#1
Which of the following is included in the calculation of Gross Domestic Product (GDP)?
Income from exports
ExplanationIncome generated from a country's exports contributes to the overall calculation of GDP.
#2
What does GDP per capita represent?
Total GDP divided by the total population
ExplanationGDP per capita is the average economic output per person in a country, obtained by dividing the total GDP by the population.
#3
In the GDP formula, which of the following represents the value of all final goods and services produced within a country's borders?
C (Consumption)
ExplanationConsumption (C) in the GDP formula represents the total value of final goods and services produced within a country's borders for personal consumption.
#4
Which of the following is considered an investment in the context of GDP calculation?
Purchasing a new house
ExplanationInvestment in GDP includes expenditures on assets like houses, machinery, and equipment, contributing to economic growth.
#5
Which component of GDP includes government expenditures on goods and services?
Government spending
ExplanationGovernment spending is a component of GDP, encompassing expenditures on goods and services by the government.
#6
Which of the following is included in the calculation of GDP by the expenditure approach?
Exports of goods and services
ExplanationThe expenditure approach includes exports of goods and services as part of the GDP calculation, representing external economic activity.
#7
Which of the following is not a component of GDP?
Total savings
ExplanationSavings are not directly included in GDP calculations as they represent a form of personal financial activity, not economic output.
#8
How does GDP differ from GNP (Gross National Product)?
GDP accounts for income earned within a country's borders, while GNP accounts for income earned by a country's residents regardless of location.
ExplanationGDP focuses on income generated within a country, while GNP includes income earned by the country's residents globally.
#9
Which approach is used to calculate GDP by adding up all expenditures in the economy?
Expenditure approach
ExplanationThe expenditure approach to GDP calculation sums up all expenditures in the economy, including consumption, investment, government spending, and net exports.
#10
Which of the following is an example of a non-market transaction that would not be counted in GDP?
Mowing your neighbor's lawn for free
ExplanationNon-market transactions, such as providing services for free, are not included in GDP calculations as they lack a monetary exchange.
#11
Which of the following is not a limitation of using GDP as a measure of economic well-being?
It doesn't provide information about the country's trade balance.
ExplanationGDP does not directly inform about a country's trade balance; other indicators are required to assess the trade situation.
#12
What is the difference between nominal GDP and real GDP?
Nominal GDP includes inflation, while real GDP is adjusted for inflation.
ExplanationNominal GDP includes the impact of inflation, while real GDP provides an inflation-adjusted measure of economic output.
#13
What does it indicate if a country's GDP has a high rate of growth?
The country's economy is expanding and producing more goods and services.
ExplanationA high GDP growth rate signifies economic expansion, indicating increased production of goods and services within the country.
#14
If a country's nominal GDP increased by 5% and its inflation rate was 3%, what was the real GDP growth rate?
2%
ExplanationReal GDP growth rate is calculated by subtracting the inflation rate from the nominal GDP growth rate, resulting in the actual growth in economic output.
#15
How does depreciation of capital affect GDP?
It decreases GDP.
ExplanationDepreciation of capital, representing the loss of value in physical assets, reduces the overall economic output, leading to a decrease in GDP.
#16
Which of the following accurately describes GDP deflator?
It measures changes in the price level of all goods and services included in GDP.
ExplanationGDP deflator is a measure of inflation or deflation, reflecting changes in the overall price level of goods and services encompassed in GDP.
#17
What does GDP not directly measure?
Income distribution
ExplanationGDP does not directly capture the distribution of income among the population, requiring additional measures to assess income inequality.