AP Economics Quiz Part 2

Which of the following best defines Gross Domestic Product (GDP)?

• The total income earned by a country's residents

• The total value of all goods and services produced within a country's borders in a year

• The total value of all exports and imports

• The sum of all assets owned by residents of a country

Which of these is included in GDP calculations?

• Illegal goods and services

• Financial transactions such as stock sales

• Public goods like highways and education

• Intermediate goods

What is the main purpose of calculating Real GDP?

• To measure the nominal value of goods produced in a year

• To account for population growth

• To adjust for inflation and measure actual growth

• To calculate the income of only domestic companies

Which of the following items is NOT counted in GDP?

• The sale of a new car

• A social security payment

• A haircut at a local salon

• A new house purchase

Gross National Product (GNP) measures the output produced by...

• only goods and services produced within a country's borders

• all goods and services produced within a country, regardless of ownership

• all goods and services produced by the residents of a country, regardless of location

• all domestic assets owned by foreign nationals

Which of the following statements is true regarding GDP and GNP?

• GDP is always higher than GNP

• GDP includes only foreign investments

• GNP measures income by nationals, regardless of location

• GDP includes only local businesses

If nominal GDP increases while real GDP remains the same, what likely happened?

• Economic growth

• Decrease in inflation

• Increase in inflation

• Population decrease

The Circular Flow of Income model shows...

• the total production in an economy

• the flow of goods, services, and money among sectors

• only the income of households

• only government spending

In the Circular Flow model, firms provide households with...

• wages and dividends

• goods and services

• government subsidies

• labor resources

Which of the following transactions would directly increase GDP?

• Purchase of a used car

• Building of a new hospital

• Receiving a government pension

• Buying shares in a company