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Gross Domestic Product (GDP)

Description: Gross Domestic Product (GDP) Quiz
Number of Questions: 15
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Tags: economics macroeconomics gdp
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What is the most commonly used measure of the size of an economy?

  1. Gross Domestic Product (GDP)

  2. Gross National Product (GNP)

  3. Net Domestic Product (NDP)

  4. National Income

Show answer
Correct Option: A
Explanation:

GDP is the total monetary value of all finished goods and services produced within a country's borders in a specific time period.

What are the three main components of GDP?

  1. Consumption, Investment, and Government Spending

  2. Exports, Imports, and Net Factor Income from Abroad

  3. Wages, Profits, and Rent

  4. Taxes, Subsidies, and Transfer Payments

Show answer
Correct Option: A
Explanation:

GDP can be calculated using three different approaches: the expenditure approach, the income approach, and the value-added approach. The expenditure approach measures GDP as the total spending on goods and services in the economy.

What is the difference between real GDP and nominal GDP?

  1. Real GDP is adjusted for inflation, while nominal GDP is not.

  2. Real GDP is measured in constant prices, while nominal GDP is measured in current prices.

  3. Real GDP includes the value of imported goods, while nominal GDP does not.

  4. Real GDP is calculated using the expenditure approach, while nominal GDP is calculated using the income approach.

Show answer
Correct Option: A
Explanation:

Real GDP is a measure of the value of goods and services produced in an economy, adjusted for the effects of inflation. Nominal GDP is a measure of the value of goods and services produced in an economy, without adjusting for the effects of inflation.

What is the relationship between GDP and economic growth?

  1. GDP growth is the rate of change in real GDP over time.

  2. GDP growth is the rate of change in nominal GDP over time.

  3. GDP growth is the rate of change in the value of goods and services produced in an economy over time.

  4. GDP growth is the rate of change in the value of imported goods over time.

Show answer
Correct Option: A
Explanation:

GDP growth is a measure of the rate at which the economy is growing. It is calculated as the percentage change in real GDP from one period to the next.

What are some of the factors that can affect GDP growth?

  1. Changes in government spending

  2. Changes in investment

  3. Changes in consumer spending

  4. All of the above

Show answer
Correct Option: D
Explanation:

GDP growth can be affected by a variety of factors, including changes in government spending, investment, and consumer spending.

What is the relationship between GDP and unemployment?

  1. GDP growth and unemployment are positively correlated.

  2. GDP growth and unemployment are negatively correlated.

  3. GDP growth and unemployment are not correlated.

  4. The relationship between GDP growth and unemployment is complex and depends on a variety of factors.

Show answer
Correct Option: D
Explanation:

The relationship between GDP growth and unemployment is complex and depends on a variety of factors, including the structure of the economy, the rate of technological change, and the level of government intervention.

What are some of the limitations of GDP as a measure of economic well-being?

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

  2. GDP does not take into account the value of non-market goods and services.

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

  4. All of the above

Show answer
Correct Option: D
Explanation:

GDP is a limited measure of economic well-being because it does not take into account the distribution of income, the value of non-market goods and services, or the environmental impact of economic activity.

What are some of the alternatives to GDP as a measure of economic well-being?

  1. The Human Development Index (HDI)

  2. The Genuine Progress Indicator (GPI)

  3. The Inclusive Wealth Index (IWI)

  4. All of the above

Show answer
Correct Option: D
Explanation:

There are a number of alternatives to GDP as a measure of economic well-being, including the Human Development Index (HDI), the Genuine Progress Indicator (GPI), and the Inclusive Wealth Index (IWI).

What is the difference between GDP and GNI?

  1. GDP includes the value of net factor income from abroad, while GNI does not.

  2. GNI includes the value of net factor income from abroad, while GDP does not.

  3. GDP is measured in constant prices, while GNI is measured in current prices.

  4. GNI is a measure of the value of goods and services produced in an economy, while GDP is a measure of the value of goods and services produced within a country's borders.

Show answer
Correct Option: B
Explanation:

GNI is a measure of the value of goods and services produced by a country's residents, regardless of where the production takes place. GDP is a measure of the value of goods and services produced within a country's borders, regardless of who owns the factors of production.

What is the relationship between GDP and GNP?

  1. GNP = GDP + Net Factor Income from Abroad

  2. GNP = GDP - Net Factor Income from Abroad

  3. GNP = GDP * Net Factor Income from Abroad

  4. GNP = GDP / Net Factor Income from Abroad

Show answer
Correct Option: A
Explanation:

GNP is equal to GDP plus net factor income from abroad. Net factor income from abroad is the difference between the income earned by a country's residents from abroad and the income earned by foreign residents in the country.

What is the difference between GDP and NDP?

  1. NDP is equal to GDP minus depreciation.

  2. NDP is equal to GDP plus depreciation.

  3. NDP is equal to GDP times depreciation.

  4. NDP is equal to GDP divided by depreciation.

Show answer
Correct Option: A
Explanation:

NDP is equal to GDP minus depreciation. Depreciation is the decline in the value of a capital asset over time.

What is the relationship between GDP and NI?

  1. NI = GDP + Net Factor Income from Abroad + Depreciation

  2. NI = GDP - Net Factor Income from Abroad - Depreciation

  3. NI = GDP * Net Factor Income from Abroad * Depreciation

  4. NI = GDP / Net Factor Income from Abroad / Depreciation

Show answer
Correct Option: A
Explanation:

NI is equal to GDP plus net factor income from abroad plus depreciation. Net factor income from abroad is the difference between the income earned by a country's residents from abroad and the income earned by foreign residents in the country. Depreciation is the decline in the value of a capital asset over time.

What is the difference between GDP and disposable income?

  1. Disposable income is equal to GDP minus personal taxes and non-tax payments.

  2. Disposable income is equal to GDP plus personal taxes and non-tax payments.

  3. Disposable income is equal to GDP times personal taxes and non-tax payments.

  4. Disposable income is equal to GDP divided by personal taxes and non-tax payments.

Show answer
Correct Option: A
Explanation:

Disposable income is equal to GDP minus personal taxes and non-tax payments. Personal taxes are taxes paid by individuals, such as income tax and property tax. Non-tax payments are payments made by individuals to the government that are not taxes, such as social security contributions and Medicare contributions.

What is the relationship between GDP and personal consumption expenditures?

  1. Personal consumption expenditures is the largest component of GDP.

  2. Personal consumption expenditures is the smallest component of GDP.

  3. Personal consumption expenditures is not a component of GDP.

  4. Personal consumption expenditures is equal to GDP.

Show answer
Correct Option: A
Explanation:

Personal consumption expenditures is the largest component of GDP. It includes spending on goods and services by households.

What is the relationship between GDP and investment?

  1. Investment is a component of GDP.

  2. Investment is not a component of GDP.

  3. Investment is equal to GDP.

  4. Investment is the largest component of GDP.

Show answer
Correct Option: A
Explanation:

Investment is a component of GDP. It includes spending on new capital goods, such as machinery and equipment, and spending on the construction of new buildings.

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