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GDP and Real GDP

Description: Test your knowledge on GDP and Real GDP, essential concepts in economics.
Number of Questions: 15
Created by:
Tags: gdp real gdp economic growth inflation
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Which of the following is NOT a component of GDP?

  1. Consumption

  2. Investment

  3. Government Spending

  4. Net Exports

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Correct Option: D
Explanation:

Net exports are not a component of GDP, but rather a component of Gross National Product (GNP).

What is the difference between nominal GDP and real GDP?

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

  2. Real GDP includes inflation, while nominal GDP does not.

  3. Both nominal and real GDP include inflation.

  4. Neither nominal nor real GDP include inflation.

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Correct Option: A
Explanation:

Nominal GDP includes the effects of inflation, while real GDP adjusts for inflation to provide a more accurate measure of economic growth.

What is the formula for calculating real GDP?

  1. Real GDP = Nominal GDP / GDP Deflator

  2. Real GDP = Nominal GDP * GDP Deflator

  3. Real GDP = Nominal GDP + GDP Deflator

  4. Real GDP = Nominal GDP - GDP Deflator

Show answer
Correct Option: A
Explanation:

Real GDP is calculated by dividing nominal GDP by the GDP deflator, which adjusts for the effects of inflation.

What is the GDP deflator?

  1. A measure of the overall price level in the economy

  2. A measure of the rate of inflation in the economy

  3. A measure of the value of the dollar in the economy

  4. A measure of the size of the economy

Show answer
Correct Option: A
Explanation:

The GDP deflator is a measure of the overall price level in the economy, calculated as the ratio of nominal GDP to real GDP.

What is the relationship between real GDP and economic growth?

  1. Real GDP and economic growth are the same thing.

  2. Real GDP is a measure of economic growth.

  3. Economic growth is a measure of real GDP.

  4. Real GDP and economic growth are not related.

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Correct Option: B
Explanation:

Real GDP is a measure of the total value of all goods and services produced in an economy, and economic growth is the rate at which real GDP increases over time.

What is the relationship between real GDP and inflation?

  1. Real GDP and inflation are positively correlated.

  2. Real GDP and inflation are negatively correlated.

  3. Real GDP and inflation are not related.

  4. Real GDP and inflation are inversely related.

Show answer
Correct Option: B
Explanation:

Real GDP and inflation are negatively correlated because inflation reduces the purchasing power of money, which leads to a decrease in real GDP.

What are some factors that can affect real GDP growth?

  1. Government policies

  2. Technological advancements

  3. Natural disasters

  4. All of the above

Show answer
Correct Option: D
Explanation:

Real GDP growth can be affected by a variety of factors, including government policies, technological advancements, natural disasters, and other economic conditions.

What is the difference between real GDP per capita and real GDP?

  1. Real GDP per capita is the real GDP divided by the population.

  2. Real GDP per capita is the real GDP multiplied by the population.

  3. Real GDP per capita is the real GDP minus the population.

  4. Real GDP per capita is the real GDP plus the population.

Show answer
Correct Option: A
Explanation:

Real GDP per capita is calculated by dividing real GDP by the population, providing a measure of the average standard of living in an economy.

What is the relationship between real GDP per capita and economic development?

  1. Real GDP per capita and economic development are positively correlated.

  2. Real GDP per capita and economic development are negatively correlated.

  3. Real GDP per capita and economic development are not related.

  4. Real GDP per capita and economic development are inversely related.

Show answer
Correct Option: A
Explanation:

Real GDP per capita and economic development are positively correlated because higher levels of real GDP per capita are associated with higher standards of living and improved economic conditions.

What are some factors that can affect real GDP per capita growth?

  1. Population growth

  2. Technological advancements

  3. Government policies

  4. All of the above

Show answer
Correct Option: D
Explanation:

Real GDP per capita growth can be affected by a variety of factors, including population growth, technological advancements, government policies, and other economic conditions.

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

  1. Real GDP growth is the growth rate of real GDP.

  2. Nominal GDP growth is the growth rate of nominal GDP.

  3. Real GDP growth is the growth rate of real GDP per capita.

  4. Nominal GDP growth is the growth rate of nominal GDP per capita.

Show answer
Correct Option: A
Explanation:

Real GDP growth is the percentage change in real GDP over a period of time, while nominal GDP growth is the percentage change in nominal GDP over a period of time.

What is the relationship between real GDP growth and economic growth?

  1. Real GDP growth and economic growth are the same thing.

  2. Real GDP growth is a measure of economic growth.

  3. Economic growth is a measure of real GDP growth.

  4. Real GDP growth and economic growth are not related.

Show answer
Correct Option: B
Explanation:

Real GDP growth is a measure of the rate at which the total value of all goods and services produced in an economy is increasing over time.

What are some factors that can affect real GDP growth?

  1. Government policies

  2. Technological advancements

  3. Natural disasters

  4. All of the above

Show answer
Correct Option: D
Explanation:

Real GDP growth can be affected by a variety of factors, including government policies, technological advancements, natural disasters, and other economic conditions.

What is the relationship between real GDP growth and inflation?

  1. Real GDP growth and inflation are positively correlated.

  2. Real GDP growth and inflation are negatively correlated.

  3. Real GDP growth and inflation are not related.

  4. Real GDP growth and inflation are inversely related.

Show answer
Correct Option: B
Explanation:

Real GDP growth and inflation are negatively correlated because inflation reduces the purchasing power of money, which leads to a decrease in real GDP growth.

What are some policies that governments can implement to promote real GDP growth?

  1. Expansionary fiscal policy

  2. Expansionary monetary policy

  3. Supply-side policies

  4. All of the above

Show answer
Correct Option: D
Explanation:

Governments can implement a variety of policies to promote real GDP growth, including expansionary fiscal policy, expansionary monetary policy, and supply-side policies.

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