNP decrease.