ECON 1002 EXAM 2 |2025-2026 LATEST UPDATED | ACTUAL EXAM
QUESTIONS WITH SOLUTIONS | 100% RATED CORRECT | 100% VERFIED
SOLTIONS | ALREADY GRADED A+
1. What does GDP mean?: Gross Domestic Product
2. What does GDP measure?: Measures the total income/spending/output of a
nation
3. What is the interdependence principle?: - Your best choice depends on the
other choices you make, the choices others make, developments in other
markets, and expectations about the future.
- When any of these factors change, your best choice might change.
4. What is the Circular Flow?: A diagram that maps the way a market economy
operates
5. Circular Flow Model:
6. What is GDP?: The market value of all final goods and services produced
within a country in a given period of time
,7. What is included in the GDP?: Domestically produced final goods and
services, including capital goods, new construction of structures, and changes
to inventories 8. What is excluded from the GDP?: intermediate products,
secondhand sales, non market transactions, and underground economy
Goods produced in another country even if made by Canadian companies or
goods produced in previous time periods
9. Examples of what is included in GDP: Bread sold by bakery owned by
French citizen in Ottawa
Time estimated value of owner occupied homes
10. Examples of what is excluded from GDP: Unpaid babysitting by
grandmother
Unpaid housework
Car maker has stock of tire it has not yet used to make cars
Second hand sales
Goods not used yet in production of final goods
11. What are the three perspectives of GDP Statistical reporting?: Total
Spending
Total Output
Total Income
,12. Statistical reporting: Most frequently used GDP definition focuses on
expenditures and government measure gdp using income and output since
every dollar spent in the economy represents an income to someone else
13. When does Frequency of reporting happen?: Annual or quarterly at an
annual rate
14. Seasonal adjustment: adjusting an economic variable to remove the effects
of changes predicted to occur at that time of year
e.g. at the end of harvest season, there will be a bump in production of agricultural
products meaning that quarter has a higher gdp
15. What are the components of GDP meaning who is doing the spending?:
Y=C+I+G+NX
-Y = GDP
C = Consumption
I = investment
G = Gov. purchases
NX = Net exports
16. What is consumption?: household spending on final goods and services
17. What is investment?: Purchases of new capital assets that will be used in
future production of other goods such as capital equipment, research and
, development 18. Government purchases: spending on goods and services
by local, state, and federal governments includes salaries of government
employees (teachers, police)
19. Net exports are: total exports minus total imports because they are in other
components
Net imports aren't included because they are produced outside of Canada
20. Value added is: amount paid by which the value of an item is increased at
each stage of production = total sales minus cost of intermediate inputs
21. GDP equals to?: C+I+G+(X-M)
Total income = total wages + total profits
22. Nominal GDP is: Production of goods and services valued at current prices
23. REAL GDP is: Value of production of goods and services assuming prices
from some fixed prior year meaning constant prices
REAL GDP focuses on change in quantities
24. NOMINAL GDP focuses on: combining both changes in prices and quantities
25. Growth rate of Y = percentage change in Y =: % Y=Yt - Yt -1 divided by Yt -
1
X 100 = Y divided by Yt-1 X 100
QUESTIONS WITH SOLUTIONS | 100% RATED CORRECT | 100% VERFIED
SOLTIONS | ALREADY GRADED A+
1. What does GDP mean?: Gross Domestic Product
2. What does GDP measure?: Measures the total income/spending/output of a
nation
3. What is the interdependence principle?: - Your best choice depends on the
other choices you make, the choices others make, developments in other
markets, and expectations about the future.
- When any of these factors change, your best choice might change.
4. What is the Circular Flow?: A diagram that maps the way a market economy
operates
5. Circular Flow Model:
6. What is GDP?: The market value of all final goods and services produced
within a country in a given period of time
,7. What is included in the GDP?: Domestically produced final goods and
services, including capital goods, new construction of structures, and changes
to inventories 8. What is excluded from the GDP?: intermediate products,
secondhand sales, non market transactions, and underground economy
Goods produced in another country even if made by Canadian companies or
goods produced in previous time periods
9. Examples of what is included in GDP: Bread sold by bakery owned by
French citizen in Ottawa
Time estimated value of owner occupied homes
10. Examples of what is excluded from GDP: Unpaid babysitting by
grandmother
Unpaid housework
Car maker has stock of tire it has not yet used to make cars
Second hand sales
Goods not used yet in production of final goods
11. What are the three perspectives of GDP Statistical reporting?: Total
Spending
Total Output
Total Income
,12. Statistical reporting: Most frequently used GDP definition focuses on
expenditures and government measure gdp using income and output since
every dollar spent in the economy represents an income to someone else
13. When does Frequency of reporting happen?: Annual or quarterly at an
annual rate
14. Seasonal adjustment: adjusting an economic variable to remove the effects
of changes predicted to occur at that time of year
e.g. at the end of harvest season, there will be a bump in production of agricultural
products meaning that quarter has a higher gdp
15. What are the components of GDP meaning who is doing the spending?:
Y=C+I+G+NX
-Y = GDP
C = Consumption
I = investment
G = Gov. purchases
NX = Net exports
16. What is consumption?: household spending on final goods and services
17. What is investment?: Purchases of new capital assets that will be used in
future production of other goods such as capital equipment, research and
, development 18. Government purchases: spending on goods and services
by local, state, and federal governments includes salaries of government
employees (teachers, police)
19. Net exports are: total exports minus total imports because they are in other
components
Net imports aren't included because they are produced outside of Canada
20. Value added is: amount paid by which the value of an item is increased at
each stage of production = total sales minus cost of intermediate inputs
21. GDP equals to?: C+I+G+(X-M)
Total income = total wages + total profits
22. Nominal GDP is: Production of goods and services valued at current prices
23. REAL GDP is: Value of production of goods and services assuming prices
from some fixed prior year meaning constant prices
REAL GDP focuses on change in quantities
24. NOMINAL GDP focuses on: combining both changes in prices and quantities
25. Growth rate of Y = percentage change in Y =: % Y=Yt - Yt -1 divided by Yt -
1
X 100 = Y divided by Yt-1 X 100
