AP Macro AMSCO 2.1 Reading Quiz

Why is GDP considered to be an essential economic measurement?

• It is the total value of final goods and services the economy produces in a given period of time.

• It identifies the different factors of production.

• It reveals a country's trade deficit by subtracting total imports from total exports.

• It focuses on household income and savings.

Which are NOT true about Gross National Product?

(Select 2 that are NOT true.)

• It calculates production exactly the same as Gross Domestic Product.

• It is a way to measure total production of a country.

• It includes the production of a country's citizens who are outside their nation's border.

• It is presently the preferred and most common way of estimating a country's production.

Which is NOT a method for measuring GDP?

• expenditures approach

• value-added approach

• income approach

• factor-product approach

The simplest version of circular flow model illustrates

(Select 2 that are correct.)

• the flow of money between banks and governments.

• the flow of goods/services and payments between households and firms.

• the flow of resources and payments between households and firms.

• the exchange of information between consumers and producers.

A more complex version of the circular flow model includes the government.

In this version of the model, the government does all of the following EXCEPT

• supplies goods and services.

• demands resources.

• pay taxes to households and businesses.

• collects taxes from households and businesses.