Question

13. In a particular country, the gross domestic product (GDP) increased by 10 percent during the year. At the same time inflation was 6 percent. Therefore real GDP a fell by 10 percent. b. fell by 4 percent. c. rose by 10 percent. d. rose by 6 percent. e. none of the above. 14. One of the major determinants of increasing real GDP per capita and therefore a country's standard of living is a. increasing labour productivity. b. decreasing labour productivity. c. increasing immigration and hence, the labour force. d. decreasing unemployment. e. both "e" and "d". 15. Despite some problems with equating GDP with economic well-being, real GDP per person does imply greater economic well-being because it tends to be positively associated with a. crime, pollution, and economic inequality. b. better education, health care and life expectancy. c. unemployment, availability of goods and services and better education, d. poverty, congestion and pollution. e. crime, poverty and the depletion of non-renewable resources. 16. An example of a transfer payment is a. a senior collecting Canada pension. b. government spending on military equipment. c. government payments of salaries to schoolteachers. d. a firm paying dividends to its shareholders. e. government payments of salaries to members of Parliament. 17. The natural rate of unemployment is the sum of a. structural and frictional unemployment. b. cyclical and frictional unemployment. c. structural and cyclical unemployment. d. seasonal and cyclical unemployment. e. seasonal and frictional unemployment.

Answer 1

13. Option E

Explanation: In this case, growth of real GDP = growth of nominal GDP - inflation rate = 10% - 6% = 4%

14. Option A

Explanation: When labor productivity increases, the total income increases in the economy.

15. Option B

Explanation: Higher real GDP per person leads to higher average income and more spending on health and education.

16. Option A

Explanation: Transfer payment is a payment in lieu of which no goods or services are exchanged.

17. Option A

Explanation: In the case of natural rate of unemployment, the cyclical unemployment rate is zero.