Understanding GDP in Macroeconomics

The video tutorial explains GDP as a measure of economic health, detailing its components, such as final and capital goods, and methods of calculation, including nominal and real GDP. It highlights GDP's limitations, like ignoring non-market activities and negative externalities, and introduces GDP per capita and alternative measures like the Human Development Index. Despite its flaws, GDP remains a primary economic metric due to its clarity and ease of measurement.

What does the 'domestic' in Gross Domestic Product refer to?

• The final goods produced

• The services provided

• The total value of goods

• Within a country's borders

Which of the following is considered a final good?

• Flour used by a baker

• A cake sold to a customer

• Sugar bought by a confectioner

• Butter used in baking

How is GDP affected when a new car is sold?

• It increases

• It depends on the car's origin

• It remains unchanged

• It decreases

What is the difference between nominal GDP and real GDP?

• Real GDP is adjusted for inflation

• Nominal GDP is measured in constant prices

• Real GDP is measured in current prices

• Nominal GDP is adjusted for inflation

Which of the following is NOT accounted for in GDP?

• Net exports

• Non-market activities

• Final goods and services

• Government spending

Why might GDP increase after a natural disaster?

• Due to the rebuilding of infrastructure

• Due to decreased consumption

• Because of reduced production

• Because of increased leisure time

What is a limitation of GDP in measuring economic health?

• It accounts for income distribution

• It adjusts for negative externalities

• It includes non-market activities

• It does not measure quality of life

What does GDP per capita measure?

• GDP adjusted for inflation

• Total GDP of a country

• Total GDP divided by the number of businesses

• GDP divided by the population

Which index is an alternative to GDP for assessing economic health?

• Consumer Price Index

• Human Development Index

• Stock Market Index

• Producer Price Index

Why do policymakers continue to rely on GDP?

• It is easy to manipulate

• It accounts for all economic activities

• It is the only available metric

• It provides a clear and unbiased measure