#1
Which of the following is NOT included in the calculation of Gross Domestic Product (GDP)?
Unemployment benefits
ExplanationGDP excludes transfer payments like unemployment benefits.
#2
Gross Domestic Product (GDP) is defined as the total market value of all:
Goods and services produced by a country
ExplanationGDP encompasses all goods and services produced domestically.
#3
Which of the following is NOT a method used to calculate GDP?
Consumption approach
ExplanationConsumption approach isn't a recognized method for GDP calculation.
#4
Which of the following is an example of an intermediate good?
Steel used to manufacture cars
ExplanationIntermediate goods are inputs used in the production process.
#5
Which of the following is an example of government transfer payments?
Social Security benefits
ExplanationGovernment transfer payments include benefits like Social Security.
#6
What does the term 'nominal GDP' refer to?
The GDP of a country measured in current prices without adjusting for inflation
ExplanationNominal GDP reflects economic output using current prices, without accounting for inflation.
#7
Which of the following is an example of a component of GDP?
All of the above
ExplanationAll options contribute to GDP: consumption, investment, government spending, exports.
#8
In the expenditure approach to calculating GDP, which of the following is NOT a component?
Imports
ExplanationImports are subtracted in the expenditure approach to avoid double counting.
#9
Which of the following is a limitation of using GDP as a measure of economic well-being?
It does not account for income distribution within a country.
ExplanationGDP fails to consider how wealth is distributed among citizens.
#10
What is the formula for calculating GDP using the expenditure approach?
GDP = Consumption + Government Spending + Investment + Exports - Imports
ExplanationGDP via expenditure sums up consumption, investment, government spending, and net exports.
#11
Which of the following best describes the underground economy?
It includes legal activities that are not reported to the government for tax purposes.
ExplanationUnderground economy comprises unreported legal transactions to evade taxes.
#12
Which of the following scenarios would lead to an increase in GDP?
An increase in consumer spending
ExplanationConsumer spending growth fuels economic activity, thus boosting GDP.
#13
What is the difference between nominal GDP and real GDP?
Real GDP is adjusted for inflation, while nominal GDP is not.
ExplanationReal GDP accounts for inflation's impact on the value of goods and services.
#14
If a country's nominal GDP increased by 5% from one year to the next and the inflation rate was 3%, what is the country's real GDP growth rate?
2%
ExplanationReal GDP growth is nominal growth minus inflation, thus 5% - 3% = 2%.
#15
What is the difference between GDP and GNP (Gross National Product)?
GDP includes income earned by foreign residents, while GNP includes income earned by domestic residents.
ExplanationGDP tallies income generated within the country, while GNP includes income from citizens globally.
#16
What is the difference between GDP deflator and Consumer Price Index (CPI)?
GDP deflator measures inflation for all goods and services produced domestically, while CPI measures inflation for a basket of consumer goods and services.
ExplanationGDP deflator monitors inflation across all goods and services produced, while CPI tracks inflation for consumer goods and services.
#17
What is the formula for calculating GDP using the income approach?
GDP = Compensation of Employees + Gross Operating Surplus + Gross Mixed Income + Taxes on Production and Imports
ExplanationIncome approach aggregates various income sources to derive GDP.