The existence of which one of the following is a reason for the fact that GDP gives an underestimated value of total output in the economy?

a) depreciation

b) market activities

c) underground economy

d) environmental problems

e) pollution

Which one of the following people would be counted as unemployed in Canada?

a) Christos was laid off from his job a month ago and has not been looking for a new job, as he is waiting for a severance package from his former employer

b) Veena is not working, but she is looking for a full-time job.

c) Kathy has stopped looking for work since she was unable to find a suitable job during a one-month search.

d) Benoit was laid off when his firm closed down two months ago and has not been looking for work, as he is going back to school.

e) Sharon is a university student with a job.

The three types of unemployment are

a) frictional, structural, and cyclical.

b) frictional, structural, and involuntary.

c) voluntary, involuntary, and cyclical.

d) voluntary, involuntary, and natural.

e) cyclical, maternity leave, and paternity leave.

The unemployment rate is defined as

a) the number of unemployed people divided by the number of employed people.

b) 100 minus the employment rate.

c) the number of unemployed people divided by the sum of the people employed and the people unemployed.

d) the number of unemployed people divided by the number of people in the country.

e) the number of unemployed people divided by the working-age population.

The cost of producing aspirin increases at the same time as doctors discover that taking one aspirin per day reduces the risk of heart attacks. As a result, the

a) supply of aspirin decreases by more than the demand for aspirin increases.

b) equilibrium quantity of aspirin increases and the equilibrium price of aspirin rises.

c) supply of aspirin decreases and the demand for aspirin increases.

d) equilibrium quantity of aspirin decreases and the equilibrium price of aspirin rises.

e) supply of aspirin increases and the demand for aspirin decreases.

Gross domestic product is

a) the final value of all goods produced in a country in a given time period.

b) the market value of all the final goods and services produced in a country during a given time period.

c) the market value of all goods and services produced in a country during a given time period.

d) the market value of all the intermediate goods and services produced in a country during a given time period.

e) the average value of output produced in a country in a given time period.

Real GDP

a) fluctuates from year to year but is always below potential GDP.

b) fluctuates around potential GDP.

c) equals potential GDP when the price level is constant.

d) grows at a constant 3 percent per year.

e)equals potential GDP in the base year.

Suppose we observe a rise in the price of goodAand an increase in the quantity of goodAbought and sold. Which one of the following is a likely explanation?

a) The demand forAdecreased.

b) The supply ofAincreased.

c) The supply ofAdecreased.

d) The demand forAincreased.

e) The law of demand is violated.

Which one of the following isfalse?

a) Y=C+I+G+X - M

b) Y=C+I+G+M-X

c) Y+M=C+I + G + X

d) Y - C - I - G - X + M = 0

e) X - M = Y - C - I - G

Which one of the following would be included in the calculation of GDP by the expenditure approach?

a) the cost of new kitchen cupboards when you renovate your house

b) the income you pay to your gardener

c) the purchase of 20 shares of a new issue of IBM stock

d) the purchase of an eighteenth century work of art

e)the value of your brother's services when he mows the lawn for the family

The rich should face higher income tax rates than the poor." This is an example of

a) a positive statement.

b) economic reasoning.

c) a normative statement.

d) a negative statement.

e) neither a normative nor a positive statement.

Which market is an example of a market for factors of production?

a) foreign exchange market

b) furniture market

c) automobile market

d) apple market

e) computer programmer market

Marginal benefit is

a) the cost of a decrease in an activity.

b) the benefit that arises from a decrease in an activity.

c) the benefit that arises from an increase in an activity.

d) the sum of benefit and cost that arises from an increase in an activity.

e) the cost of an increase in an activity.