GDP and Economic Principles Quiz

Why is GDP considered a useful measure of society's welfare?

• It measures moral attributes of the population.

• It measures a nation's ability to purchase inputs for welfare.

• It directly measures health and education.

• It is the responsibility of the government.

What does Y represent in the equation Y = C + I + G + NX?

• The economy's total income.

• The economy's total expenditure.

• The number of firms in the economy.

• The number of households in the economy.

Which component of GDP includes household spending on goods and services?

• I (Investment)

• C (Consumption)

• G (Government spending)

• NX (Net exports)

Which of the following is not a nondurable good?

• A microwave

• A loaf of bread

• A pound of bacon

• A pair of jeans

Which of the following can be negative if imports exceed exports?

• C (Consumption)

• I (Investment)

• G (Government spending)

• NX (Net exports)

How do economists typically measure economic growth?

• Absolute change in nominal GDP

• Percentage change in nominal GDP

• Percentage change in real GDP

• Absolute change in real GDP

The GDP deflator is a measure of what?

• The level of prices of all new, domestically produced, final goods and services

• The total output of an economy

• The unemployment rate

• The exchange rate

How is the inflation rate in year 2 calculated?

• Year 2 minus Year 1 divided by Year 1, then multiplied by 100

• Year 1 minus Year 2 divided by Year 2, then multiplied by 100

• Year 2 divided by Year 1, then multiplied by 100

• Year 1 divided by Year 2, then multiplied by 100

What does the GDP deflator adjust nominal GDP for?

• Population growth

• Inflation

• Unemployment

• Interest rates

If nominal GDP doubles and the GDP deflator doubles, what happens to real GDP?

• It doubles

• It quadruples

• It remains constant

• It halves