If a Canadian household buys a $75 handbag from Italy, Canadian consumption incr
ID: 1220489 • Letter: I
Question
If a Canadian household buys a $75 handbag from Italy, Canadian consumption increases by $75, Canadian imports increase by $75, and Canadian GDP increases by $75. imports increase by $75, but Canadian GDP is unaffected. imports are unaffected, and Canadian GDP is unaffected. exports increase by $75, and Canadian GDP increases by $75. The GDP deflator can be used to identify the increase in nominal GDP that is due to an increase in prices rather than an increase in production. increase in real GDP that is due to an increase in prices rather than an increase in production. increase in the cost of living for typical Canadian consumers. reduction in the cost of living for typical Canadian consumers. The price index in 2001 is 120, and in 2002 the price index is 127.2. What is the inflation rate? 5 percent 6 percent 8 percent The inflation rate is impossible to determine without knowing the base year. After looking for a job for more than 8 months, Kyle has become frustrated and stopped looking, even though he would take the first job that came along. Statistics Canada considers Kyle to be not part of the labour force both unemployed and a discouraged worker part of the labour force, but neither employed or unemployed frictionally unemployed Which of the following combinations will NOT result from a decrease in the money supply? higher interest rates, lower exchange rate and lower investment spending higher interest rates, higher exchange rate and lower net exports higher interest rates, higher exchange rate and lower investment spending higher interest rates, lower net exports and lower investment spending An increase in government spending will have a larger effect on real GDP if the marginal propensity to save falls the marginal propensity to import rises the marginal propensity to consume falls private sector spending is very responsive to changes in interest rates An example of human capital would be the money a person has the tools a worker has to work with the job skills a worker has all of the above are examplesExplanation / Answer
1)b. Imports increased by $75, but Canadian GDP is unaffected
2)a. increase in nominal GDP that is due to an increase in prices rather than an increase in production
3)d. The inflation rate is impossible to determine without knowing the base year.
4)b. both unemployed and a discouraged labor.
5)d.Higher Interest rate, lower Net export and lower investment spending
6)d. private sector spending is very responsive to changes in interest rates
7)c. the job skills the worker has