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Measuring Economic Growth: GDP and Its Components

Description: This quiz will test your understanding of Gross Domestic Product (GDP) and its components, which are crucial for measuring economic growth.
Number of Questions: 14
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Tags: economics economic growth gdp components of gdp
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What is the full form of GDP?

  1. Gross Domestic Product

  2. Gross Domestic Profit

  3. Gross Domestic Price

  4. Gross Domestic Production

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Correct Option: A
Explanation:

GDP stands for Gross Domestic Product, which is the total monetary value of all finished goods and services produced within a country's borders in a specific time period.

Which of the following is NOT a component of GDP?

  1. Consumption

  2. Investment

  3. Government Spending

  4. Exports

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Correct Option: D
Explanation:

Exports are not a component of GDP because they are already included in Consumption, Investment, and Government Spending.

What is the difference between nominal GDP and real GDP?

  1. Nominal GDP includes inflation, while real GDP does not.

  2. Nominal GDP is calculated using current prices, while real GDP is calculated using constant prices.

  3. Nominal GDP is the total value of goods and services produced in a country, while real GDP is the total quantity of goods and services produced in a country.

  4. Nominal GDP is used to measure economic growth, while real GDP is used to measure inflation.

Show answer
Correct Option: A
Explanation:

Nominal GDP includes inflation, while real GDP does not. This is because real GDP is calculated using constant prices, which means that the prices of goods and services are held constant over time.

What is the relationship between GDP and economic growth?

  1. GDP is a measure of economic growth.

  2. Economic growth is a measure of GDP.

  3. GDP and economic growth are the same thing.

  4. GDP and economic growth are not related.

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Correct Option: A
Explanation:

GDP is a measure of economic growth because it shows the total value of goods and services produced in a country over time. If GDP is increasing, then the economy is growing.

Which of the following is NOT a factor that can affect GDP?

  1. Changes in government policies

  2. Changes in consumer spending

  3. Changes in technology

  4. Changes in the weather

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Correct Option: D
Explanation:

Changes in the weather can affect GDP, but they are not a factor that can be controlled by policymakers.

What is the formula for calculating GDP?

  1. GDP = Consumption + Investment + Government Spending + Exports - Imports

  2. GDP = Consumption + Investment + Government Spending

  3. GDP = Consumption + Investment

  4. GDP = Consumption

Show answer
Correct Option: A
Explanation:

The formula for calculating GDP is GDP = Consumption + Investment + Government Spending + Exports - Imports.

What is the difference between GDP per capita and GDP?

  1. GDP per capita is the total value of goods and services produced in a country divided by the population.

  2. GDP per capita is the total quantity of goods and services produced in a country divided by the population.

  3. GDP per capita is the average income of a person in a country.

  4. GDP per capita is the total value of goods and services produced in a country divided by the number of workers.

Show answer
Correct Option: A
Explanation:

GDP per capita is the total value of goods and services produced in a country divided by the population. It is a measure of the average standard of living in a country.

Which of the following is NOT a benefit of economic growth?

  1. Increased standard of living

  2. Increased job opportunities

  3. Increased poverty

  4. Increased technological innovation

Show answer
Correct Option: C
Explanation:

Increased poverty is not a benefit of economic growth. In fact, economic growth can lead to increased poverty if it is not shared equitably.

What is the relationship between GDP and inflation?

  1. GDP and inflation are positively correlated.

  2. GDP and inflation are negatively correlated.

  3. GDP and inflation are not related.

  4. GDP and inflation are inversely related.

Show answer
Correct Option: A
Explanation:

GDP and inflation are positively correlated. This means that as GDP increases, inflation also tends to increase.

What is the difference between real GDP growth and nominal GDP growth?

  1. Real GDP growth is the percentage change in GDP using constant prices, while nominal GDP growth is the percentage change in GDP using current prices.

  2. Real GDP growth is the percentage change in GDP using current prices, while nominal GDP growth is the percentage change in GDP using constant prices.

  3. Real GDP growth is the percentage change in GDP using constant prices, while nominal GDP growth is the percentage change in GDP using average prices.

  4. Real GDP growth is the percentage change in GDP using average prices, while nominal GDP growth is the percentage change in GDP using constant prices.

Show answer
Correct Option: A
Explanation:

Real GDP growth is the percentage change in GDP using constant prices, while nominal GDP growth is the percentage change in GDP using current prices.

Which of the following is NOT a limitation of GDP as a measure of economic growth?

  1. GDP does not take into account the distribution of income.

  2. GDP does not take into account the quality of life.

  3. GDP does not take into account the environmental impact of economic growth.

  4. GDP does not take into account the size of the population.

Show answer
Correct Option: D
Explanation:

GDP does not take into account the size of the population. This means that a country with a large population may have a higher GDP than a country with a small population, even if the standard of living is the same in both countries.

What is the difference between extensive economic growth and intensive economic growth?

  1. Extensive economic growth is driven by increases in the quantity of inputs, while intensive economic growth is driven by increases in the quality of inputs.

  2. Extensive economic growth is driven by increases in the quality of inputs, while intensive economic growth is driven by increases in the quantity of inputs.

  3. Extensive economic growth is driven by increases in both the quantity and quality of inputs.

  4. Intensive economic growth is driven by increases in both the quantity and quality of inputs.

Show answer
Correct Option: A
Explanation:

Extensive economic growth is driven by increases in the quantity of inputs, such as labor and capital. Intensive economic growth is driven by increases in the quality of inputs, such as education and technology.

What is the difference between economic growth and economic development?

  1. Economic growth is a quantitative measure of the increase in the value of goods and services produced in a country over time, while economic development is a qualitative measure of the improvement in the well-being of a country's population.

  2. Economic growth is a qualitative measure of the improvement in the well-being of a country's population, while economic development is a quantitative measure of the increase in the value of goods and services produced in a country over time.

  3. Economic growth and economic development are the same thing.

  4. Economic growth and economic development are not related.

Show answer
Correct Option: A
Explanation:

Economic growth is a quantitative measure of the increase in the value of goods and services produced in a country over time. Economic development is a qualitative measure of the improvement in the well-being of a country's population.

What is the relationship between GDP and the business cycle?

  1. GDP is positively correlated with the business cycle.

  2. GDP is negatively correlated with the business cycle.

  3. GDP is not related to the business cycle.

  4. GDP is inversely related to the business cycle.

Show answer
Correct Option: A
Explanation:

GDP is positively correlated with the business cycle. This means that as the business cycle expands, GDP also tends to increase. Conversely, as the business cycle contracts, GDP also tends to decrease.

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