Back
0

GDP and Nominal GDP

Description: This quiz covers the concepts of Gross Domestic Product (GDP) and Nominal GDP, providing a comprehensive assessment of your understanding of these economic indicators.
Number of Questions: 15
Created by:
Tags: gdp nominal gdp economic growth inflation macroeconomics
Start the Quiz
Attempted 0/15 Correct 0 Score 0
‹
›

Which of the following is a measure of the total value of all goods and services produced within a country's borders in a given period?

  1. Gross Domestic Product (GDP)

  2. Net Domestic Product (NDP)

  3. Gross National Product (GNP)

  4. National Income

Show answer
Correct Option: A
Explanation:

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

What is the difference between GDP and GNP?

  1. GDP includes income earned by domestic residents abroad, while GNP excludes it.

  2. GDP excludes income earned by domestic residents abroad, while GNP includes it.

  3. GDP includes government spending, while GNP excludes it.

  4. GDP excludes investment spending, while GNP includes it.

Show answer
Correct Option: B
Explanation:

Gross National Product (GNP) includes the total income earned by a country's residents, both domestically and abroad, while GDP only includes income generated within the country's borders.

Which of the following is NOT a component of GDP?

  1. Consumption spending

  2. Government spending

  3. Investment spending

  4. Exports

Show answer
Correct Option: D
Explanation:

Exports are not included in GDP because they represent goods and services produced domestically but sold to foreign countries.

What is the relationship between GDP and economic growth?

  1. GDP growth is the same as economic growth.

  2. GDP growth is a measure of economic growth.

  3. GDP growth is not related to economic growth.

  4. GDP growth is the opposite of economic growth.

Show answer
Correct Option: B
Explanation:

GDP growth is a common measure of economic growth, as it reflects the overall increase in the value of goods and services produced in a country over time.

What is Nominal GDP?

  1. GDP calculated using current prices.

  2. GDP calculated using constant prices.

  3. GDP calculated using average prices.

  4. GDP calculated using future prices.

Show answer
Correct Option: A
Explanation:

Nominal GDP is the value of all goods and services produced in a country in a given year, valued at current prices.

How does Nominal GDP differ from 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 GDP and Real GDP include inflation.

  4. Neither Nominal GDP nor Real GDP includes inflation.

Show answer
Correct Option: A
Explanation:

Nominal GDP includes the effects of inflation, while Real GDP is adjusted for inflation to provide a more accurate measure of economic growth.

Which of the following is NOT a factor that can contribute to a difference between Nominal GDP and Real GDP?

  1. Inflation

  2. Changes in the composition of output

  3. Changes in the quality of output

  4. Changes in the exchange rate

Show answer
Correct Option: D
Explanation:

Changes in the exchange rate do not directly affect the difference between Nominal GDP and Real GDP.

What is the GDP deflator?

  1. A measure of the overall price level of goods and services in an economy.

  2. A measure of the overall quantity of goods and services produced in an economy.

  3. A measure of the overall value of goods and services produced in an economy.

  4. A measure of the overall growth rate of an economy.

Show answer
Correct Option: A
Explanation:

The GDP deflator is a measure of the overall price level of goods and services in an economy, calculated by dividing Nominal GDP by Real GDP.

How is the GDP deflator used to calculate 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.

What is the relationship between the GDP deflator and inflation?

  1. The GDP deflator is a measure of inflation.

  2. The GDP deflator is the opposite of inflation.

  3. The GDP deflator is not related to inflation.

  4. The GDP deflator is a component of inflation.

Show answer
Correct Option: A
Explanation:

The GDP deflator is a measure of inflation, as it reflects the change in the overall price level of goods and services in an economy over time.

Which of the following can cause the GDP deflator to increase?

  1. An increase in the overall price level of goods and services.

  2. A decrease in the overall price level of goods and services.

  3. An increase in the quantity of goods and services produced.

  4. A decrease in the quantity of goods and services produced.

Show answer
Correct Option: A
Explanation:

An increase in the overall price level of goods and services, also known as inflation, will cause the GDP deflator to increase.

What is the relationship between Nominal GDP and Real GDP in a period of deflation?

  1. Nominal GDP will be higher than Real GDP.

  2. Nominal GDP will be lower than Real GDP.

  3. Nominal GDP will be equal to Real GDP.

  4. Nominal GDP and Real GDP will not be related.

Show answer
Correct Option: B
Explanation:

In a period of deflation, when the overall price level of goods and services is decreasing, Nominal GDP will be lower than Real GDP.

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

  1. Nominal GDP does not account for inflation.

  2. Nominal GDP does not account for changes in the composition of output.

  3. Nominal GDP does not account for changes in the quality of output.

  4. Nominal GDP is easy to calculate.

Show answer
Correct Option: D
Explanation:

Nominal GDP is relatively easy to calculate, compared to Real GDP, which requires adjustments for inflation and other factors.

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

  1. Real GDP does not account for changes in the composition of output.

  2. Real GDP does not account for changes in the quality of output.

  3. Real GDP is difficult to calculate.

  4. Real GDP is not subject to revision.

Show answer
Correct Option: D
Explanation:

Real GDP is subject to revision, as new data and methodologies become available.

Which of the following is a potential consequence of a significant difference between Nominal GDP and Real GDP?

  1. Misleading conclusions about economic growth.

  2. Inaccurate estimates of inflation.

  3. Ineffective economic policies.

  4. All of the above.

Show answer
Correct Option: D
Explanation:

A significant difference between Nominal GDP and Real GDP can lead to misleading conclusions about economic growth, inaccurate estimates of inflation, and ineffective economic policies.

- Hide questions
ADVERTISEMENT

Find more quizzes from top tags

general knowledge
3615 Quizzes
119858 Questions
 technology
307 Quizzes
36705 Questions
 sports
963 Quizzes
19148 Questions
 history
1187 Quizzes
13475 Questions
 physics
598 Quizzes
13441 Questions
 biology
1160 Quizzes
12174 Questions
 science & technology
551 Quizzes
11015 Questions
 chemistry
490 Quizzes
9892 Questions
 maths
518 Quizzes
9324 Questions
 softskills
0 Quizzes
7131 Questions