#1
Which of the following is included in the calculation of Gross Domestic Product (GDP)?
Exports
ExplanationExports contribute to GDP by representing the value of goods and services produced domestically and sold abroad.
#2
What does GDP stand for?
Gross Domestic Product
ExplanationGDP measures the total monetary value of all finished goods and services produced within a country's borders in a specific time period.
#3
Which of the following is considered an investment in the context of GDP?
Purchasing stocks and bonds
ExplanationInvestment includes spending on capital goods, such as machinery and equipment, and financial assets like stocks and bonds, which contribute to future production.
#4
Which of the following represents the largest component of GDP in most economies?
Consumption
ExplanationConsumption, including household spending on goods and services, typically constitutes the largest portion of GDP.
#5
Which of the following is NOT included in the calculation of GDP?
Intermediate Goods
ExplanationIntermediate goods are excluded from GDP calculation to avoid double-counting, as their value is already included in the final goods and services.
#6
Which of the following is NOT a component of GDP?
Imports
ExplanationImports are purchases of goods and services produced abroad and therefore do not directly contribute to a country's GDP.
#7
What does the expenditure approach to calculating GDP involve?
Total spending on newly produced goods and services within a country
ExplanationThe expenditure approach sums up the total spending by households, businesses, government, and net exports on goods and services produced within a country.
#8
Which of the following is an example of government investment that contributes to GDP?
Military spending
ExplanationGovernment investment includes expenditures on infrastructure, education, and defense, such as military spending.
#9
What does the GDP deflator measure?
The change in the overall price level of all goods and services produced in the economy
ExplanationThe GDP deflator measures the extent to which the general price level has changed over time, reflecting inflation or deflation.
#10
Which of the following scenarios would result in an increase in GDP?
An increase in business investment
ExplanationIncreases in business investment, government spending, consumer spending, or net exports contribute to GDP growth.
#11
Which of the following represents the formula for calculating GDP using the income approach?
GDP = Wages + Rent + Interest + Profit
ExplanationThe income approach calculates GDP by summing up all incomes earned by factors of production, including wages, rent, interest, and profits.
#12
What is the primary function of the production approach to calculating GDP?
To calculate the value added at each stage of production
ExplanationThe production approach assesses GDP by summing up the value added at each stage of production, from raw materials to final goods and services.
#13
What is the relationship between real GDP and nominal GDP?
Real GDP equals nominal GDP when there is no inflation
ExplanationReal GDP adjusts nominal GDP for inflation or deflation, providing a more accurate measure of economic output over time.
#14
What is the formula for calculating GDP using the income approach?
GDP = Wages + Rent + Interest + Profit
ExplanationThe income approach sums up all incomes earned in the production process, including wages, rent, interest, and profits, to determine GDP.
#15
What is the difference between real GDP and nominal GDP?
Real GDP is adjusted for inflation, while nominal GDP is not
ExplanationReal GDP adjusts for inflation or deflation, providing a measure of economic output that reflects changes in purchasing power over time.