Understanding Economic Growth Quiz

Illyas and Mason are discussing the progress of their country's economy. Illyas asks, "What does economic growth mean?" What is the definition of economic growth?

• An increase in the price level of goods and services in an economy

• An increase in the real output of goods and services produced by an economy over time

• A decrease in unemployment rates

• A reduction in government spending

Match the following economic indicators with what they are commonly used to measure.

• Used to measure the percentage of people in the labor force who are jobless

• Unemployment Rate

• Used to measure all economic transactions between residents of a country and the rest of the world

• Balance of Payments

• Used to measure changes in the average price level of goods and services in a country

• Gross Domestic Product (GDP)

• Used to measure a country's economic growth

• Consumer Price Index (CPI)

During a class discussion, KaeQi and Liv are comparing different ways to measure a country's economic growth. What does "real GDP" mean?

• GDP measured at current market prices

• GDP adjusted for inflation

• GDP per capita

• GDP including imports

Match each economic growth calculation scenario with the correct equation.

• To determine the total GDP over two years by adding the values

• To calculate the product of GDP values from two different years

• To calculate the economic growth rate as a percentage change in GDP over a year

• To find what percentage the initial GDP is of the final GDP

One benefit of economic growth is (a)   .

• Higher unemployment
• Increased poverty
• Higher living standards
• Lower investment

Ammar and Liv are comparing the economies of different countries for their school project. They come across the term "GDP per capita." What does GDP per capita measure?

• The total value of goods and services produced in a country

• The average income per person in a country

• The total population of a country

• The inflation rate

Westy and Mason are discussing how to measure a country's economic growth in their economics class. (a)   is NOT a way they could use to measure economic growth.

• Real GDP
• GDP per capita
• Inflation rate
• Nominal GDP

Irene Zhang and Rain are comparing the economic growth of their country over the past five years. Why is it important for them to use real GDP instead of nominal GDP when measuring economic growth?

• Real GDP includes imports and exports

• Real GDP is not affected by inflation

• Real GDP is always higher than nominal GDP

• Real GDP measures only services

Irene and Michael are discussing the effects of their country's sustained economic growth. Which of the following is a possible benefit they might observe?

• Increased tax revenue for the government

• Decreased employment opportunities

• Lower productivity

• Reduced investment