lecture 1 macroeconomics

What does GDP measure?

• Total savings of households

• Total investments in foreign markets

• Total government spending

• Total income of everyone in the economy

Which of the following is NOT a component of GDP?

• Consumption (C)

• Investment (I)

• Government Purchases (G)

• Personal Savings (PS)

What is the primary difference between Real GDP and Nominal GDP?

• Real GDP measures only services

• Nominal GDP includes only government spending

• Nominal GDP is always higher than Real GDP

• Real GDP is adjusted for inflation

Which method of measuring GDP includes labor income?

• Expenditure Method

• Market Value Method

• Production Method

• Income Method

What does the GDP deflator measure?

• The growth rate of GDP

• The unemployment rate

• The level of prices in the economy

• The total income of a nation

Which of the following is included in the Consumption (C) component of GDP?

• Government spending on infrastructure

• Household spending on goods and services

• Exports minus imports

• Business investments in equipment

What is excluded from GDP calculations?

• Household consumption

• Exports

• Government purchases

• Illegal market transactions

Which of the following statements about GDP is true?

• GDP includes all legal market transactions

• GDP measures only the production of goods

• GDP is the same as Gross National Product (GNP)

• GDP measures the wealth of a nation

What does the Circular Flow Diagram illustrate?

• The government’s role in the economy

• The interaction between households and firms

• The relationship between GDP and inflation

• The flow of goods and services

Which of the following is a limitation of GDP as a measure of well-being?

• It accounts for environmental factors

• It reflects income distribution

• It includes illegal activities

• It measures only market transactions